Wynn’s career at new height with Bellagio opening

John Wilen

Wednesday, Oct. 14, 1998 | 11:44 a.m.

Listening to Steve Wynn talk about his art collection is like listening to other people talk about their kids.

He knows every detail of the history of every painting in the brand new Bellagio hotel-casino's compact art gallery. He knows when they were painted, the artist's mindset at the time of painting and what mood each piece was intended to convey.

After a pause, he implores the visitor to study the brush strokes that compose the woman's face in van Gough's "Peasant Woman With Straw Hat Sitting in the Wheat."

Saying Wynn is proud of his collection is an understatement.

"Any museum director would kill for this painting," Wynn says, gesturing toward the surreal "Dialogue of Insects" by Joan Miros. "It's very famous."

Wynn's passion for art is more impressive when one considers that the gaming magnate suffers from retinitis pigmentosa, which severely limits his vision. Yet Wynn, 56, knows the location of every painting, and can expound at length on minute details of shading and texture.

"It's my pleasure, believe me it's my pleasure," Wynn laughs as he leads reporters out of the gallery after an hour-long tour.

Wynn's seemingly obsessive attention to detail is not limited to the art he and Mirage Resorts have assembled for Bellagio. Attention to detail is a hallmark of Wynn's career, the reason each of his resorts has set a successively higher standard of excellence for the industry as a whole.

And it's the reason, Wynn says, that he spent six years making sure Bellagio would be -- undebatably -- the best resort in the world.

"No more 'It's the best hotel in Vegas,"' said Wynn during a lengthy interview this week. "It's the best hotel. ... We did not squander this opportunity. This is our best effort."

Wynn properties have always raised the bar for the rest of the industry. Wynn is widely acknowledged as being the first in Las Vegas to make as much money from the entertainment and hospitality side of the equation as from gambling.

"Prior to the opening of the Mirage, gaming properties were simply commodities," says Harry Curtis, an analyst with Bank America Robertson Stevenson, in New York. "The only entertainment there was within a casino was the gambling part of the equation. What Steve Wynn did was he expanded that to include much more significant non-casino entertainment. And that included higher quality hotel rooms, hotel facilities, real food and beverage, and imaginative shows."

Wynn's $620 million Mirage hotel-casino, opened in 1989, features 4 acres of lagoons, centered around a working volcano. Next door, at Treasure Island, actors portraying pirates defeat actors portraying the crew of a British frigate every 90 minutes.

And when Wynn's crowning achievement, the $1.6 billion Bellagio, opens on Thursday, visitors entering the Italian-themed resort will have a hard time ignoring grand music and light shows featuring 1,200 fountains.

"There's no question that Mr. Wynn is one of the great developers in the gaming business," said Dave Ehlers, chairman of Las Vegas Investment Advisors. "The Mirage and Treasure Island speak for themselves. They're the best. And I would imagine that Bellagio will be about as impressive as this sort of thing can be."

Wynn now competes with a new generation of like-minded properties, including Kirk Kerkorian's gigantic MGM Grand with its "City of Entertainment" theme, the Big Apple-themed New York-New York, and Circus Circus properties like the King Arthur-themed Excalibur and the Egypt-themed Luxor. Wynn's competitors can't help but be impressed with what he has accomplished.

"Steve Wynn was instrumental in helping re-shape Las Vegas in terms of the type of property or product that customers would anticipate or want," said Jim Murren, chief financial officer of the MGM Grand. "When he built the Mirage ... it set off a new generation of properties that other companies have followed."

And while arguing that Hilton Hotels pioneered the days of corporate casino ownership by being the first New York Stock Exchange company to enter the hospitality market here in the late 1960s, Hilton Senior Vice President Marc Grossman can't help dishing Wynn a backhanded compliment.

"It's safe to say that without that environment in place, Steve Wynn, for all his tremendous creative skills ... would not have had the opportunity to do the wonderful things that he's been able to do," said Grossman.

Industry impressions of Wynn are boosted by more than just nice amenities and pirate shows. The bottom line at Mirage Resorts has made everyone a believer.

