Two Way Hard Three | Las Vegas Casino & Design Blog

June 23, 2012 11:49 AM Posted by detroit1051

Great stuff, as always. Let me comment on Cosmo first. You all pointed out that since most F&B outlets are third party, DB only gets a percentage of revenue, but gaming revenue belongs 100% to DB. So, why isn't the casino being promoted like hell? I know I'm only repeating the question you all asked, but there's got to be a reason. Let me put on my tinfoil hat: Is it possible that there's some tax, financial or other money reason that would make it disadvantageous to Deutsche Bank as a whole to let Cosmo be profitable? I think we all agree DB wants to unload Cosmo at some point. (My guess has always been at the end of this year, 2012.) As counter-intuitive as it sounds, would Cosmo be easier for DB to sell as a loser than as a winner? Please don't laugh at me.
While listening to the Cosmo discussion, I checked the website for Identity offers. I was amazed to see promos which would be an embarrassment to regional locals casinos around the country. They're more like the wrong amount of wrong.

Is Las Vegas boring without ongoing construction? I've wondered for some time why I've lost much of my interest in returning to the city. I believe part of it is age. I started my frequent trips when I was just slightly (or moderately) older than Hunter, Chuck and Dave. The excitement isn't there as much for a septuagenarian as it is for you three, although Steve Wynn may disagree with me. During my peak visit years, new construction and Valley growth always gave me an added incentive to return. I have these out of order, but when The Hilton was my home, it was exciting to see Landmark and Dunes closed and demolished; The Mirage, Treasure Island and Bellagio opened; Marina closed and incorporated into the new MGM Grand; Hacienda closed and Mandalay Bay, Luxor and Excalibur built; Green Valley Ranch, Red Rock, Southpoint, Suncoast, Rio, etc, etc, etc. There wasn't a year in which there wasn't an implosion or new property being opened. Oh, how could I forget Sands coming down for Venetian. I think SkyVue will be a gimmick, but Linq may be exactly what's needed for the Center Strip as you all discussed.

From what I know about AAA Diamond Ratings, there is no way Encore could be downgraded mid-year without something so egregious that it would have made news. If anything, AAA is criticized for being too soft on hotel deficiencies.

Great comment, I believe by Chuck, that Elaine was the stabilizing influence on Steve in both his personal and business lives. As already covered in Vegas Tripping, I hope Steve doesn't experience another MIR outcome to this mess.

Thanks for the episode. When's the next Vegas Gang?

June 24, 2012 5:14 AM Posted by Dshort2727

Re the Cosmo, I agree whole-heartdly with chuck. When we stat there I walk by the 10 to 25 dollar tables and walk accross the road to the user friendly Planet Ho for the 6 card bonus $5 three card often dealt by partly clas sweet young things.

The table games are a joke and I have yet to make one play on them in 4 visits.

Dan

June 24, 2012 8:37 AM Posted by Jeff in OKC

Another great episode, as always. Thanks for the shout-out. I love and appreciate all your efforts and think honest opinion sharing stimulates discussion, which hopefully generates more comments and interest.

A quick comment about Las Vegas seeming to be boring now: I think Las Vegas has certainly lost it's boomtown vibe and has transitioned into survival mode, which is much less sexy. One thing I realized I was really missing is Steve Friess' Vegas Happens Here blog and The Strip podcast. Steve always found good newsworthy stories, befitting his profession, but what I am really noticing currently is that I don't hear much about the World Series of Poker. I am a very casual observer of poker and Steve's coverage was about the only way I knew what was happening. I wonder how many freelancers are in Las Vegas now versus 8 years ago?

June 24, 2012 9:34 AM Posted by parchedearth

While it is easier to get excited by a new property, I think there is enough natural turnover at the existing properties to keep me engaged. There are always too many new restaurants, clubs, spas, and renovated rooms for me to ever visit.

I like the Cosmo casino and have started getting pretty good comps. I haven't sensed the minimums being too high. Everyone has differing expectations of what they are looking for. Personally, I'm not looking for a high energy madhouse. I prefer a quiet casino where I can find an empty table.

June 24, 2012 10:21 AM Posted by BigHoss

Great podcast, guys. Thanks for all of the work you put into this.

In regard to the Elaine Wynn stock ownership discussion, control does appear to be the issue. Steve Wynn owns 10,026,708 shares. Elaine owns 9,742,150. That gives Steve outright voting control over nearly 20 million shares, close to 20 percent of those outstanding.

With Okada out of the picture, the other major individual holdings are relatively negligible. The next largest individual shareholder after Elaine is Ronald Kramer with 280,755 shares, followed by Linda Chen at 265,000, Mark Schorr at 250,000 and John Strzemp at 195,000. So it appears officers and directors with large stakes aren't the base of concern about control.

Externally, the picture is significantly different. As of March 31, Waddell & Reed Financial held the largest institutional stake at 17 million shares, a $1.7 billion position that accounts for approximately 16.9 percent ownership of the outstanding shares. On the mutual fund side, Waddell & Reed Advisors owns 1.4 million shares in its Asset Strategy Fund – a $145.3 million position, accounting for 1.42 percent ownership.

Together, the Waddell & Reed stakes total 18.4 million shares – just shy of the 19.7 million shares upon which Steve exerts control.

So, for someone who appears to enjoy ruling the roost with a pretty tight fist, Steve is in a tough spot. If Elaine sold only 700,000 shares and Waddell & Reed or one of its subsidiaries picked them up, then Steve's no longer the controlling vote. Is that automatically a bad thing? Not necessarily, but it could lead to major decisions being wrested away from him.

