MGM Gets its New Parking Lot – The Riviera

This past week it was announced that the Las Vegas Convention and Visitors Authority (LVCVA) had purchased the aged Riviera Hotel and Casino on the Las Vegas Strip and will close the place on May 4, 2015.  The ultimate demolition of the buildings will give the LVCVA a “footprint” on the Vegas Strip.  As in its new parking lot. Ok, I can buy that reasoning to a point.  But after living here for 14 year, you learn to automatically start to look for the other side of the story. The excuse being the need for access to the strip. But the reason is usually something different.  Like the MGM wanted a new parking lot and the Las Vegas room tax was the way to get that without any legal problems.

Think about it, 45 years ago the reclusive billionaire tried to buy the Stardust Resort but that would give him a 25% control of the Vegas Strip. According to the government and those charged with protecting the gaming public, that was too much control and not a safe bet for the tourists.  So they stopped him.  Today, MGM owns 55 % of the Vegas Strip properties with Caesars holding another 40% and nobody “protecting the public” is saying anything about it.  Probably because they look at these two businesses as their next employer after retiring from government jobs???

Could There Be  Better Explanation??

My version looks at buying the Riviera as a way to finally get rid of the The Ma & Pa Kettle types of tourists (middle-class, family) who don’t drink $20 bottle of beer and will never pay $50 to sit in a pool and wait to see the newest, hottest celebrity.  That young, easily influenced by the ever-changing social media whores they follow is the current bread and butter income for MGM and Caesars.  But they do attend conventions and they do attend barroom style sporting events like pool tournaments and arts and craft shows.  But the organizers of such events balk at paying $2000 a day for a 300 square foot meeting space. Another profitable income stream for MGM & Caesars.

That middle-class, family tourist has some value to las Vegas, but are more of a problem than an income for companies like The MGM and Caesars entertainment.  The middle-class people who stay at such low rent places like the Riviera do attend conventions and they do attend barroom style sporting events like pool tournaments and arts and craft shows.  But the organizers of such events baulk at paying $2000 a day for a 300 square foot meeting space. Another profitable income stream for MGM & Caesars.

Being MGM and needing to look good for the modern version of the yuppies and their Gold Visa credit cards, you can’t have these low life’s wandering through your casinos, wanting to see how the other half lives.  They won’t shop your stores or stop in for that three figured priced buffet.  So you need to eliminate their need to come to your property.  Like getting rid of the MGM lions.  But what you need to do is to really eliminate these pesky people with the flip-flops and Ross Dress for Less bags from polluting your casinos altogether.

What Do You Do?

Buying places like the Riviera outright would cause a media frenzy and your star with the Wall Street vultures would be tarnished. Plus, why pay for it with your cash when you can avoid all the messy paperwork and funding issues by having someone else pay for it all? Like the very tourists you despise?? Since MGM and Caesars Entertainment generate 95% of the room tax revenue that pays for the LVCVA, you essentially control the LVCVA board.  Why not have them buy out the nuisance property and make it into a parking lot?  Problem solved, no legal issues, no money issues and no gaming issues.  Plus the storyline sounds plausible.  You need a parking lot.

Since losing the Stardust and losing the Frontier, this is more about losing an entire class of tourists and conventioneers.  It’s nice, as a resort owner, to have those big conventions filled with people who can expense the $400 a night room, the $250 meals and the $100 tickets to some lame topless show (Not SEXXY or Fantasy, those are the good ones) or another version of Cirq So Sick.

But it’s the smaller ones, the pool tournaments, the roller hockey,  and the arts & craft shows that fill in the longer stretches of time and they help keep the lights on while waiting for the bigger shows to come to town.    It’s their fans, their families and supporters that keep the annual occupancy rates so high and fill in the shopping malls now lining the Strip. Together, they have a buying power that once gone, will leave a noticeable void in the city that will not be easily filled.

Think about all the people and the businesses that are now needing to find a new home and with the loss of the Riviera, it won’t be Las Vegas.

Just something to think about besides the 800 or so jobs lost…