Barrick Gaming is ready to turn downtown inside out.
Bucking conventional wisdom, the company that has agreed to purchase Jackie Gaughan’s casinos says it expects to quintuple cash flow at the properties.
"There’s built-in value there," Phil Flaherty, Barrick’s chief gaming officer, said of downtown and Gaughan’s Plaza, Las Vegas Club, Western and Gold Spike casinos.
Barrick’s multi-faceted strategy includes:
”¡ Building and mining customer databases.
”¡ Selected expansion.
”¡ Transportation tie-ins.
”¡ Tapping the Latino market.
Before getting the keys to the properties ”” probably sometime this fall ”” Barrick did its due diligence to learn about the clubs’ players and their habits.
Flaherty found that light or infrequent players were getting giveaways and promotions while a $3,000-a-day player received no mailers. From that, the company figures a sophisticated player tracking system will yield a large upside.
"Not using your database is insanity,’’ he added.
Located between Fremont Street and the city’s 61-acre parcel near I-15, the Plaza, in particular, has growth potential.
Flaherty told a gaming conference sponsored by CB Richard Ellis last week at the MGM Grand, "We could easily add 2,000 rooms to the Plaza." That’s substantial, considering the total sale encompasses just 1,800 rooms.
With 25 acres of gaming property in its deal with Gaughan, Barrick will be downtown’s biggest non-governmental landowner. And the county’s upcoming monorail is seen as a boon for downtown — and Barrick — as it drops Strip tourists between the Plaza and the Las Vegas Club.
Finally, Flaherty believes that the burgeoning Hispanic population has untapped potential.
"We’ll see higher population density downtown,’’ he predicted. "And no one is paying much attention to the people on the eastern end of Fremont. We’re targeting it.’’
Scheduled to take over the Gaughan properties in the fall, Barrick also has plans to upgrade service. Flaherty noted that the rise of ticket slot machines has led to a decline in personnel on casino floors — making for a less friendly environment.
While the company has no immediate plans to pull the ticket machines, Flaherty pledged, "We’re going to put more people on the floor for a better social experience.’’
Critics — noting that the Plaza had fallen out of escrow several times in the past — are skeptical that Barrick can turn things around. But at $82 million for the entire package, most observers believe the company got a good deal.
"It’s not the value now, it’s the potential for earnings,’’ CB Richard Ellis gaming director Carlton Geer said of Barrick’s acquisition.
Flaherty also put some fresh perspective on downtown’s health. It’s an unconventional view from an outsider whose family business has heretofore been focused on banking, mining and ranching.
"Downtown revenue has been flat for five years. But the Strip only grew because of room growth. Downtown is actually more stable that the Strip,’’ Flaherty asserted.
Net income downtown, for example, has gone from a $49 million loss in 1997 to a $29 million profit in 2002. "The Strip’s gains were less than that,’’ he stated.
So bullish is Barrick on downtown that it also plans to buy two downtown Ambassador East motels and has an option to buy Gaughan’s El Cortez.
So stay tuned.