In 1989, the year the Mirage hotel-casino opened, Mirage Resorts lost $21.2 million, or 25 cents per share, on revenues of $329 million. More importantly, the company was nearly $900 in debt, a figure that rose to more than $1 billion by 1990, reflecting borrowings to complete the project.

By 1995, earnings had jumped to $163 million, or 85 cents per share, on revenues of $1.5 billion. And debt had been cut to $250 million. In 1997, Mirage made $207.6 million, or $1.08 per share, on revenues of $1.55 billion.

The Mirage's success did more than just convince the gambling industry that there was a market for high-end properties. It also legitimatized the industry -- long associated with the Mafia -- in many people's minds.

"You've got to credit him for lifting the perception of gambling from one just of gambling to one of gambling as a legitimate form of entertainment," said Curtis.

To what does Wynn owe this success? Was he born with an innate sense for building casinos? Perhaps.

Wynn is widely portrayed as a dynamic charismatic with a hair-trigger temper and a knack for persisting until he gets what he wants. He is perpetually tanned, and numerous plastic surgeries have ensured his face, teeth and physique continue looking young and vibrant.

Born to a bingo-parlor operator, Wynn spent his youth watching his father operate a seven-state East Coast bingo empire. He took a trip to Las Vegas with his dad in 1952. But Mike Wynn's attempt to open a bingo hall here failed, and the Wynns returned to the Miami Beach.

But Steve Wynn had taken his first taste of Vegas, a taste that "altered the young boy's world view and left him forever changed," according to biographer John L. Smith.

Wynn credits another visionary, Walt Disney, with exposing him to ideas Wynn would later apply to his casino resorts.

"That was a revelation," said Wynn. "DisneyLand wasn't an amusement park. It was the equivalent of the messiah arriving."

Disney's idea of creating a microcosm of reality that was better than reality itself simply "rubbed off" on Wynn.

"It's a reflection of the romantic spirit, a world the way you wish it could be," said Wynn.

Still, it was years before Wynn had a chance to attempt creating his own versions of reality. He went to college at the University of Pennsylvania, in Philadelphia, first studying medicine, then English literature and business. When his father died in 1967, Wynn took over one of his Maryland bingo halls. But unsatisfied with life in a gaming backwater, Wynn moved his family to Las Vegas.

His youthful exposure to Mike Wynn's gambling empire gave Steve contacts he would use the rest of his life. With the help of those contacts, he bought a 3 percent stake in the Frontier hotel-casino for $45,000. He increased his holdings to five percent with a $30,000 stock buy a few days before Howard Hughes bought the resort for $24 million. Wynn used his profits from the deal to buy a liquor distributor, which he ran from 1969 to 1972 and also sold at a profit.

But the transaction that forms the capstone of Wynn's reputation as a savvy operator involved a small sliver of land adjacent to Caesars Palace hotel-casino. In 1971, Wynn bought a 1.1-acre strip of land next to Caesars Palace for $1.1 million.

The land, located between Caesars and the intersection of the Strip and Flamingo Road, was clearly worth more to Caesars than to Wynn and partners. In 1972, Caesars bought it from Wynn for $2.25 million.

Wynn had long dabbled in gaming stocks. He used profits from the Caesars transaction to buy up shares of the downtown Golden Nugget. Later stock buys made Wynn the Golden Nugget's largest shareholder. He got himself appointed to the Golden Nugget's board, convinced its president to quit and formed a group of partners to buy up 25 percent of the stock.

Firmly in control, Wynn remodeled the Golden Nugget, turning it into downtown Las Vegas' only four-star resort, and building an adjoining hotel. By 1977, Golden Nugget profits were booming, and Wynn began to eye Atlantic City.

He bought an aging Atlantic City hotel in 1978, razed it and built the Golden Nugget Atlantic City for $160 million. Opened in 1980, and financed with junk bonds arranged by Wall Street whiz kid (and later felon) Michael Milken, the Golden Nugget "set the East Coast ablaze with its opulence and success," according to Smith's biography.

But the best was yet to come.

