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No autonomy for Mandalay Group

Nov 30, 2004 4:12 AM

Look for Mandalay Resort Group casinos to be integrated into the existing MGM Mirage network without the creation of a separate division.

The Group will generally be run by the people in control now, answering perhaps to either John Redmond or Bobby Baldwin, who are the top people at the MGM Grand and Mirage Resorts divisions, respectively.

This is off-the-record, since nothing official can be said for months. The acquisition by MGM of all that’s Mandalay will not be completed before the first or second quarter of 2005.

But it now seems likely we won’t see the creation of a separate division with the co-equal status that MGM Mirage gave Mirage Resorts in 1990.

Mandalay Resorts President and CFO Glenn Schaeffer is not expected to remain, although his plans continue to resemble a mystery wrapped inside an enigma. The last several years he has effectively fronted a company for senior officials who would just as soon not be seen or heard.

He’s said publicly his only goal is to get the merger completed in a fashion that benefits shareholders ”¦ yadda, yadda, yadda.

That’s not what the Glenn Schaeffers of the world say or permit to be said on their behalf if they expect to shape strategy for a new company. And he’s been saying "thanks but no thanks" to various interview opportunities.

But, you never know. Perhaps, Schaeffer is truly one of those unresolved issues. He was once "the face of the gaming industry," so far as much of Wall Street was concerned. It could be he’s now content to pass the afternoon sipping lattes at a Starbucks, working on books and screenplays or sparring with scruffy members of the creative set over lunch at Spago.

But Schaeffer and his interests are only part of the second or third storyline here.

MGM Mirage won’t be hurt by niche casinos Circus Circus and Excalibur, and will be very well-served by Mandalay Bay and its high-end add-ons.

Yet, it’s hard to say what will happen to the properties in Laughlin, Mississippi and Illinois. The evolving political and economic conditions in those jurisdictions cloud the picture.

But in Laughlin, the prospects for growth may persuade MGM to retain a presence there. The Mandalay casinos on the Colorado River were among the first and most successful in the area. And remember that Barrick Gaming, the recent buyer of the Golden Nugget Laughlin, expects to plug that casino into a growing network of operations that will include Indian casinos.

But big companies and small companies often have different approaches to life. MGM can afford to sit on this decision for awhile.

The picture in Reno is much clearer. Mandalay interests there will probably be sold as quickly as buyers can be found.

Getting back to the Las Vegas Strip: MGM will end up with two miles of continuous frontage on the west side of the Strip between Russell and Flamingo roads.

Expect the company to create and expand on this stretch of real estate for a good many years to come, probably long after most of those now in charge have moved on.

In the end, MGM Mirage and, yes, the bigger than ever Harrah’s will have sufficient assets to preserve Las Vegas’ top-of-the-mountain status as a travel destination: real estate, money and the imagination to use them creatively.

Enough, in fact, to stave off any threat from the tribal casinos in California.