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Ruffin Eyeballing Strip Properties

By Chuckmonster on Tuesday, 11th December 2012 2:40pm
  » filed under Mergers & Acquisitions  comments: 23


Treasure Island owner Phil Ruffin appeared on local flasher Jon Ralston's reportage to discuss everybody's favorite subject - the Las Vegas casino industry.

In the interview, Ruffin mentions that he has made multiple offers to MGM Resorts International for Beau Rivage and Monte Carlo ($500m each) and numerous offers on the Mirage as well. When pressed, Ruffin plays coy about still having offers in to purchase the Mirage but expresses a strong desire to own the property.

Ruffin also mentions that he will be purchasing a Strip property in 2013.

Any guesses? Other than snatching something from the Borg or MGM, the pickins seem to be somewhat thin... Tropicana? No, they just signed the Hilton Doubletree Deal. Cosmopolitan? Price is too high and they aren't his demographic. Perhaps a Sahara deal has been penciled with Stockbridge if SBE can't get the cash? Stratosphere? LVH? Riviera? Trump? Donald is his best pal but theres no casino there, just empty hotel rooms... perhaps they could build a bridge over the top of Fashion Show Mall? Stratosphere? LVH? Riviera? Hooters? Rio? All good choices and somewhat easy targets...

But what about Ballys?

In the latest episode of the Vegas Gang, while discussing the Bill's/Drai's renovation project, Dr. Dave floated a balloon that Caesars should sell Ballys and use the proceeds to bolster The Quad, Harrah's and Flamingo's aging and funky assets as "odds" behind the Linq project. A very interesting thesis, indeed.

The Ballys asset is non-essential in the Caesars portfolio (for now) and would require a thorough re-thinking if it is to maximize on all that wasted Strip front square footage. It is doubtful that there are any deep pocketed bozos willing to take such a chance these days, even if the location is the one of best in the world. Thus, the property would probably continue to limp along as is for a while with Caesars penciling in the possibility of purchasing it back when thorough demolition would make financial sense.

But when does financial sense drive anything Caesars does? With roughly $20B in debt, the only way out of their hole is either bankruptcy restructuring or going public again when the market ends and Vegas is showing boomtown signs again.

Every mouse loves cheddar... what will Phil Ruffin buy?

Big thanks to Detroit1051 for the Tweet tip.

Tagged: phil ruffin   mirage   ballys   caesars   mgm   


Comments & Discussion:

The tram link between Mirage and TI, and the fact that the latter was originally built as a complement to the latter, makes me think Mirage is the most likely. Not to mention, Bally's just strikes me as so soulless that it wouldn't really catch the eye of someone like Ruffin.

Him buying The Mirage has been a long rumored one ever since he bought Treasure Usland and to me makes the most sense. Monte Carlo, not so much.

A little out of the box thought, what about a deal with Ruffin to buy the Mirage, the Beau Rivage and MGM's stake in Marina District Development (AKA The Borgata)? I'm estimating that this would be a deal in the neighborhood of $1.2 to 1.5 billion at most. Land prices in Las Vegas are down from their highs of several years ago when Ruffin sold The Frontier and A.C. is having a pretty rough go of it in recent years. The Beau Rivage is still the class property on the Gulf Coast and I can see why Ruffin has made offers for it. Perhaps MGM might exit Mississippi altogether and include the Gold Strike in Tunica in such a deal?

I honestly don't see Caesars selling off Ballys anytime soon. That being said, I don't think that the Grand Bazzar Shops planned for the front of Bally's will be what the property needs either. According to the site plans posted on the website for the project (http://www.grandbazaarshops.com/), there will be a total of 253 retail spaces (233 kiosks and 20 cart) and 11 food and beverage spaces. I just don't see there being anyway to fill that many spaces without having multiple spaces selling the same stuff and would probably be similar to the carts and kiosks found alongside Carnaval Court at Harrah's and within spaces inside many of the other casinos on The Strip. They really ought t revisit this concept and cut back on the number of retail spaces and perhaps look into perhaps turning part of the area into a beer garden and even some sort of area for performances. Bally's has retail space in the lower level as you head towards the Monorail that during VIMFP was in the process of closing down (several of the shops were liquidating their inventory). Now what's being done with this space is not yet know and one rumor is that when Bill's closes for it's makeover, Drai's will be moving over to Bally's in an unspecified location.

