Our Week Begins
Big News Story #1: This week started with leftover chatter about the Big News Story from last week when it was announced that MGM Resorts announced the possible sale of the Bellagio and MGM grand properties to the Blackstone Financial Group.
Big Story #2: That chatter was pushed aside when the news broke that “Nevada gaming regulators move to ban casino mogul Steve Wynn.
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With all that juicy news, the Vegas blogosphere went wild. As if the two stories were separate bits of shocking news involving the same players. In reality, the two news stories are actually part of one bigger, juicier story that anyone receiving advertising dollars from MGM fears to report on in order to not have that advertising revenue cut.
Thankfully The Vegas Tourist was never in fear of losing their advertising money because they never gave us any!
Now, for anyone who has lived here for any length of time knows, neither story as reported has a bit of truth to it (as reported). But the Vegas Boggerspohere went nuts over all this “News”. Much of it had already been dished out and talked about by the best news source you can have for Las Vegas: Vital Vegas
Pause. Recap / Update
For those who do not pay much attention to the musings of a Las Vegas vlogger or the day to day ramblings of the city built on sin and corruption, let me fill in some of the blanks before I go on.
MGM Resorts owns about 55% of the Strip business. In order to prevent a too hostile takeover and to possibly enrich the pockets of the major stakeholders in the MGM corporation, the company split into two separate companies. In April 2016, MGM held an initial public offering for a new company ( MGM Growth Properties).
This would be a new real estate investment trust (REIT) with ownership of ten of the company’s casinos. The parent company (MGM Resorts) would continue to operate the casinos under a lease agreement.
Think of it like a McDonald’s. The franchisee owns what’s inside the building, McDonald’s real estate company owns the land and the building. Here, the property is owned by one company while a second company “leases” the land and buildings to the resort operator.
In fairness, most “non-Las Vegas” resorts and hotels operate like this. The building sign may say “Holiday Inn” today but can change to a “Comfort Inn” tomorrow. Same building, different tenant. This being MGM, being Las Vegas and MGM being the dominant operator in town, this makes it a little more complicated and more mysterious in its actions and abilities to influence policymakers.
For various reasons, depending on who you ask, the two crown jewels of the MGM empire; the Bellagio and the MGM Grand were not put into this trust. They were kept intact as part of the original resort company.
The Bellagio was once owned by Steve Wynn and was reportedly his prized possession. The one resort some people say he regrets ever letting go and would want to get back if he could.
The one thread that winds through all this story is the continued battle of the egos first started in 1971 between a young and ambitious Steve Wynn and the first real king of the modern Las Vegas development era; Kirk Kerkorian (MGM) and later his hand-picked heir apparent, Jim Murren. Current CEO of the MGM Resorts.
Looking at Story #2
So now the State gaming regulators want Steve Wynn to surrender his gaming license. This would make it virtually impossible or financially rewarding for him to make any kind of a comeback to the Strip.
The basis for this action by our State’s gaming gods revolves around the allegations of sexual misconduct by the CEO and Vegas visionary many years ago and was revealed right at the time when his ex-wife was in an ugly custody battle over her voting shares in the company she helped him to start.
Those allegations, bolstered by the fear that the #metoo movement had instilled into the current crop of American corporate CEO’s. This supposed revealing allegation led to his resignation from the company that has his name on the marquee.
Believable so far for some. Fair enough. The story and reasoning seem legit to anyone living outside the Las Vegas orbit. For those of us who live it or have lived it, this reasoning (sexual harassment) is a bit laughable and could be excused as BS, except that its consequences will impact thousands of Las Vegas jobs and upset many lives.
We know the reasons, the causes, and the story or stories behind all the headlines are. In short; Steve Wynn, along with Las Vegas as we know it, must die.
According to the Washington Post:
“The move marks the latest chapter in the magnate’s drawn-out fall from grace since the Wall Street Journal reported in January 2018 that Wynn had pressured female employees for sex and used his wealth and power to create a culture of complicity at his casinos.”
STOP! Reality Check
Time for a reality checks folks! A Las Vegas strip casino owner sexually pressuring a female employee for sex in Las Vegas in the 1970s or 1980s is news or even shocking?. Really? That’s the news or is news. And that’s the reason Steve Wynn needs to lose his gaming license?
We are talking forty years ago when that was normal casino office behavior. As an example, I remember when I was doing interviews with people who worked the Strip in those days for my podcast.
I remember one lady I interviewed who was one of the very first female front desk managers of a major resort on the Las Vegas Strip. Her exact words about her achievement were this “I made it to be the first female front desk manager on the Strip and I did it with my skirt and my pantyhose intact!”
I get it. Sexual Harassment is never acceptable and should never happen. I agree. However, it does and it did, a lot. When this supposed “news” broke, most people working the Strip from that era yawned and smiled because they knew what was really going on here.
What is happening here has NOTHING to do with sexual harassment. It was about dethroning a kingmaker, a Vegas icon who ruled the world Jim Murren was playing in and one he thought he controlled.
