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Breaking News: MGM to sell Treasure Island; Phil Ruffin to take ownership

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The first Cirque du Soleil show in Las Vegas, Mystere, still wows with its incredible acrobatics and hilarious clowns.

Solid rumors are flying tonight that MGM Mirage has entered into a business transaction that will eventually see Treasure Island being sold.

The rumors indicate that MGM executives will make a very early morning Las Vegas announcement in advance of the Wall Street open that the sale is underway.

It is believed that billionaire businessman Phil Ruffin will be the new buyer, but no purchase price or other financial details have been learned at this time.

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Frontier's illuminated sign.

Although self-made billionaire Ruffin lives in Wichita, Kan., he has numerous interests in casinos and racetracks. He is the former owner of the Frontier hotel here, which he sold for a record-breaking price to an Israeli group that planned to build a super-luxurious Plaza New York hotel condominium project on the parcel of land just north of the T.I. location on the Strip.

As part of the deal, Ruffin retained some of the land from the Frontier real estate that enabled him to partner with Donald Trump in the Trump International Hotel next door to Fashion Show mall and across the Strip from Steve Wynn's new Encore hotel.

Treasure Island was opened by Wynn in 1993 as a sister property to The Mirage. Led by Kirk Kerkorian, MGM claimed ownership in 2000 in its merger with Mirage Resorts, which marked the beginning of MGM Mirage. Treasure Island is home to the first Cirque du Soleil resident show in Las Vegas, Mystere, along with Pure Management Group's new Christian Audigier nightclub (where hot Hills couple Spencer Pratt and Heidi Montag are due to handle the midnight countdown on New Year's Eve), Social House restaurant and the long-running sexy outdoor show Sirens of T.I.

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Longtime Strip inhabitants The Sirens of T.I.

Vegas DeLuxe had contacted MGM Public Affairs officials about the rumored sale, but on Sunday evening, nobody in that department was available for comment. Vegas DeLuxe will update as soon as is possible with any confirmation or denial we receive, and as we will report tomorrow, this is the first of two other major Strip hotel ownership changes being worked on currently.

UPDATED 12/15/08 @3 A.M.: Wall Street sources early this morning (Monday) report the proposed deal should be officially announced at 6 a.m. local Vegas time -- 9 a.m. New York time. MGM shareholders will be told that the Treasure Island resort will be sold for $775 million.

Proposed buyer Phil Ruffin, who previously owned the new Frontier -- just several hundred yards away -- sold that property in May of last year for $1.25 billion to the Israeli Elad group, a real-estate financial group that owns the New York Plaza Hotel. They went ahead with the implosion of the Frontier, but plans to re-create that Manhattan landmark on the site have stalled subsequently during the nation's economic slowdown.

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Phil Ruffin, shown in a 2003 Las Vegas Sun file photo.

Treasure Island, with its 90,000-square-foot casino and 2,665 rooms and 220 suites, was opened at a reported cost of $450 million, but seven years later, when acquired by MGM as part of a $6.4 billion purchase of all Mirage resorts, its actual sales price was not broken out separately.

Vegas DeLuxe has also learned that Steve Wynn, who sold the Mirage properties to MGM, "took a hard, serious look" at buying back T.I. before the negotiations heated up with Ruffin, but he nixed the idea to concentrate on the opening of his new Encore casino resort, which opens its doors in exactly one weeks' time at 8 p.m. next Monday night (Dec. 22).

Number crunchers in financial circles are trying to calculate the impact of the sales price now on Vegas gaming values and Strip property values. One banker told me that it’s a great deal for Ruffin on paper because he's bought another, better hotel than the one he sold and still kept $250 million on the spread between sale and purchase of the two!

Insiders tell me that the sale will enable MGM to meet obligations on its $11 billion CityCenter project that is due to open next fall and loosen up credit restrictions on that 65-acre complex brought on by tightened financial markets worldwide.

Check back to Vegas DeLuxe later this morning for Wall Street reaction and the official sale details -- plus news of two other hotels on the Strip that also might change hands soon.

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