While Caesars does need to get its' debt down, more than likely Rio is the Vegas property to be sold and they would likely try to sell off some of their Tunica properties as well as the land on the Gulf Coast originally slated to become a Margaritaville casino resort. Perhaps even an A.C. property will be sold. They'll probably spin off the World Series Of Poker into a separate company and perhaps even sell off London Clubs International. I also would not be surprised if they sold off their golf course holdings as well (Rio Secco, Cascata, Atlantic City Country Club, The Links At Cottonwood).

The only reason I discount Ballys is because I know that there is some kind of active thought on developing that strip front. I was in a job interview last year in an architectural firm here in LA and there in the conference room on the wall amongst all their retail projects was a ground plan for that Strip frontage of theirs. Maybe money ran out?

You mean that shanty-town looking refugee camp idea for the retail in front of Bally's?

Phil Ruffin ruins everything he touches. He has zero class. He's the hick version of the 2012 Steve Wynn.

I wish @RateVegas would tell us what he really thinks.

I still believe that Murren will be ready to sell The Mirage at some point. It doesn't really tie in with Bellagio, MGM Grand, City Center or the Mandalay properties. It's gone down market from what I read, and it and "Treasure Island at The Mirage" were designed to be one property and should be. I'd hate to see Ruffin get Beau Rivage and ruin it, but even MGM Grand Detroit is much more important to the company than is either the Beau or The Mirage.

wow Phil Ruffin wants to buy a hotel let me think which one he would pick new York new York or circus circus

Please don't let this moron close to my Bally's. As a low roller who loves his free nights in Bally's I think I would cry if he touches this place.

ugh. Ruffin. The idea of him owning the Mirage makes me a sad panda indeed. If he were to do that, in 20 years he will be 96 and the Mirage will have exactly the same bedspreads, carpet, and chairs as it does right now. He (or whoever he is teaching to manage the fortune after he is gone) will squeeze it for every penny he can get and sell it off during the next market run up. Phil Ruffin is the ultimate slum lord. I can't really knock his business principles from a making money viewpoint, but I certainly don't want to hang out in his joints.

He's still paying MGM for parking and the tram. That still makes Mirage his most obvious target, but I don't think MGM is interested in selling, since they're not struggling to meet cash demands anymore.

I don't think the Hilton deal would sour him on the Trop. His immediate plans after buying TI were cross-promoting it with Trump and registering it in some independent hotels association. Looking to outside, non-gambling markets to fill the rooms isn't a dealbreaker for him.

I guess I'm going to have to go to TI sometime, because although Ruffin isn't my kind of guy (keeps company with Trump, which says enough), the last time I saw the place it was still clean and reasonable even if it was sacrificing artistic vision to increase profits.

Exactly. Yes, Mirage makes more sense as a fit with TI but since when does Jim Murren care about that at all? He cares about the bottom line and as long as Mirage is significantly cash flow positive and he's not under the gun for cash, why sell?

Murren would sell Mirage because it releases MGM of note debt. Murren also won't sell because the debt might be more than Ruffin is willing to pay.

From the recent MGM investor deck:

Bellagio/Mirage 2014 lein : $640M principle, 10.4% interest, $68M/yr interest
Bellagio/Mirage 2017 lein : $850M principle, 11.1% interest, $94M/yr interest

I'm sure Ruffin offered in the neighbs of $500M for Mirage, cash. Murren probably wants $700M, and might go as low as $600 in an all cash deal. Knowing that Ruffin is a cheapskate and Murren is a dweeb will they be willing to meet in the middle. $535M sold and out the door.... anything more than that and Ruffin gets points in MGM.

Book it.

I will straight up cry if Ruffin gets his hands on The Mirage.

TI was something like $700MM and some more in IOUs, and at that price it is reliant on Mirage being a friendly neighbour and willing to lease services like "a place for people to put their cars" since it was designed to mooch off Mirage's infrastructure and still did after the attorneys separated the paperwork and numbers. So, why would you pay less for Mirage which is sitting on all that plus more land in a slightly-less-gloomy tourist economy?

