BUSINESS
MARCH 6, 2000 VOL. 155 NO. 9
Playing for A Wynn
Two Las Vegas legends clash over Mirage Resorts
BY JOHN GREENWALD

Forget Siegfried and Roy and their white tigers. Of all the spectacles on display in Las Vegas last week, none attracted the high rollers as much as the sudden arrival of the "Steve and Kirk Show." That's Steve as in Wynn, 58, the master builder of Vegas and chairman of Mirage Resorts, whose lavish spending on casinos like the $1.6 billion Bellagio has made Mirage about as popular as snake eyes with investors on Wall Street. The Kirk is for Kerkorian, 82, the reclusive Beverly Hills billionaire with a knack for doubling his bets and winning. The rival moguls took center stage when Kerkorian's MGM Grand bid $17 a share, or $3.4 billion, for Mirage, which only the day before had been trad- ing at $10 a share and change.

The surprise bid set up a clash of Strip titans and stunned gaming-industry observers. Steve Wynn cave to Kirk Kerkorian? No way. Besides, Nevada law frowns on unfriendly corporate takeovers--and even a Kerkorian insider admits, "Wynn has a grade-A defense." Perhaps to get around that, MGM Grand called its offer friendly, at least for now. Still, Kerkorian takes no for an answer only in exchange for a hefty profit. In 1996 he scrapped a run at Chrysler after his stock in the carmaker reportedly doubled in value to nearly $3 billion. (Kerkorian currently owns about 5% of DaimlerChrysler.)

A combined MGM-Mirage is a jackpot worth fighting for. It would become the No. 2 U.S. gambling behemoth, behind Park Place Entertainment, and would own 50% of the lucrative tables for baccarat, a card game in which players can wager as much as $250,000 at a turn. So coveted are Mirage's four Las Vegas casinos that both Park Place and Harrah's are reportedly weighing their bids for the company.

Kerkorian is clearly counting on Mirage's disillusioned shareholders, who have watched their stock slide from a 52-week high of $26 a share last May, to pressure a reluctant Wynn into making a deal. Some owners are eager to do just that. Hours after Kerkorian launched his offer, five Mirage shareholders brought class actions in Las Vegas to demand that Wynn and his board seriously consider all bids.

Analysts expect Wynn, who is gradually losing his sight to a degenerative eye disease called retinitis, to reject Kerkorian's bid as too little when the board meets this week. "There's no question that the offer isn't high enough," says a Mirage insider. "The real question is, What do we want to be when we grow up?" Translation: unless Wynn can win over Wall Street, his long-term chances of evading a predator like Kerkorian could be just a mirage.

--WITH REPORTING BY JEFFREY RESSNER/LOS ANGELES




COPYRIGHT © 2000 TIME INC.





CASINO WARS: Playing for a Wynn






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John B.
jblersch@optonline.net

JohnSr, I received word today that Mirage Resorts turned down the MGM Grand offer which amounted to $17 a share.

Do you or any other Talk Vegas member have a track record of the price per share of Mirage Resorts stock since it was founded?

It would be interesting to see a chart of the daily price per share if one was available.

What is the accepted business method of determining the market value of Mirage Resorts or other similar properties?

Is it established by the current price per share, the value of the real estate plus inventory and good will, or its income potential over a predetermined period of time?

Is there a reliable formula to determine its net worth and market value and the price at which a ready, willing, and able buyer would become seriously interested?

Anyone out there in the business to determine its value?

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will800

I have not tracked it but I purchased 500 shares 6 months ago on advice from my broker. price then was 11-5/8, 17 looks pertty good right now. But I have been advised to hang on

On the Las Vegas Advisor's web site is an unconfirmed rumor that Mirage Resorts has been sold to MGM for $21 per share. Guess we'll have to stay tuned to see if this rumor is true.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

If this is true, and since the Desert Inn is back on the market, maybe Steve-erino will buy it now.

V,
I know the LVA isn't the most reliable source of information, so it may not be true. <vbg> Their speculation was the same as yours however. Maybe Steve is going to start all over again with that end of the strip. Let's just hope he doesn't implode the DI to build something else.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

I just checked the RJ and they are also reporting the story. According to them the deal is close to being closed and an announcement could come as early as today. If it goes through it will cost MGM about 6.1 billion dollars and they will assume Mirage's 2.1 billion dollar debt. Steve and Elaine Wynn will make over 507 million dollars in the deal. I guess today should be an interesting day.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

LeeAnn,
This is sort of an exciting story. I know it's got my ear!
Would this be the biggest sale ever in Las Vegas casino history? If not, it's got to be close!

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Lee-PA
Moderator, What's New Forum
lee@talkvegas.com

Well gang, looks like it's a done deal. MSNBC has reported that MGM and Mirage have announced the agreement. Pending approval by shareholders and government regulatory approval, the merger is expected to take place by the fourth quarter of 2000. MSNBC reports the deal will be about 4 billion dollars plus the acquisition of 2 million dollars in Mirage debt.

