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StumbleFrom MGM to Ruffin: Treasure Island changes hands
Ruffin working toward $20 million discount for paying in cash
Sun file photo
MGM Mirage sold the Treasure Island to former Frontier hotel owner Phil Ruffin. MGM Mirage had owned Treasure Island since May 2000.
Published Thursday, March 19, 2009 | 4:18 p.m.
Updated Friday, March 20, 2009 | 12:27 a.m.
Phil Ruffin, owner of the New Frontier, speaks during an interview on Tuesday, Oct. 21, 2003.
Sun Archives
- Board recommends approval of Treasure Island sale (3-4-2009)
- Treasure Island’s buyer talks about the art of the deal (12-28-2008)
- Treasure Island likely a domino standing alone (12-22-2008)
- For strapped casino giant, sale provides sure cash (12-16-2008)
- MGM Mirage to sell Treasure Island (12-15-2008)
Treasure Island
UPDATED STORY: Ruffin rejoins ranks of Strip casino owners
Treasure Island came under new ownership Friday morning.
After months of a pending sale, Kansas billionaire Phil Ruffin was to take over the newly purchased property.
The Nevada Gaming Commission approved Ruffin’s purchase of Treasure Island Thursday. Ruffin was to pay $600 million in cash by midnight and take possession of the former MGM Mirage property in the early hours of Friday morning.
MGM Mirage will give Ruffin a $20 million discount on the $775 million purchase price if he pays all cash for the Treasure Island resort.
To get the price cut, Ruffin must pay down $175 million in notes by April 30 on top of $600 million in cash. The notes come due for payment in three years.
“We are trying to pay the $175 million by April 30 but we are trying to get financing for that and that’s not set in stone,” Ruffin told the Sun on Thursday.
MGM Mirage also benefits by this new arrangement, as the company would get needed cash faster. The money will help the company fund operations as it struggles to raise cash for its under-construction CityCenter amid declining earnings and a poor economy.
The original terms of the deal called for a $500 million cash payment plus two short-term bond issues totaling $275 million.
Tuesday, MGM Mirage Chief Executive Jim Murren said the sale process went faster than expected and will result in an "orderly turnover."
"We believe customers will see no impact from this transaction," he said.
Ruffin said he expects the transition to go smoothly. The atmosphere is expected to be quiet on Friday, with no grand ceremony to usher in the new owner.
“Everyone has taken it very, very well,” Ruffin said of the staff at Treasure Island. “They seemed to be pleased for us to be here. We’ll be on property tomorrow. The owner will be here everyday so I think that says something.”
Ruffin said there will be no major changes in leadership for now and as for plans over the next year, they’re on the horizon but Ruffin said, “For the first few months, we’re just going to absorb. There are plans down the road but we’re not prepared to say them now.”
MGM Mirage announced in December that Ruffin Acquisition LLC, which Ruffin wholly owns, would be purchasing Treasure Island for $775 million.
Ruffin, a Wichita, Kan., businessman, is the former owner of the New Frontier hotel-casino, which closed on July 2007 and was imploded in November 2007 to make room for a multibillion-dollar resort bearing The Plaza brand, and the $1.2 billion Trump International Hotel & Tower that opened March 31 on the Las Vegas Strip.
Treasure Island has 2,885 rooms, including 220 suites, and a 95,000-square-foot casino. The resort also has 18,000 square feet of convention space and hosts Cirque du Soleil's "Mystere."
With casinos reporting losses across the board and the fear of bankruptcy constantly looming, Ruffin is acquiring Treasure Island in one the most difficult times for Strip Casinos.
“It’s going to challenging but it’s going to be great,” Ruffin said.
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As Ruffin improves the operation of Treasure Island it bodes badly for the remaining MGM properties that have to shoulder the burden of MGM debt.
The employees at Treasure Island are the lucky ones looking down the rest of this year. The MGM is about to implode.
Why didn't the article mention whether the Treasure Island is currently making or losing money?
