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Spiraling land costs send development upward

Nov 16, 2004 6:47 AM

You can almost hear the acceleration of creative thinking along the Las Vegas Strip.

Last week’s MGM Mirage announcement of plans for the high-density development of 66 acres between the Bellagio and Monte Carlo will do that to a company.

Cluster concepts are not exactly new to the Strip. Steve Wynn is headed toward a similar goal on his roughly 200 acres. He’s previously said he expects to eventually have some 20,000 hotel rooms.

It was close to 20 years ago that a former president of Caesars Palace called the news media to the Las Vegas Country Club for a press conference in which he explained his notion for creating a number of hotels around a single casino south of the then-Hacienda.

It sounded like an interesting idea, but this individual did not have the money and his efforts to sell other non-Las Vegas hotel companies on the notion were not successful.

MGM’s announcement has zapped the thought processes at Boyd Gaming, sources say. Ditto for New Frontier owner Phil Ruffin who may now be huddling with his new best friend Donald Trump to discuss possibilities to follow through on his big dreams.

Ruffin and Boyd (the Stardust) each have about 60 acres on their respective tracts opposite Wynn Las Vegas. The success of Boyd’s Borgata and the cash flow being generated by its purchase of Coast Casinos suggests Boyd can also afford to think as big as it wants.

The urbanization of the Las Vegas Strip — taller buildings occupying smaller footprints — seems logical as property values soar — speculators say up to $20 million an acre on the Strip. But don’t be fooled by the snap, crackle and pop generated by the artful packaging of new concepts. The appeal of whatever’s eventually built is the only yardstick that will matter.

Wall Streeters can gush all day about earnings and multiples, but when’s the last time you met a tourist who decided where to spend his money only after a careful study of corporate balance sheets?

Let’s see what they put up before we wax poetic.

Laughlin booming?

Change appears on the way in Laughlin.

Let’s start with Barrick Gaming’s planned purchase of the Golden Nugget Laughlin from the owners of the Nugget in Las Vegas. But this is only the tip of the iceberg.

Aztar Corp. Chairman Paul Rubeli is excited about more development. And he’s lavished superlatives on the recent performance of his firm’s Ramada Express in Laughlin, calling for other casino companies with Laughlin hotels to either pay some serious attention to what they have there or get out of town.

"The city is on the verge of big things," says one of the industry veteran who views the Laughlin Nugget sale as a precursor of bigger things still to come.

Fueling the speculation is word that the BLM is ready to release a couple thousand acres for development on the Las Vegas side of the Colorado River. On the other side, in Arizona, houses are being sold as fast as they can be built.

Barrick’s head of gaming operations Phil Flaherty says the Laughlin Nugget will provide a marketing link between the properties Barrick has in downtown Las Vegas and the burgeoning regions of Arizona and California.

Fertittas in Nevada

The list of Fertitta family members involved in the Nevada casino business may grow.

The Houston-based Fertittas, who are big in the restaurant business (Landry’s and others) are said to be among those most interested in acquiring Caesars Tahoe.

They have long held well-located property south of Houston, believing Texas will eventually allow casinos. The Fertitta family has roots in the gambling business that go back to the days when Galveston, about 50 miles south of Houston, was something of an "adult Disney Land."

Poker glut?

The commercialization of big time poker may be taking its toll on at least one of the major television events.

The filming of the second edition of the All Stars of Poker for the Fox network hit a road block when most of the 24 poker players invited to participate in the filming demanded more prize money. They are also unhappy about the network’s refusal to let them wear clothing emblazoned with the logos of some of the commercial ventures in which they are associated.

Las Vegan Daniel Negreanu, one of the top tour players in the world, argued that the roughly $750,000 being added to the prize money by Fox was not enough considering the added cash was about the same last year when there were only eight players.

But Californian Barry Greenstein, who also played in the first All Stars competition, said he’ll play, explaining that the guaranteed TV time is great exposure for his efforts to market a book coming out next year.

Another new book from a poker player? Now, there’s something novel.