For whatever context it helps, I seem to remember that the TI price was based on 7x annual revenues. I'm guessing based on better traffic but also some expenses in ripping out half the amenities, he's probably still about two years away from actually getting his money back.

Not much of a chance he'd make a bid for the bones of FBleau to do his own thing from the ground up?

Riviera or Saharah seem like opportunities to....

Ruffin sold the New Frontier in 2007 for $1.2 billion. In 2009, he purchased TI for $775 million. That left him with $425MM. He has made money from operating TI since 2007 and from his Trump deal. So he probably has about $500MM of his own money to spend. He seems to have an aversion to taking on a lot of debt.

He covets the Mirage. In a previous Ralston interview that was linked to on this site, he admitted that he wanted the Mirage. The Mirage has the most synergy with TI as others have pointed out. I think he likes the idea of trading the New Frontier for the Mirage and TI. I would bet it's the Mirage or nothing for Mr. Ruffin.

My only other theory is if MGM brings Ruffin in for partnership to buy the Cosmopolitan, since that place is something of a pain in their ass, and Ruffin is unlikely to be the kind of guy who will protest if MGM wants to be in charge of the day to day operations.

I'm a little surprised he still owns TI after almost four years, since the 7*$profit pricetag assumes he'll either still be running it in seven years time, or that he would have someone to sell it to for more than that value later. The "putting it on loan" theory always made the most sense: that he would be happy to buy TI for $775MM in 2008 if it means that MGM returns with $1B before 2014. At which point he could fly out of McCarran a winner, just like everyone does.

I can't understand why CET doesn't renovate Bally's South Tower. The rooms are big and every room has a spectacular strip view, either north or south, from the most perfect mid-strip location. Yet the rooms look like they haven't been updated since the 80s. What a waste.

That said, Ruffin will never be able to run away from the stench of The New Frontier, I don't care how much money he made on the deal from the morons he sold it to. I hope he doesn't get his hands on Bally's.

The only place that makes sense is Mirage since to some it's already a part of TI. Bally's isnt something Ruffin would be interested in since it would be too far from TI. He probably could buy the carcass of Fontanbleu but Circus Circus or Riviera would be easier to upgrade. The longshot would be Trump's and if he was the new owner then the place could get a casino.

Bally's Trivia: that weird little strip of land in front of Bally's was originally the open-air parking lot, back in the day when it was the MGM Grand. It sprawled from the corner of Flamingo across where the South Tower and the Paris casino now stand. You'd pull in from the Strip, park, and hike back to the casino/hotel. Now that's a bygone era!

If my memory serves me (of a photo I once saw, not the actual place), a big MGM lion statue stood at an entrance about where the Paris casino is now located.

Ruffin has been previously quoted as saying he wouldn't touch a Total Rewards property as their customer base is far too integrated with their resorts. Although I think that would change for the right price.

I think Ballys is a long shot, given it shares back of the house (if I'm not mistaken) with Paris and Caesars has other assets it could more easily let go of and for amounts they could probably get for Ballys (Harrahs and Rio come to mind).

I don't think there is a doubt that Phil wants the Mirage, but if it's not that, I don't think he'd particularly care one way or another what property he gets as long as its cheap and MGM and CET have shown so far that they won't sell at bargain prices (except MGM in dire need of cash and offloading TI).

Perhaps the Trop then, Riviera, Hooters, Strat?? I don't think Ruffin lines up with Rio, although I think he could get it at a price he wants.

To me I want to see Ruffin with more properties on the strip, especially if it means less for MGM or CET, anything that reduces the number of properties under those two bumbling companies, is only good long term for Las Vegas regardless of who owns it or what they do with it, because potentially they are available to someone else then too down the line.

Uncle Phil can turn it into New Frontier 2.0 for all I care, but at least he's working to increase visitor volume and make the strip a competetive landscape.

I can't see CET offloading Bally's. They worked too hard collecting the 3/4-mile-long complete set of Harrahs/Quad/Flamingo/Bills/Bally's/Paris/PHo.

I doubt MGm is offloading CC anytime soon given that...

1. They own all the land borth of it

2. They apparently want to add a waterpark to the joint, per one of the more reliable amusement park news website, screamscape.com

I still say the FBleu is possible, but Mirage seems more likely, though I still don't quite see it. Maybe the Trop in the end afterall?

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