March 1, 2004
Prospective downtown casino owner Barrick Gaming expects to be a key player in a revitalization of the classic gaming market, company executives said Wednesday as they announced a sequence of new investments they hope will energize the four hotel-casinos they plan to buy from gaming pioneer Jackie Gaughan.
Before the state Gaming Control Board voted 3-0 to recommend Barrick’s application to buy the Plaza, Las Vegas Club, Western and Gold Strike, Barrick bosses told regulators they were 100 percent bullish on downtown.
Barrick lawyer Tony Cabot said company executives are visionaries who see possibilities downtown that others don’t.
“They see an opportunity to bring back what once was the glory of Las Vegas,” Cabot told the panel.
Stephen Crystal, who owns a 25 percent stake in Barrick, ticked off a list of improvements the company plans to take advantage of what he believes is a pending downtown renaissance.
He said Barrick plans to:
Tear down the brick front of the Las Vegas Club facing Fremont Street, replacing it with an open- air feel with entertainment, opening up the casino to Fremont Street Experience crowds. The project should be finished by September, he said.
Build a deck across Main Street connecting the Las Vegas Club to the Plaza. Barrick Chief Operating Officer Phil Flaherty said the walkway would tie the properties together and create a 1,500-room resort with two themes. He also said the “trapezoidal” design would be superior to the walkway across Main Street that now connects Boyd Gaming properties Main Street Station and the California, which he jokingly called a “hamster tube.” The deck’s completion is slated for September 2005.
Buy the Nevada Club and Queen of Hearts hotel properties on Main Street and refurbish and re-open them with gaming by about September 2005.
Build a 1,200-room hotel tower expansion next to the Plaza’s south tower, converting it into a V-shaped building, and build a separate 1,200-room time share tower on top of a planned downtown intermodal transportation building, within the next three years.
Redevelop the Western hotel-casino, using six square blocks surrounding the property to build a first-class Latino-themed property designed to appeal to Hispanics. The project wouldn’t begin for three to five years.
“In our view downtown’s reached its first significant tipping point,” Crystal said, naming a host of downtown projects completed or planned as evidence. “But the real tipping point will be when people start to return downtown to live.”
If the Nevada Gaming Commission approves the $82 million sale at its March 18 meeting, the four Barrick-owned casinos should make money right away, executives said, noting that together they garner 25 percent of the downtown gaming market’s gambling winnings.
But Crystal said it was the big chunks of additional downtown real estate that made the purchase most appealing, particularly the seven acres immediately south of the Plaza’s south tower.
“The Plaza acreage is prime for immediate redevelopment, and we’re going to change the skyline of downtown Las Vegas,” Crystal said. “With the city’s plans for its 61-acre site (west of the Plaza), the outlet mall, the new furniture mart, and maybe a performing arts center, this represents an entirely new downtown Las Vegas.”
BarrIck bosses want to create an old-Vegas-themed street in the middle of their redeveloped Plaza parcel.
They also have an option to buy Gaughan’s El Cortez, and Barrick bosses said they hope the city’s planned Fremont Street entertainment district would be a plus for the property.
Crystal said the company also hopes to erect an 8,000-seat temporary sports arena on the Plaza site. They plan a portable arena because it would cost 75 percent less than a permanent version and because they may decide to move it to the Western site if an all-new redeveloped resort is built there.
Flaherty said he and the company’s 75-percent owner, D. W. Barrick, plan to aggressively try to increase revenues while working to cut costs.
To increase revenue Barrick plans to increase its use of database marketing, add new special events and entertainment options, improve convention and banquet sales and hire seven casino hosts to boost high-end gambling play.
On the cost side, the company hopes to save $3 million by cutting the number of participation slot machines, games which require payments to the devices’ owners, and replacing them with Barrick-owned devices. About 25 percent of the company’s existing slots are participation games, Flaherty said.
Crystal said the property arranged about $75 million through a $45 million dollar loan from Frankfurt, Germany-based Aereal Bank and $30 million in mezzanine financing from New York-based Fortress.
He said the mezzanine financing sets the stage for an eventual public offering of stock, but declined to set a timetable for the likely move.
The $.75 million carries a blended cost of about 11 percent, he said. Control Board Chairman Dennis Neilander said he was impressed by the Barrick plan.
“Sometimes I get locked into ‘gaming world,’ but it’s important to see how gaming fits into future redevelopment,” Neilander said.
Board member Bobby Siller agreed.
“I’m excited about your strategy, your vision, your realistic plan and your commitment,” Siller said.