Protecting Future Employers
Members of the Nevada Gaming Board are famously known to retire from their positions of protecting the clean-cut image of Nevada gaming and go directly to work for the companies they once had licensing power over.
Their jobs as Gaming Board members are to assure the visitors to Nevada gaming establishments that they are free from corruption, undue influence and undesirable people in positions of power.
Now think about that for a second. Imagine if your job was to protect the “image” of your state’s gaming market. One day when you are maybe not so silently debating on retirement from the position, you get wind of a rumor that one of the largest gaming companies in the state, one you have licensing authority over, is maybe talking about needing a newly created position of the administrator of worldy legal and corporate basketweaving affairs blah blah blah.
Amazingly enough, the new job description lists all of your best skill sets as job requirements. Imagine that! The mystery job is rumored to not being made available until a date in the future that just may coincide with your not yet really announced plan to retire.
So back at the office, you still have this unannounced, rumored job offer that fits your skillset in the back of your mind. Just as the CEO of this company starts to question the suitability of their most hated competitor. A person who may be making a back door return to power.
Question: Just how are you going to handle that news?
Just for the record: I am not inferring anything here. I am just connecting some dots that you see when you read the official reports of some of the cases the Gaming Board decides on and how they often came to their judgment for the casinos and not for the tourist who claims they were wronged by a faulty slot machine or a misplaced winners jackpot for a poker game. And how you compare similar cases yet different outcomes when you look at the ownership of the casinos in question. Sometimes ownership has benefits.
Jim Murren’s Achilles heel
Jim Murren was basically Kirk Kerkorian’s hand-picked successor. Kirk was the founder of MGM and was at one time the owner of MGM studios (in case you were wondering why the MGM Grand is emerald green). Murren was a Wall Street guy. That’s it. There are many rumored reasons why Kirk picked a man with no gaming experience, no common sense and no knowledge of the world of hospitality to run a gaming and hospitality-based company. Other than he was good at making short gains for stockholders. He also grew to have an ego that was bigger than his ability to back it up. Something Steve Wynn played on often and Murren hated it because Steve would often make it a public spectacle.
Case in point. The Stadium. Sheldon Adelson, the owner of the Palazzo and a Wynn antagonist, was ready to push forward with a domed stadium for the University of Nevada Las Vegas football team. People in the community were starting to look for the usual signs from the casino gods on what they feel about it before publicly acknowledging their feelings for the idea. (In management, you don’t want to publicly go against your boss in Las Vegas)
Jim Murren stepped forward and in no uncertain terms said it was a no-go. He would not support the idea and that meant no money or support from his empire. People dependant on the MGM for their livelihood (jobs and supplies) started to emerge and said they (reluctantly) agreed. It was a bad deal, no go. The idea of a Las Vegas domed stadium was now dead in the water.
Steve Wynn was silent for a little while longer. But when finally he spoke, the world, as usual in the Las Vegas universe, changed. He said it was a great idea and its what Las Vegas needed now. Guess what? Public opinion for the idea suddenly changed. The movement was not dead in the water anymore. As the news spread that Steve Wynn thought Vegas needed a domed stadium, Jim Murren suddenly announces he too believes a domed stadium would be a killer idea for the Las Vegas tourism economy!
Enough is Enough
I believe it was at that point that Jim Murren had enough of being upstaged by the older master of Las Vegas politics and needed to finally get him out of town. I think it was he who somehow got to Elaine Wynn who was desperate for a powerful Las Vegas ally who would publicly support her and together orchestrated the overthrow of Steve Wynn’s empire. The key to their success was literally handed to them by the democratic party. They found a willing stooge to push it front and center of the world’s media in the #metoo movement. Putting the #metoo movement front and center came with a lot of free press that was coveted by the world champions of what we now call “fake news.”
Once they had their stooge/victim willing to go public, they were ready for the blood of Steve Wynn to pour over the streets of Vegas and Jim Murren would now be the absolute king of the town. They never looked for any other “victims” and anyone coming forward claiming to be a victim was quickly shown the exit because they weren’t needed. The coup was started and they found what they needed to feed the media.
Steve Wynn, for all his faults and his secret connections to people of questionable characters, was a showman. He loved the attention and would seek it when he could. However, deep in his soul, I always saw a love for what he created and for the people he employed to work there.
So when all this news of “sexual harassment” hit, Steve’s sudden departure to supposedly save the company and the people it employed, I believe he was genuine and was concerned about that, about them. Not to say retiring at his age with a billion dollars in the bank and a hot former British model wife to snuggle up with isn’t a good reason to cash out and stay out of the limelight.
I’m just saying he did something few people expected. I know Elaine Wynn and Jim Murren were certainly not expecting that to happen!
