Wynn buying more MGM assets, moves up DI closure

David Strow

Wednesday, June 28, 2000 | 11:24 a.m.

Desert Inn owner Steve Wynn agreed to purchase $17.2 million in assets from his former company, MGM MIRAGE announced today.

Meanwhile, Wynn is speeding up his plans to close the flagging D.I., announcing to employees Monday that the hotel-casino will close no later than Aug. 30.

Wynn will purchase Mirage Resorts' Gulfstream III jet and a furnished apartment in New York City. Wynn held the right to purchase both assets under his employment agreement with Mirage Resorts, which was acquired last month by MGM Grand. The combined company now calls itself MGM MIRAGE.

And in a surprise move, MGM MIRAGE said Wynn has waived his right to match any outside purchase offers for paintings remaining in the collection of the now-closed art gallery at the Bellagio resort on the Las Vegas Strip.

"Mr. Wynn's waiver should clear the way for additional art sales," said MGM MIRAGE President and Chief Financial Officer Jim Murren.

Including today's sales, MGM MIRAGE has raised $154.2 million from the sale of Mirage Resorts assets, primarily from the sale of Bellagio artwork. MGM MIRAGE is using these funds to reduce debt incurred in its $6.4 billion acquisition of Mirage Resorts on May 31.

"We think they've been aggressive (with asset sales), and I do expect to see more," said Joe Coccimiglio, gaming analyst with Prudential Securities. "They have land assets they're looking to sell in Nevada and New Jersey ... Mirage even had land in Lawrenceburg, Ind. We'll see some movement on the land assets now ... that would be my guess."

MGM MIRAGE spokesman Alan Feldman said land parcels in Texas and a house in Atlantic City will probably be next on the sales list, but said Atlantic City land parcel sales probably won't be immediate. MGM MIRAGE co-CEO John Redmond has been assigned to decide which parcels in that city will be used for future development, and his analysis is still continuing, Feldman said.

"Less than half a dozen" paintings now remain available for sale from the art collection, Feldman said.

Though the controversial right of first refusal gave Wynn the capability of buying all $200 million in artwork owned by Mirage Resorts, the casino mogul only ended up purchasing three items from the gallery -- though it has not been revealed what Wynn paid for these paintings, or which paintings he purchased.

Coccimiglio said he was somewhat surprised by Wynn's decision.

"I really thought he was enamored with the art," Coccimiglio said. "But he may be conserving his capital for the DI. He may have a need to put more personal equity in there, and doesn't want to exhaust his own resources."

Wynn, however, apparently still owns $200 million in artwork formerly displayed at the Bellagio that he leased to Mirage Resorts. Wynn has hinted of his intent to display this art at the new hotel project he's planning at the site of the Desert Inn.

Meanwhile, Wynn has again accelerated his timetable for redeveloping the Desert Inn, informing employees that the 50-year-old resort will close a month sooner than expected.

On Monday, the 1,500 employees of the Desert Inn received letters informing them that their employment will be terminated effective Aug. 30. In his initial announcement that he would close the Desert Inn, Wynn told the Nevada Gaming Commission that he planned to shut down the property Sept. 30.

Virtually all Desert Inn employees will lose their jobs on Aug. 30, with the exception of a few administrative staff and golf course employees, said Desert Inn spokeswoman Caroline Coyle. Should the property close earlier than that date because of employee departures, remaining employees would be paid through Aug. 30, Coyle said.

"I would imagine (the changed date) was just timing ... to coincide with (the opening) of the Aladdin," Coyle said. The Aladdin will open Aug. 17 with about 4,000 employees, and Wynn has targeted the property as one where he will attempt to help DI workers find jobs.

By giving notice on Monday that Aug. 30 will be the close date, Wynn will also satisfy the 60-day warning period mandated by federal labor law, Coyle said.

In a television interview Monday, Wynn warned that he didn't expect the money-losing DI to remain open until Sept. 30, as employee departures would make it difficult to keep the property operating.

In a continuation of this television interview, Wynn sounded off Tuesday on a variety of political issues, including Indian gaming in California and discussions of a hike in the state's gaming tax. Political reporter Jon Ralston, a columnist for the Las Vegas Sun, aired portions of this interview Tuesday night on Las Vegas ONE.

In his most surprising statement, however, Wynn apparently dropped his opposition to proposals by MGM MIRAGE and Park Place Entertainment Corp. to build a monorail along the Strip.

"If it's their money ... and not the state's money, it's very hard not to give them what they want," Wynn said.

Noting that the monorail would help the public transit situation on the Strip and provide a connection to the Las Vegas Convention Center, Wynn said, "How can that be a bad thing? I don't see anything to object to."

Not surprisingly, however, Wynn maintained his vocal opposition to efforts to raise the state's gaming tax.

"The cross-section of the gaming industry is not healthy in Nevada, and it has been getting less healthy as a group," Wynn said. "(Gov. Kenny Guinn) has to revisit the tax base in the state. We have to broaden the business tax approach because right now we're dependent on gaming and sales taxes and those have terrible fluctuations.

"I think if the governor has his way, it will be the thinnest possible increase spread out over the widest area of the economy. But gaming will pay half of it when it's over."

Wynn also noted that Indian gaming may cut down on the visits of "average Joes" from California.

"All of a sudden there's a slot club and a nice room and a slot host and everything they're going to get (in Las Vegas) in Palm Springs or in San Diego," Wynn said. "So they'll make two trips a year instead of six, or five instead of six. It happens and it will happen.

"Hitting that I-15 traffic is no picnic with the bumper-to-bumper (traffic) in Barstow."

However, Wynn insisted that the impact on many Strip properties will not be substantial, saying that high-end properties now rely heavily on convention business and international visitors.

"Here, a great percentage of the business is visitors not from California," Wynn said.

Wynn also took a poke at efforts by the NCAA to ban betting on college sporting events.

"It is certainly disconcerting as a citizen to see any piece of legislation that has no logic to it, whether it's related to your business or not," Wynn said. "You can conjure up how this has some kind of sex appeal for it, though it doesn't make any sense."

When asked if his legendary political influence would wane after selling Mirage Resorts, Wynn retorted that this influence was "exaggerated."

"I certainly hope it will be perceived as being diminished," Wynn said. "When I was right, I had a lot of influence, and when I was wrong they ignored me every time.

"I never had any influence in the state other than what I had because of my employees. Sometimes it was profound, other times it was meaningless."

Wynn also denied having any special insight into the future direction of Las Vegas.

"I certainly have not had a crystal ball about Las Vegas," Wynn said. "I followed my instincts a couple of times and was lucky."

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