Columnist Jeff Simpson: The scoop on Gaughan’s latest property

By Jeff Simpson (contact)

Sunday, Oct. 9, 2005 | 10:34 a.m.

In the casino business the name of the game is luxury.

You see it on the Strip, where palaces like Wynn Las Vegas, Bellagio and the Venetian capture ever larger chunks of the tourist dollar; in the locals market, where Strip-quality properties like Green Valley Ranch blow their competitors away, and even in the slot-bar market.

Savvy casino boss Michael Gaughan thinks Coast Casinos' new South Coast is poised to capitalize on the trend.

"People want nicer places, so everybody's trying to build them," Gaughan said of his new south valley property, which he expects to tap into the sweet surrounding locals demographic and the drive-by tourist traffic on Interstate 15.

Gaughan noted that he originally planned to spend $350 million on the South Coast, slated to open by the end of the year. "Now I'm up to $600 million." He also said Station Casinos' estimated Red Rock Resort would cost about $400 million. "Now it's almost a billion," he said of the competitor planned to open next spring.

With MGM Mirage and Harrah's Entertainment controlling the lion's share of Strip hotels, casino industry consolidation has created a whole new world for the Culinary Union's top official, D. Taylor.

The last citywide casino strike took place in 1984, when most of the city's top hotels were owned by individuals or small partnerships.

Now it's a different story, but Taylor says he has no idea how the consolidation will affect the next round of negotiations for contracts, most of which expire in mid-2007.

In 2002, Mandalay Resort Group and MGM Mirage played the bad cops, calling on the union to abandon its no-paycheck-deduction health care plan. But good cops Park Place Entertainment and Harrah's Entertainment declined to form a united front with the other two companies and reached deals with Taylor, forcing Mandalay and MGM Mirage to back off their hard lines.

Now that MGM has swallowed Mandalay and Harrah's has engulfed Park Place successor Caesars Entertainment, does that leave MGM Mirage -- the biggest Strip operator -- alone in the tough-guy role?

Taylor doesn't know. He noted recently that Harrah's led four Atlantic City operators' opposition to union efforts to negotiate a three-year, rather than a five-year, contract, shortened terms that would have aligned the A.C. deals with the Las Vegas contracts' 2007 expirations.

Harrah's won that battle, and Taylor said he doesn't know what to expect when new negotiations begin in Las Vegas.

"Maybe they'll both be bad cops," he deadpanned.

Bank West of Nevada Chairman Art Marshall thinks the chairman of the bank's holding company has the Las Vegas-based outfit on a path toward greatness. Robert Sarver took the parent company, Western Alliance Bancorporation, public in June. Its subsidiaries also include Alliance Bank of Arizona and Torrey Pines Bank in San Diego.

Las Vegas-based bank companies are enjoying the city's business boom, and Western Alliance is no exception.

Marshall, co-founder of resort-wear retailer Marshall Rousso and chairman of BankWest since gaming titan Bill Boyd founded the bank in 1994, said Sarver has aggressively grown the holding company since he took over in 2002.

The corporation has more than $2 billion in deposits and recently announced a major expansion, including plans to grow from 13 offices in June to 24 by the end of 2006, doubling its Las Vegas offices from five to 10.

"He's a whirling dervish," Marshall said of Sarver, also owner of the Phoenix Suns. Commercial real estate and construction loans make up about two-thirds of the company's portfolio, profitable sectors given the white-hot growth in Las Vegas, Phoenix and San Diego, making the bank a potential tasty morsel for profit-hungry banking behemoths.