If you have read any books on Steve Wynn or any reports or exposé on him, you know he has a dark side. Mysterious connections, friends, and confidants in places you don’t want to know about. So I just have a feeling it was not so much a goodbye, so long as it was a smile and a nod saying “Don’t count me out yet”. Jim Murren, I’m sure was not sleeping well after that.
Build, Buy, Vegas Changes
In 2000, MGM bought the Mirage companies. Steve Wynn’s empire including the Golden Nugget, The Mirage, Treasure Island, and the coveted Bellagio. Most people were in agreement that MGM didn’t know what they were doing when they assumed management of the empire and they ruined the experience of working for the resort. They said that Steve Wynn always talked about taking care of the employee better will result in the employee taking better care of the guest. MGM never saw the value or the truth in that statement.
When I was a chauffeur on the Strip (2001 to 2006) and I would talk to the staff at the former Wynn properties, they always stated he loved what he did and what he built. Including the people who worked for him. Many were staying where they were, waiting to move on to whatever Mr. Wynn’s next project was going to be. They would be the first in line to be hired.
Some I talked with and worked with told me how they moved up the ladder. Starting out at the Golden Nugget, then moved to the Mirage when that opened, then moved to Treasure island than onto the Bellagio. Never once thinking of working anywhere else.
As I said, they were all waiting at a formerly Steve Wynn owned property for a chance to easily score a new job at whatever Mr. Wynn was going to be building next.
Jim Murren liked to take over projects and properties but he has no idea how to create anything that would attract consumers. He has no idea how to make MGM respectable in the world of tourism and gambling except by being the biggest bully in the market and making others follow his path. He was there to make the money as quickly as possible in any way possible. That’s all.
Almost from day one as CEO, he started to make the MGM properties more of a leasing agent of a retail establishment and less of a resort for attracting tourism. Removing the things that made each resort unique and replacing it with a leased retailer or entertainment attraction. Some had great ideas that matched that resorts original theme and prospective guests while most stores were just stores that are used to being in shopping malls and were willing to pay a rental fee to be inside a world-famous hotel.
Steve Wynn is the exact opposite. He knows how to build things that attract paying clientele that will want to return and that’s where you make the money. In the returning guests. He also believes that when one does well, the feeling is spread and that everyone can do well.
With MGM being the biggest employer in town, they try to run the show, and under Jim Murren, the idea of marketing to a guest so that they want to return to Las Vegas is a foreign concept.
Jim Murren’s operating plan seems to look like this:
1) Get people in the door anyway possible
2) Empty peoples pocket immediately
3) Reward stockholders
Jim Murren’s vision for Las Vegas is to be a four-mile-long version of the Mall of America shopping experience. A retail complex where the land is owned by one company but everything else is open to whoever can pay the lease payments. Nothing more, nothing less.
The problem always was Steve Wynn’s vision for Las Vegas as well as his need for publicity. So when Jim Murren would try something that was against the normal Vegas operating plan, Steve always publicly called him out on it. This was not anything new, He did the same thing when Kirk Kerkorian was at the MGM helm and their battles were legendary as much as they were public.
Looking at Story #1
That brings us back to story number one. Selling the Bellagio land and building and leasing it back to the MGM resorts to operate.
Remember two things. The Bellagio is the MGM’s crown jewel. It’s what keeps MGM’s high rollers and wealthy old-timers coming back. It’s is also a huge piece of free marketing for the MGM Resorts company with the dancing fountains and the conservatory. It’s also been rumored to be the one thing Steve Wynn would give almost anything to get back into his portfolio. Ok, there are three things to remember.
Jim Murren’s time is almost up at MGM. He is heading to the exit either voluntarily or by Board member revolt. To go out with a bang and hopefully erase the bad feeling some have from his fumbling of major projects like City Center, he needs to raise cash quickly. Murren claiming this cash would be better used for some upcoming deals he has in the works. Not to mention hoping to build up the stockholders quarterly dividends as he exits.
Here are My Hypothesis and Opinions
Selling the crown jewels to Blackstone and company solves one problem (cash flow). Yet creates another one for Murren personally. Controlling the actual property. Not having it in the MGM real estate trust he helped create, means he doesn’t have any way of controlling the true owner of the property. MGM will only have a 5% stake in the new trust.
You now have Steve Wynn, through a proxy company, buying a mansion really close to the Strip. You have Steve Wynn with a few bucks in the bank he could easily use to buy, influence or make available to others who could make some giant transactions involving beloved properties. He has some great connections in the world of real estate wheeling and dealing if he ever decided to buy some property on the strip that may become available for the right price to the seller who doesn’t mind making a hefty profit for a quick turn no matter what the current tenant of the building thinks.
Question: What would stop the man most credited with creating the modern Las vegas from acquiring a large stake in a company that owns the one piece of property it is rumored he loves the most and wished to have back??
Answer: The lack of a gaming license.
So let’s ask again why would the members of the Nevada Gaming Board want Steve Wynn’s license to operate a casino in Nevada revoked?
Do You Agree??
What’s your opinion?
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