Lee, if it's not the biggest sale in Las Vegas history, I would think it would be close to it.

Anyone want to start guessing what Steve is going to do with all that money? I'm with Veronica on this one. I think he has his eye on the Desert Inn. I don't think he would give up this easily without having some kind of plan in mind.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

[This message has been edited by Lee Ann (edited March 06, 2000).]

Lee Ann and all: Wow, this whole thing is really something.

Just think...according to PRNewswire, the acquisition of Mirage Resorts by MGM Grand will mean the MGM will own and operate the following 14 resorts: in Nevada: MGM Grand, Bellagio, Mirage, New York New York, Treasure Island, a 50% interest in Monte Carlo, Golden Nugget, Whiskey Pete's, Buffalo Bill's, and Golden Nugget, Laughlin; in Detroit: MGM Grand Detroit Casino; in Mississippi: Beau Rivage; and in Australia: MGM Grand Darwin; along with
extensive undeveloped acreage in Nevada, New Jersey, and Mississippi.

Should we buy MGM stock?

The plans for developing that new resort in Atlantic City probably fall to the bottom of the list or get cancelled?

Veronica,
I was wondering what would happen with the AC properties. I didn't read anything about them in the merger announcement. I also wondered if they put a non-competition clause in for Steve. If they did, then he wouldn't be able to buy the DI, but he might be able to continue in Atlantic City. Steve Wynn is not the type of guy to give up easily. He has to have something up his sleeve. They haven't announced any role for him in the new company, but I can't imagine him staying with the new company. He not the type of guy to not be number one. He wouldn't want to have to answer to someone in higher authority. Maybe Atlantic City is his plan. He may want to change Atlantic City the way he did Las Vegas. Whether you like him or not, I think you would have to admit that Las Vegas would probably be much different today if it wasn't for him and I think he likes that. Whether Las Vegas is better or worse for his influence is open to interpretation. Maybe he wants to come to Atlantic City and get rid of "the Donald" and now he has money to do it.

Of course this would all happen now that I was finally offered a petite suite at the Mirage after all this time. <vbg> I should have known something was up when I got that offer in the mail. [img]http://www.talkvegas.com/ubb/wink.gif[/img]

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

About a hour ago CNN was reporting that Harrah's was preparing their own offer to purchase Mirage Resorts.

msnbc says its a done deal-- 21 bucks a share--steve wynn out.there goes my cheap t.i.room

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D.A.G.SEATTLE
furdoo3@aol.com

Oops! Was a double post.

[This message has been edited by Beth (edited March 06, 2000).]

Looks like the acreage in Mississippi, Nevada and New Jersey is also included in the deal with MGM. Lots of room for new development and growth.

Frankly, I'm not too elated over this deal as I've never been impressed with the MGM. Big is not necessarily better.

Have already heard comments about how the high rollers will be receiving fewer freebies thereby making MGM more profitable. Can you imagine what will then happen to the low and middle rollers? Lots of rumors and speculation, but it does not look too good for the average gambler.

Beth

Beth & all,
I'm not an MGM fan and while I don't care for the Wynn properties, it was still better then MGM's.
Personal feeling is, Caesars (park Place) could come out smelling like a rose out of this deal! If MGM does send some of the higher rollers packing for better care, Caesars stands to be the place.


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Lee-PA
Moderator, What's New Forum
lee@talkvegas.com

Will800,
You may find this interesting. In the annual report for Mirage Resorts for 1998, there is a chart showing the stock price for the years 1974 through 1998. In 1974, the price was .06 per share. Can you imagine? Here are the other years:
0.08 1975
0.14 1976
0.23 1977
0.55 1978
0.71 1979
1.00 1980
.89 1981
1.27 1982
2.60 1983
1.88 1984
2.33 1985
1.85 1986
2.15 1987
3.55 1988
5.48 1989
3.73 1990
5.55 1991
6.55 1992
11.94 1993
10.25 1994
17.25 1995
21.63 1996
22.75 1997
14.94 1998

Kizzy,
Sounds like you bought your shares at a good price. I've got just a few shares, however, I paid about $20 at the time. Went up to $28 at one point and then back down to whatever it is now. Would have been nice to have bought some of this in the 70's, wouldn't it?

Gregg-- plus a couple of stocks splits along the way--i think the all time high was either 56 or 66 bucks a share some two years ago

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D.A.G.SEATTLE
furdoo3@aol.com

Kizzy--mirrage stock closed today at 181/8--i thought the deal was for 21 bucks a share--isnt that 15% profit sitting on the table or am i missing something?

------------------
D.A.G.SEATTLE
furdoo3@aol.com

Talked to broker today he said to hold on. I am sure no expert so I am riding on his advice

Gregg, Thanks for that very interesting stock price report you posted. Anyone in here buy in when it was selling for the price of a pack of gum?

I read somewhere, that this sale will "only" put 500 million (before taxes?) in Mr. Wynn's pockets. Anyone know the facts concerning that?

