Sunday, October 24, 2004
Copyright © Las Vegas Review-Journal

INSIDE GAMING: Trail to merger is now the fast track

MGM Mirage is in "substantial compliance" with the Federal Trade Commission's so-called second request for information about its pending $7.9 billion buyout of Mandalay Resort Group. Company spokesman Alan Feldman said that means the company has submitted all the requested documents, but has not heard whether more will be required. The request meant the commission had reservations about competitive issues raised by the merger. Feldman said the promised quick compliance means the merger is still on track to close in the first quarter of 2005.

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The Atlantic City strike by 10,000 casino workers so far is taking little bite out of Harrah's Entertainment, Chief Operating Officer Tim Wilmott said last week. Midweek volumes have been softer than expected, but weekends have been business as usual year-over-year. While there is a cost to flying 400 managers in to fill in for striking workers, Wilmott said the company is saving by not paying the striking workers. Harrah's President Gary Loveman said 10 percent to 15 percent of the company's striking workers have returned to work already despite the walkout.

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Las Vegas developer Steve Wynn has his heart set on Wynn Las Vegas being rated a five-star hotel. Wynn says it would be the first 2,700-room hotel in the world to be awarded the five-star distinction. The Bellagio, which Wynn developed, won a four-star rating, but fell short of the coveted fifth star because of chambermaid carts left in the corridors the day the property was inspected, Wynn said. Individual restaurants at Bellagio originally won five-star ratings.

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Opinion is divided over Harrah's Entertainment's possible sale of the Rio. Wall Street sources say Colony Capital is frothing to own the Brazilian-themed casino resort west of the Strip. It already owns the Las Vegas Hilton and Resorts International in Atlantic City, and is buying four midtier properties that merger partners Harrah's and Caesars Entertainment are selling. Harrah's insiders, however, caution that the company wouldn't be eager to sell the Rio -- not unless someone made such an incredible offer that it just couldn't refuse.

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Wall Street analysts are skeptical about recent estimates of land values on the Strip. Pros have been estimating $10 million to $20 million an acre. But analysts say such pie-in-the-sky figures come from figuring out the value of possible condominium developments. A 30-story project bringing in $700 a square foot for unit sales extrapolates into $10 million an acre. Fifty stories at $800 a square foot translates into $20 million. And the guesswork suggests somebody's smoking funny stuff, analysts said last week.

The Inside Gaming column is compiled by Gaming Wire Editor Rod Smith. You can reach him by phone at (702) 477-3893, fax (702) 387-5243 or e-mail at rsmith@reviewjournal.com.