Harley, Treasure Island reported net revenue of $87.7 million during the fourth quarter, compared to the $105.5 million it made in the same period of 2007. For all of 2008, Treasure Island's net revenue was $376 million, compared to the $431 million it made in 2007. Earnings after interest, taxes, depreciation and amortization for the fourth quarter of 2008 were $20.3 million, compared to $29.7 million in 2007. EBITDA for all of 2008 was $101 million, compared to $128 million in 2007. The property's earnings are down, but it's still making money.
umm.... neiman1- don't u think the 775 million dollars will help MGM finance their debt? and do you think everyone loses their job even if they file bankruptcy? u are obviously a product of the LV public education system. did u make it past the 9th grade? if they do file for bankruptcy- at least they can have the union contract broken and negotiate something more reasonable. LOL
Amanda, appreciate the timely earnings update.
Understand, Treasure Island currently continues to be a performing asset rather than a liability.
good luck!
Goes to show you that most of these MGM properties are making money, it's just the tremendous debt load that Uncle Terry loaded on and that Cousin Jim continues to add to that is dragging the company down.
Good luck to Phil, I hope he succeeds.
As someone who's stayed at TI about 10 times since I first stepped my cloven hoof inside there back in the good 'ol Vegas days of August 2007, I wish Phil all the best. He's taken over one of the most underrated and underappreciated Vegas resorts. The place exudes a level of comfort and lack of pretension that is way too common at all the minimum 4-star resorts.
From what Mr. Ruffin's said (I think I heard this on a Friess podcast), he would like to construct a sidewalk cafe, so don't be surprised if that's his first move, though I'd like to see him evict without penalty Christian Audigier and his pompous nightclub from the premises, though he may have to abide by a contract from the previous administration.
Otherwise, I can't think of many changes needed to be made. Heck, why would I? I always do stay there for a reason.
"Understand, Treasure Island currently continues to be a performing asset rather than a liability."
Probably all MGM properties are this way. The problem is that they have such a huge debt to service. This new property starts out with a reasonable debt and a sugar daddy that will see it gets what it needs.
If McCarran numbers keep dropping eventually there will be very few viable strip properties.
Swolfla, you are right about MGM Mirage, unfortunately, they are now so far in debt with City Center, the $775M may only cover interest on the next upcoming mortgage payment.
It's so sad when greed outweighs common sense.
I wouldn't be surprised if they do away with all that ship business in the front yard. It's a bit old hat by now.
As to that Audigier designer/night club dude, I agree, buy that deal out as well.
I agree TI is a very nice place overall, it just needs a little upgrading, rearranging and remodeling here and there.
No doubt Mr. R. will bring forth his sensibilities soon enough.
I too have been a once or twice a year patron of TI since the '90's. I had a feeling they weren't loosing money, but if Union workers contracts are broken & they slide closer to the pay scale of the Wal Mart worker I doubt I'll like the results.
I disagree about the Pirate Ships, the de-theme move in LV may account for some of it's down-turn. Making the Luxor LESS like an Egypt fantasy, making ny ny LESS like New York, making TI LESS like a pirate adventure all just makes all the properties more like each other, boring.
Now I do agree the ship's mast as a pole-dance prop is silly, there were more Biker-Bad-Boy-Pirate-tribal-tatoo-gold-chain-wearin-booty-bounty themes that they could have gone with. Audigier is a better direction, keep the boats just steer them to the dark side.
When they quit drawing a croud THEN sink the boats.
I just hope he lets me check in without a credit card like MGM did (don't bring your plastic to Vegas boys). And I hope he replaces the 2 broken (for 3+ years) chairs in the men's spa.
Other than that you bought a turn-key operation Mr. Ruffin, GOOD LUCK !
I just came back from vegas and some friends and I were talking about the theme hotels, some hotels lack any theme and are boring like Ballys, some are ridiculos like the cesar or the NY, and a great theme is paris, I think the hotel of TI have some oportunity changing some things and making room for another theme something that will attract a different croud and a different vive, even the ships can stay with little remodeling to be a important theme for the new hotel i have lots of ideas of how this work being and architect I saw the bad and good of the casinos I visited in my last trip. The TI theme doesnt say anything, the treasure island may be and old theme, so many movies about pirates, there is still chance for a new concept in this property.