The same report stated that he was ready to get out of the business in Las Vegas and open an island paradise with accomodations for approximately 20 personal guests.

I would think that his Las Vegas job would have been one of the best jobs in the world. I bet he'll miss it.

Does anyone have any idea of what his daily routine was like while he ran Mirage Resorts?
Did he have fantastic accomodations in each property and the finest of gourmet dining each evening? Did he swim with the dolphins and pet the white tigers? Was a limo at his beck and call whenever he wanted to take a drive into the desert? How many people reported directly to him each day? How many in house meetings did he have on a daily basis? Was he ever able to sit down and make a bet and have a comped cocktail in his own casino just to relax? Did he ever swim in the pool? Did he ever draw a moustache on one of those masterpieces just for the hell of it? He he ever played funny tricks on his employees? Did he participate in the auditions of the performers in Cirque du Soleil? Or the hireing of the cocktail waitresses? Did he really personally inspect each room in the Bellagion before it opened to the public? Did he get a monthly salary? How much per day?

Anyone got the inside scoop?

------------------
will800

Some experts think the Mirage deal isn’t the last deal to be made. Since there are no new states approving gambling, the only way a corporation can grow is through acquisition.

The MGM/Mirage deal reduces to 6 the number of major players: MGM-Mirage, Park Place Entertainment Corp., Harrah's Entertainment, Inc., Mandalay Resort Group, Boyd Gaming Corp. and Station Casinos Inc. At least one analyst is predicting that Mandalay Resort Group will be next.

D.A.G. --

I'm no expert on picking stocks (if you don't believe me, I'll show you my "portfolio" :-)), but I think there is a fairly reasonable explanation as to why the price of Mirage stock has settled in at the $18-$19 share price range at this time.

MGM's purchase of Mirage is not supposed to close until the 4th business quarter. So there's still time for the deal to go bust, and there's still time before the investor collects the $21 a share. Therefore, the market values the risk of the deal not being completed and the time-value of the money being tied up at around 15%. And by the way -- although the risk of the deal going bust may not be high, if it does the downside is substantial; it's likely the price would drop at least as low as it was prior to the MGM offer, which I believe was around $10 a share.


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Mark L. in NJ


[This message has been edited by markl (edited March 12, 2000).]

Will --

I enjoyed your questions about Steve Wynn! One of them was whether he "participated in hiring cocktail waitresses?"

While that's not a question I can answer, in John L. Smith's book "Running Scared," which is an unauthorized biography of Steve Wynn, Smith interviews several people who claim that Mr. Wynn's appetite for women is as strong as it is for the casino business; those people allude to hiring practices that reflected this appetite.

One of the most amusing quotes in the book relates to this, and was attributed to Ron Tucky. Mr. Tucky purportedly was Steve Wynn's personal aide until he quit after a pay dispute in 1993. Mr. Tucky said: "It doesn't matter if it's Lana Turner or Stomach Turner. When it comes to getting [women], he has no taste at all." (Running Scared, page 222).

With respect to your other questions, I'm sure there's no doubt that Steve Wynn had many ameneties at his beck and call as CEO of Mirage Resorts. However, with Mirage being a publicly traded company, he also would have had to be mindful of not being too "piggy" when it came to doing things on the company dime. Just what would be considered "too piggy," however, is a matter for debate!

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Mark L. in NJ


[This message has been edited by markl (edited March 12, 2000).]

Will: Steve Wynn has a home on the Shadow Creek golf course that most likely MGM will retain for their high rollers. Reportedly the sale of Mirage Resorts automatically triggered a previous arrangement Wynn had where the house would sell for an automatic price, so he would have to move by the time the deal is closed. Don’t worry that Steve
will be homeless though. It’s also reported that he is currently building a penthouse at the Park Towers high-rise luxury condo development that he is working on.

Park Towers condo location? Dunno.

Veronica,
I read somewhere last week, (don't ask me where because I can't remember <vbg> ) that Steve Wynn will be allowed to keep his house at Shadow Creek. So much has been written in the last week who knows anymore what is fact and what is speculation. Guess we have to wait and see what happens.

There's one thing for sure. No matter what happens, Steve Wynn will have plenty of money for the rest of his life. <vbg>

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

This info was in today's Sun...

Steve Wynn will have a three year employement contract with MGM after the sale, however, this agreement can be cancelled by Steve Wynn or MGM at any time.
If the agreement is cancelled Steve Wynn gets a payment of $11.25 million.

Steve Wynn has the right to buy one of the Mirage's jets and an apartment in New York owned by the Mirage.

There is also mention made of the Shadow Creek house. "Within five years, Wynn can require MGM Grand to purchase his home at Shadow Creek 'at cost'".

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

I was speaking with a slot club clerk at the Bellagio last night who reported that Steve Wynn had been at the casino last night taking a stroll and saying hello to all the employees. I wonder if he can ever roam around the hotels incognito.