Offers they can refuse: For now, no changes on tap at Sahara

By Liz Benston

Monday, Feb. 13, 2006 | 12:30 p.m.

It's just another day at the office for Al Hummel, the chief executive of the Sahara hotel.

That means dispelling rumors spread among employees and suppliers that the historic property will soon be blown up.

"It makes it tough," Hummel said. "I'm trying to run a business. I'm just trying to make money and keep my employees happy."

While other older casinos have discussed potential or imminent redevelopment plans, the Sahara - the northernmost hotel on the Las Vegas Strip - has been relatively silent.

Speculation about redevelopment has filled the void, which is understandable given the unprecedented luxury building boom on the Strip. Over the next five years, several older properties will come down, replaced by sparkling new high-rise resorts and condominiums.

While other companies eagerly make plans for a glitzier future, the Sahara - one of the few single-property, privately held casino enterprises left on the Strip - has so far turned down hundreds of lucrative offers to buy the property.

"We're not pressed to sell it," Hummel said. "We're making money, and things are going well."

Gordon Gaming Corp., the entity that owns the 53-year-old Sahara, has installed a high hurdle for interested buyers. The company will look only at offers of more than $700 million for the roughly 55 acres that include the Sahara site, some 26 acres of vacant land across the Strip and an 11-acre parking lot behind the hotel and across Paradise Road.

It's a package deal - meaning that buyers cannot pick up the vacant land without acquiring the Sahara along with it. The company has turned down qualified offers from reputable companies, Hummel said. It also has refused many more from unknowns.

Some inquiries have come from buyers who say they are working with brokers claiming to have an exclusive arrangement to sell the Sahara. Those brokers, trying to insert themselves into a deal to earn a commission, are bogus, Hummel said. The Sahara property is not listed with a broker, which means it technically is not for sale. But, as with anything in Las Vegas, anything can be had - for a price.

"Maybe it will come today, this afternoon or tomorrow - the deal you can't refuse," Hummel said. "Where the players are right, the money is right and the timing is right. So far, it hasn't been perfect."

Real estate experts say the $700 million threshhold is several hundred million dollars above what the Sahara would have brought a couple of years ago, just as real estate prices - fueled in part by demand by condominium developers - began to skyrocket.

That's the sign of a reluctant seller, said Las Vegas casino and condominium broker David Atwell.

"It becomes very hard to figure out what the real value is," he said. "Someone gives them an offer, and they think, 'Wow, maybe we priced it too low,'" said Atwell, who has represented potential buyers interested in the Sahara.

It's more likely that a group of investors - such as a casino company partnering with a real estate company that builds master plan communities - would finance a purchase rather than a single buyer, he said. The buyer would probably choose to operate the hotel for some time while redeveloping the vacant land across the street, he added.

The price - roughly $13 million per acre - is a lot to swallow, even though it's less than what other companies have paid for smaller parcels closer to the center of the action on the Strip. The best part of the deal is not the Sahara itself but the 26 acres of vacant land, the largest vacant parcel of Strip land available for redevelopment, Atwell said.

"Prime Strip property is scarce," he said. "It's like diamonds on platinum."

The biggest casino companies have too many good development opportunities on their plates right now to concern themselves with acquiring another like the Sahara, analysts say. The Sahara's less-than-premier location at the north end of the Strip - out of the range of most walk-by traffic - also is a deterrent, they say.

Atwell disputes that notion. Easy access from Interstate 15 is a big plus, and the surroundings are ripe for redevelopment. "It's a great location. The traffic count there is tremendous," he said.

Hummel will not disclose specifics about performance, though he said the hotel was better than 95 percent occupied last year.

"I need more rooms," Hummel acknowledged. "And I need more rooms around me. When Circus Circus is doing well, we're doing really well."

Even so, the Sahara wants more pedestrian traffic. To that end, the property plans to open an attraction behind the property with automotive giant General Motors. The attraction, expected to open in about a month, would allow tourists to test drive new cars on a track.

Before he died in 2002, Sahara owner and longtime casino boss Bill Bennett spent tens of millions of dollars on the property, giving it a modern makeover inside that contrasts with many of the older properties on the Strip, including the closed and soon-to-be-demolished Boardwalk and Westward Ho. The upgrades included a NASCAR-themed restaurant and a roller coaster called Speed.

Bennett, who acquired the Sahara in 1995, broke with a longstanding practice of tearing down older properties past their prime. While financial experts scratched their heads, employees and customers have applauded the move, rewarding the property with the kind of loyalty that is increasingly hard to find on the Strip.

The Sahara's entertainment lineup - which includes a show featuring the Platters, Coasters and Drifters and performances by Louis Prima's daughter, Lena, in the property's once-hallowed Casbar lounge - is firing on all cylinders, Hummel said.

The vintage-style entertainment "packs 'em in," while additions such as performer Amazing Jonathan and a risque variety show called "Buck Wild" have spiced things up, he said.

While Strip prices have skyrocketed, the Sahara is holding its own with cheap table minimums and more reasonable hotel rates. Meanwhile, the purchase offers keep rolling in.

The decision to sell is ultimately up to Bennett's widow, Lynn. But Hummel, her brother, is a close adviser. Hummel spent some 20 years with Circus Circus Enterprises, a predecessor to Mandalay Resort Group absorbed last year by MGM Mirage. Circus Circus was co-founded by Bennett, and Hummel came out of retirement to run the Sahara after Bennett died.

Hummel recently stopped fielding Sahara purchase inquiries himself - they come almost daily - and has turned them over to a trust company that is managing the Sahara's assets.

Hummel said he cares about the property's future and does not want it to end up in the wrong hands.

"I didn't particularly like the players," he said of past offers. "If I'm going to jump into bed with somebody, I want an engagement ring, I want to know they're legitimate and that it's going to consummate - that at the 11th hour, they're not going to back out."

The Sahara's approximately 1,700 employees need not worry that changes are imminent, Hummel said.

"This property has been bought and sold twice in the last 10 years," he said. "Nobody would blow the building up if it were making revenue like we're making."

Liz Benston can be reached at 259-4077 or at [email protected].