Steve Wynn is rooting for CityCenter?
Tue, Dec 1, 2009 (5 p.m.)
Kirvin Doak Communications
It’s the conventional wisdom, so naturally Steve Wynn must do his best to explode it.
As we plod through this period of CityCenter launches that culminates on December 16 with the grand opening of the 4,004-room Aria, the response to skepticism about the project’s very premise is, again and again, to refer back to naysayers who predicted the doom of the Mirage when it bowed in 1989. The Review-Journal, in fact, built its entire Mirage-at-20 piece last month upon the notion that the sourpusses who insist on examining CityCenter’s potential through the lens of the current market and the questions about its lofty, unproved concepts are the same as those who doubted Steve Wynn two decades ago.
Nothing seems to piss Steve Wynn off more these days, not even Obamacare or Garth Brooks ticket scalpers.
“To compare CityCenter to Mirage is a ridiculous non sequitur,” he shouted into the phone last week. “It made a nice story, but it fails to examine the facts, like most of the stuff you guys write.”
Happy to pretend that by “you guys” he meant everyone but me, I pressed on. I had just finished two lengthy interviews with CityCenter President Bobby Baldwin, the executive Wynn plucked from the Golden Nugget poker room and made his first lieutenant and with whom he built the Mirage, Treasure Island and Bellagio. Baldwin parted ways with Wynn after MGM bought Mirage and has overseen CityCenter’s construction and development since it was but a bubble diagram conjured up by MGM Mirage’s then-president/now-CEO Jim Murren and design chief Bill Smith back in 2004.
“At the Mirage, we had nothing but negative publicity until the day we opened,” Baldwin recalled. “‘It’s gonna cost too much to run, it cost too much to build, it’s going to cannibalize the marketplace, the Las Vegas visitor volumes aren’t big enough for a place as large as Mirage.’ Then the day we opened, everyone went silent, and all they said were good things.”
Wynn didn’t deny that all of these things were said about the Mirage. It’s just different because while the Mirage was seen then as the great revolution of Las Vegas, all its moving parts had actually been seen and proven before.
“We had a book that was a black book, a folder, that was about 120 pages,” Wynn said. “In it was an exhaustive examination of three hotels in Las Vegas: the Hilton, Bally’s and Caesars. Each of those studies showed how food and beverage and convention sales at the Hilton were ‘X’ and worked. They showed how retail and tour and travel at Bally’s produced a result. And it showed how entertainment and fanciful public areas had worked at Caesars. And in this book was the most comprehensive financial analysis that showed that what we were doing already existed in Las Vegas in three separate hotels: 2,100 rooms at the Hilton, 2,000 rooms at Bally’s and 1,300 rooms at Caesars. Every single aspect of our program was responsible for huge success at one part of those hotels or the other, but they did not exist in one place.”
Wynn said the notion that the Mirage was some giant risk arose from remarks to a national business magazine reporter by then-Caesars World CEO Henry Gluck and President Terry Lanni—who, of course, went on to be CEO of MGM Mirage, and held that position when the company committed to building CityCenter.
“The fact that the stupid ... magazine didn’t get it was because the guy spent 30 minutes writing the story; he was a dimwit,” Wynn bellowed. “I offered to give him the books, Steve. He wouldn’t look at it. He had interviewed Henry Gluck and Terry Lanni, who said I couldn’t make it because they were in denial. They knew nothing about my business. Henry Gluck made a statement to [Mirage exec] Bob Halloran. My hotel was at the 18th or 20th floor by then, and they came from Caesars and said it would never open.”
That article, Wynn said, is where the notion originated that the Mirage needed to make $1 million a day to break even. In fact, Wynn said, the figure was $1.1 million, and they figured—rightly—that they had that covered on the slot machines and nongaming revenue alone. He said he had shown his lenders that the numbers couldn’t miss, “absolutely a lock-up, our Mirage.” And, indeed, it netted $190 million its first year, 50 percent more than the prior record of about $125 million held by Caesars.
“It wasn’t that I was smart, it was that he was stupid,” he said of the reporter. “Dumber than a rock. He would not do the research. He would not understand history. He would not take the time to find out what the truth was. He had a notion of what the truth was. He came to see the guys to get a juicy quote that would lead the pack. Tendacious, stinkin’ journalism.”
In this run-up to CityCenter’s opening, Wynn is trying not to criticize the MGM gang, although earlier this year he told Jon Ralston he had never begun construction on a project without having all the financing in place. That was a shot at MGM’s ongoing challenges nailing down the funds amid a frozen credit market, a disastrous housing collapse and a recalcitrant joint-venture partner, Dubai World.
Murren, reacting to that notion and again reaffirming CityCenter’s analogy to the Mirage, questioned to me Wynn’s own grip on the past.
“Steve is a very interesting, creative guy and he has a wonderful view of the future and a view of the history which is not always aligned with my recollection of the history whatsoever or a lot of people’s,” Murren said. “To have that point of view is to dismiss the entire corporate career of Mirage Resorts when they bet the house so many times, when they were a product of junk bonds in the ’80s and when they were building Mirage and they were teetering on the brink of not being able to open or finish because they were so overextended.”
Nonsense, Wynn fired back.
“At that time, my cash position was $750 million from [the Golden Nugget in Atlantic City], and in my loan, I had over $200 million more than the place was supposed to cost. It was in my financials!”
It’s not that Wynn wishes CityCenter ill.
“MGM’s CityCenter is a radical departure from everything we’ve done up until now,” he said. “It is really something that raises very big questions about size and scale, about 2,700 condominium units and density. Those are real issues that have never been seen before. My Mirage had been seen before. It just wasn’t recognizable.”
No, really. He’s rooting for it. Just not with as much enthusiasm as the rest of what he said.
“Hopefully,” he said somewhat unconvincingly, “it’ll be great.”