The Golden Nugget Atlantic City was high-end, a first for the casino industry, said Curtis. "But bear in mind, it was still a casino with not much in the way of non-casino amenities."

The focus on entertainment and other amenities would not come until 1989 and the Mirage. In 1986, Wynn sold the Golden Nugget Atlantic City to Bally for $440 million.

The Mirage, like Wynn's Atlantic City resort, was financed with junk bonds arranged by Milken. That posed a problem at first -- extremely high debt service requirements -- that fueled a lot of skepticism. But the Mirage's success silenced the critics.

"It was not luck," said Ehlers. "Mirage, against the background of many detractors, was able to generate cash flow of a billion dollars in its first five years and pay off the debt."

Wynn actually sees his timing with the Mirage as a mistake.

"I took too long to get us on the Strip," Wynn said, lamenting that he should have opened a Strip resort in 1981. "I could have moved faster than Circus."

He also regrets not buying the property on which the New York-New York hotel-casino now sits. Offered by its Japanese owners for $29 million, Wynn passed on the parcel over the protestations of Mirage President Bobby Baldwin. It was later bought by Kirk Kerkorian for $32.5 million.

"As I look back on it, we shoulda done it," said Wynn.

Not everything Wynn tries succeeds. An attempt in the early 1980s to enter the British gambling market failed when New Scotland Yard produced a report alleging Wynn associated with American mobsters. Wynn denied the charges, arguing that British regulators were looking for any excuse to keep American owners out (a charge given credence by British regulatory maneuvering that also drove Playboy's Hugh Hefner out of the UK market).

The Scotland Yard report led to a Wynn lawsuit against Smith, the biographer; and New York publisher Lyle Stuart. In an advertisement for Smith's 1995 Wynn biography, Running Scared, Stuart's publishing house claimed the Scotland Yard report exposed Wynn as a front for an American mob family. Wynn won the suit versus Stuart, and it is being appealed. Smith was dismissed from the Las Vegas suit, but is being sued by Wynn in a separate action in Kentucky. That suit is in the early stages and not likely to go to trial for at least a year, said a Wynn attorney.

Wynn has also been rebuffed in attempts to build casinos in Florida, Connecticut, Canada and a variety of other locations, both in and out of the United States.

Wynn's position has made him a target on other fronts. In 1993, Wynn's daughter Kevin was kidnapped by a trio of hoods looking for a big payoff. Wynn paid $1.45 million for her release. Kevin was free in hours, and the abductors were captured in the midst of a California spending spree.

But the incident changed Wynn's lifestyle. His daughters now travel with bodyguards, and the family retreated to a guarded mansion in Shadow Creek, Wynn's premier golf course in North Las Vegas.

Still, Wynn's setbacks have not slowed him down. He is building a massive resort, Beau Rivage, on the beachfront in Biloxi, Miss. (Mirage says Beau Rivage will be the largest hotel-casino in the nation outside of Nevada). And he continues to push forward with plans to re-enter Atlantic City with a 4,000-room resort.

Wynn has agreed to fund a third of the $330 million cost of a special tunnel to connect his casino site with a major Atlantic City highway, but the casino project itself is tied up in litigation with gaming company Circus Circus Enterprises Inc. Wynn unilaterally cancelled joint venture agreements with Circus Circus and Boyd Gaming Corp. earlier this year. The Boyd dispute was later settled. Sources this week told the SUN that Mirage is close to settling its disagreement with Circus.

Industry observers have little doubt that Wynn's new properties will continue to set the standard for gaming resort design.

"The back of the house at Bellagio is nicer than the front of the house at Circus Circus," Andrew Zarnett, an analyst with Ladenburg Thalmann & Co., said at a recent gaming conference.

And Wynn, not surprisingly, is not worried about Bellagio's chances of succeeding in a Las Vegas market that will see four other mega-resorts built by 2000.

"The Las Vegas resort scene is going to have to deal with ... Bellagio's main-stream, hard-core elegance," said Wynn. "My theory has always been that if you build houses of bricks, people can huff and puff all they want."

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