Another factor is the ownership stake of other institutional and mutual fund investors. The Ivy Assest Strategy Fund owns 12.1 million shares and Marisco Capital Management, LLC, owns 7.7 million shares. Big moves by either of those shareholders could easily have an effect on Steve.

This is only in regard to Wynn Resorts and not Wynn Macau Holdings, Ltd. Steve's stake in that company would certainly affect the big picture of all of this.

***

In regard to the value of Elaine owning Wynn stock if she can't sell it or vote her shares: She presumably receives the dividends on her shares. At the current level of $2 per share, that's a tidy $19.48 million annually – decent strolling change, even for a billionaire.

June 25, 2012 10:57 AM Posted by Dave

@Jeff for WSOP news, check out Card Player (http://www.cardplayer.com/). They cover the tournament pretty exhaustively.

June 25, 2012 6:03 PM Posted by Jeff in OKC

@Dave, thanks for the info. But I don't want exhaustive coverage, I want once a year coverage from a once a year reporter.

June 26, 2012 7:10 PM Posted by HillBilly

The is Vegas boring without construction question is very much a matter of perspective. Earlier in the podcast, Chuck offered up a fantastic example of this with his trip to Caesars. After quite a while of looking at the town from a journalistic perspective, he goes back, goofs around, and has a great time. He stepped back into the role of tourist.

For several years you have enjoyed exciting reporting and writing opportunities offered by the new resorts, anticipation of the new resorts, leaks, drawings, interviews, and behind the scenes tours. As a website operator and content creator, sure, the town seems less exciting now. I would say, Hunter, your hobby has really been the study of the change in Vegas as opposed to the enjoyment of it. (Painting with a broad brush here.) I understand your boredom. As an engineer, the most exciting things I do are big sweeping redesign projects. Small maintenance changes and monthly updates (70% of the work) are really quite boring but they pay the bills.

Dr. Dave has yet another perspective from his position at UNLV. As with any true academic pioneer, Dr. Dave is driven by his work and that keeps him from being bored. The cost of this is seeing work in all the places I look and see fun.

From my perspective as a tourist, I'm still excited about Vegas. After a dozen trips now I'm not the wide eyed little kid looking at all the pretty lights but I go there because I have fun there. End of story. If it gets boring to me, I'll spend more time white water rafting. Sure there are lulls where I click on VT for the 10th time in a day and think "Dammit. When is Chuck going to post some new exciting piece on here?" That is partly just me being a fan of the work he does. It's also partly because I have made looking up crap about Vegas on the internet an entirely new hobby.

You and Chuck have discovered the danger of turning your hobby into work. Chuck found his way back to the promised land. All you need is a nice fat roll and several hours of nonstop dice, cards, and booze.

From the tourist perspective, what sours me on the town is when I have a couple trips where nothing goes my way. At a certain point, losing 10 hands in a row hour after hour and having people hit one outers over and over can really wear on you.

I truly enjoy the work all of you do in your respective corners and the VegasGang podcast makes my hour long drive to work so much fun. Thanks fellas.

June 26, 2012 7:20 PM Posted by Michael James

Jeff - You drive a hard bargain, but if Vegas Gang wants to sponsor it, I suppose I could spend a few weeks out there covering the WSOP.

June 27, 2012 8:16 AM Posted by Larry

In listening to the podcast, you asked the question about excitement around going to Vegas. I have travel to Vegas anywhere from 4 to 8 times per year for about 25 years. While I still enjoy Vegas - I don't have the drive to travel there. Over the last year, I have seen the overall service drop off, the level of comps have dropped dramatically and I have lost more in the last year than I ever have (so they have changed the pay-tables) - that with the increased air costs - make it less attractive. I think all of the consolidation has hurt Vegas. When you have two or three companies dominating the strip - I think that has hurt Vegas!!! As a result - I would guess our trips will drop to two, maybe three trips per year.

June 30, 2012 10:40 AM Posted by TallTexan in DC

Wonderful show guys, first time listener to the program. Is Vegas Boring? NO! To those of us who gamble mostly on East Coast Vegas will always have that exotic allure that AC has never had. I enjoy gambling at the Borgata (Highly Recommended if you want to gamble on the east coast.) But, most of the casinos in AC are very sterile, and there are not a lot of non gambling things to do there. In AC they can't keep adding properties, so we are stuck with what is there now. AC is kind of like your old granddad who likes doing things the same way every day of his life, and Vegas is like your wild older sister who just likes having a great time and doesn't care if everybody knows it.

June 30, 2012 11:06 AM Posted by Hunter

Thanks for listening! Welcome!

July 1, 2012 7:35 AM Posted by ReadyKilowatt

I just hope the WYNN mess gets resolved soon. It's hurting the stock, and given the missteps seen over the past year or so... the web site debacle, the blowup over the "donation" in Macau... distracting the company from doing what it does best.

Besides, airing dirty laundry on the financial blogs just gives the shorts and bears a reason to drive down the stock. Resolve your differences, do it in private and get back to work, Steve!

Signed, an unhappy shareholder who thinks there's a lot of upside if you get your life in order

July 1, 2012 8:55 AM Posted by Jeff in OKC

A quick observation regarding the Cotai design: I always thought the Y shape was done first by Mr. Stern at the Internalional (now LVH) and that biggest benefit of the design in the Las Vegas Strip context was that it would allow more rooms to be sold as " Strip view". That made it a bigger benefit there than in other cities, and that is why it isn't seen everywhere. Am I close to right, or way off?