Monday, Dec. 9, 2002 | 11:24 a.m.
Jackie Gaughan today announced plans to sell four casinos in downtown Las Vegas to a startup company for $82 million -- a deal that marks the near-exit of a downtown gaming pioneer whose family's stamp on the city spans three generations.
The buyer, Barrick Gaming Corp., will retain employees at the properties as a condition of the sale of the Gold Spike, Western Hotel, Las Vegas Club and Plaza hotel-casinos.
The deal also includes two Ambassador East motels downtown, various parcels of vacant and developed land downtown and an option and first right of refusal to purchase the El Cortez Hotel and Casino, the fifth downtown casino controlled by Gaughan. The properties included in the sale employ about 1,900 people and consist of about 1,850 rooms.
The sale is subject to approvals by Nevada gaming regulators.
The properties are owned and operated by Union Plaza Hotel and Casino Inc., Exber Inc. and Gaughan South, companies headed by Jackie Gaughan and the late Mel Exber.
Details on development of the properties will be forthcoming, Barrick Chief Gaming Officer Phil Flaherty, said today. Barrick also aims to acquire other properties in Las Vegas and beyond, he said, declining to reveal details.
Las Vegas Mayor Oscar Goodman met with Barrick and Gaughan representatives to discuss the deal this morning.
"It was a very positive discussion," Goodman said. "These folks are interested in redevelopment projects and revitalizing the downtown landscape, which is my vision for downtown."
It was not clear this morning what Barrick intends to do with the properties or how it would finance the purchase.
"Thanks to the vision of those pioneers and the dedication of the Mayor and City Council, the future of downtown Las Vegas is both exciting and inviting," Steven Crystal, vice-chairman and co-founder of Barrick Gaming, said in a statement.
Crystal, also president and general counsel for Barrick Gaming, has experience advising public-private redevelopment projects across the country. He is a former legislator from New Hampshire and a partner with the Missouri law firm Armstrong Teasdale LLP.
Employees were notified of the sale in a memo issued Sunday, Gaughan representatives said.
Barrick Gaming, incorporated in Nevada this year, is made up of several executives with experience in the gaming industry.
Barrick Gaming Chief Executive Officer D.W. Barrick was a joint venture partner with Station Casinos Inc.'s casino in Kansas City, Mo., and was involved with the start-up of Casino Magic in Tunica, Miss. He has also has had a hand in developing gaming properties in South Dakota, Colorado, Iowa, West Virginia, Kentucky, Connecticut, Oklahoma, Washington and California.
Flaherty served as president and managing director of the Desert Inn and has held various positions with Howard Hughes' casino empire Summa Corp. Most recently, he has offered consulting services to small and large casinos.
Entertainer Larry Manetti, who appeared in the television series "Magnum P.I." and was a former marketer for MGM Grand in Southern California, is head of entertainment for Barrick Gaming. John Buyachek, who will focus on market development, has served in various capacities including accounting, hotel operations, casino credit and collections and marketing for Caesars Palace, Tropicana and the Desert Inn.
None of the principals or other company executives have a Nevada gaming license, though some have been licensed in other states. Flaherty said he expects the licensing process for key employees to be complete by August.
Downtown's aging casinos have been overshadowed by lavish Strip megaresorts in recent years. Still, casino executives and downtown supporters say the hotels have been holding their own, with gaming revenues remaining fairly flat.
"This is not a rescue situation," Goodman said of the sale. "It's been business as usual down here. There hasn't been any spiraling one way or the other."
"The good news is that these are new people with new ideas talking about infusing new blood to downtown. That's always welcomed."
Gaughan, 82, at one time owned an interest in the Showboat casinos in Las Vegas and Atlantic City, as well as the Flamingo, Golden Nugget, Pioneer Club, Boulder Club and Royal Inn.
He moved his family to Las Vegas from Nebraska in the early 1950s and bought an interest in the Flamingo -- founded a few years prior by mobster Bugsy Siegel -- the following year. Gaughan later sold the Flamingo and concentrated his efforts downtown, where he purchased the Las Vegas Club in 1961 and the El Cortez in 1963 with Exber. The El Cortez has served as the flagship of Gaughan's downtown casino holdings. He bought the Western, where he promoted penny slots and low-limit table games, in 1970 and purchased the Gold Spike in 1985.
Gaughan's son, Michael Gaughan, became Las Vegas' youngest casino owner when he purchased the off-Strip property Royal Inn at age 30. With profits from the sale of an interest in the Golden Nugget downtown, the younger Gaughan opened the Barbary Coast on the corner of Flamingo Road and the Strip. It was the first of what would become Coast Casino Inc.'s four-casino chain of primarily locals' properties and one of few large family run casino companies in the industry.