Two Way Hard Three | Las Vegas Casino & Design Blog

I'm easily the biggest Steve Wynn alive. But every once in a while he stretches the truth a little. If TI is worth $775, Cosmo is worth a lot more than $500m. I've said since the beginning they'd never get their $3.9 back out. Maybe never is a stretch, but it may take decades.

On the subject of CC, they spent $9 for a rough number. They got closer to $4.5 from Dubai I think. And MGM funded much of it as they built it. They only have $1.8B borrowed against their half. Does Steve think CC is only worth $1B. If so, how much is Wynncore worth?

Posted by Hunter

I'm not sure how many Steve Wynns are alive but if you want to claim to be biggest, please submit your height and girth for confirmation.

Is Steve Wynn impersonation going to be an event at the Vegas Internet Mafia Family Picnic? Right after sack races and before that egg-balancing thing? I can see it.

Nine times? Nine times earnings? (by which I assume he means cashflow) With all do respect to the Cosmo, Steve may be generous. That's a little on the high-end, even for a ballpark multiple. That said, I think its pretty well understood that Cosmo is more about loss prevention at this stage than loss elimination.

What I am trying to roll around in my head is why hasn't Wynn Macau has broken ground. This partly explains it, Steve does not want debt to finance the project. This may explain why the former Harrah's Winn is squeezing blood from Roger Thomas's stone, to get the cash for Macau.

But, what is Wynn's sudden distaste for debt? He has been a big fan of it in the past, including Wynn now. It gets me to what has been bothering me for months. Is Wynn perhaps dissing debt financing the act of a jilted schoolgirl? Is there something about Wynn Corp., or Wynn Macau's plans, that debt issuers just don't like?

The Wynn plot has been siting there for three to four years now with barely a stone unturned. I know part of it for 1-2 years was the economy, but why now? What is going on?

Posted by Hunter

If Wynn is to be believed, the Cotai project is waiting on government approval. It is 'shovel ready' as some might say.

You need workers to start construction and there just aren't enough resident workers for all the ongoing projects.

Wynn is not against all debt. He just doesn't believe in starting construction before all the financing is in place.

IMO, Steve's rants are indicative of burn-out and that he is now starting to lose perspective. There are numerous examples of driven successful men who this has happened to. (e.g. Sheldon Adelson)

TI sold for $775M in 2007. It's a different world now. I think Steve is right. $500 million is probably all it's worth. DB just wants to walk away. They'd be ecstatic if they got $500 for it.

And please someone dish on Wynn's wedding! I've been hearing some great stories! Lionel Richie!?? Are you kidding me!??

@Brian: Ruffin bought TI in early 2009 for $775 mil after it had recorded EBITDA of $101 million in 2008 (http://en.wikipedia.org/wiki/Phil_Ruffin), so he paid just under 8x. TI's EBITDA was probably lower by 2010, as I imagine most LV resorts were.

It may appear that Cosmo is worth more but I believe its casino revenue is quite low and that it costs a hell of a lot more to operate that place than TI. Cosmo has higher ADR but fewer rooms. TI has a very profitable show in Mystere.

We won't know the truth until Cosmo's earnings are public but Wynn's estimate of $40-50mm may be very close. Of course, if you believe that an economic recovery is underway, then the 2011 EBITDA will likely bear no resemblance to 2014, 15, 16, so valuations at this point are pretty much meaningless.

Posted by mike_ch

Ruffin paid $775m for a hotel, mostly in cash, that had little to no high end play, a dying nightclub scene, and doesn't even have a parking garage of it's own without rent to MGM. What TI did have going for it was recently refurbished rooms.

You think Cosmo, which also has pretty mint rooms, is worth only 2/3rds of that?

Sometimes people really believe too much of what Steve Wynn says. It never seems to dawn on anyone that he's the only person in town, sans Sheldon, who talks about other people's business like he knows everything about them.

No way Cosmo goes for $500 million. There are a hand full of people who would write a check today for $500 Million for Cosmo, including Ruffin, Wynn, and probably Sheldon and MGM. There is no way this project sells for $500M. Yes you can quote me on that.

Mr. Wynn has made cartoonish overstatements throughout his career and this is just another example. I think there is always a large degree of truth in those statements and many times he has to say them in such a way in order to make them resonate. The reality, IMO, is that the Cosmo will never make a lot of money in an absolute sense, and in relation to it's cost to build, it will always be considered an albatross. The casino is small and will not make much money, the room inventory is not large and there are a lot of operating expenses, relative to the size and layout of the entire property. I think it will always be limited. I think Wynn's numbers are probably close to the truth, but I think it would sell on the open market today for closer to $700-800 million, which Deutsche can't possibly take. I think that after there is some real recovery the selling number is going to be $1.2-1.5 billion and the only buyer is MGM. MGM is the only one who can give it any locational synergy, which is the only way to compensate for the shortcomings mentioned. I look for a complex asset swap involving MGM, Deutsche and others in 2015 or after.

I wouldn't call 3000 rooms a small inventory. ?

Hopefully the moderation Admiral can help me, but I have gotten it in my mind that the Cosmo opened with 1000 rooms, or so, and the real inventory is suspected to be about 2000 rooms. Although there may be 3000 rooms on the property (including the failed condo inventory), I don't think Deutsche Bank is in any hurry to put the entire inventory in service.

Posted by Hunter

A subject of much debate.

The official PR line at opening was that ~1500 rooms were available. A maid told Chuck something like 300 and I heard 500 from another source.

We couldn't find anyone in the West Tower that first night so I'm pretty suspicious about the initial figure.

That said, they've ramped up significantly and both towers are operating seemingly normally.

Not a maid... it was the gaggle of front desk folks checking me in on opening night. Last visit mid Feb, the same crew told me 1500.