Friday, April 10, 2009 | 11:17 a.m.
- Wynn: Obama’s remarks bad for convention business (2-26-2009)
- Wynn reports loss in fourth quarter (2-24-2009)
- Wynn announced salary reductions, reduced work weeks (2-03-2009)
- Wynn says he's prepared to weather economic storm (12-20-2008)
- Envy this casino operator (12-20-2008)
Casino mogul Steve Wynn said during an interview this week he has little faith that federal stimulus dollars headed to Nevada will lift a struggling economy.
President Barack Obama’s $787 billion stimulus plan will bring an estimated $1.5 billion to the state. Wynn said that’s not the solution.
“I think a great percentage of the stimulus has been wasted. It didn’t do what it was supposed to do,” Wynn said. “We did not create jobs. Nothing I’ve seen has been a job creator.”
Wynn sat down for an interview on the news discussion program “Face to Face with Jon Ralston,” which aired in two parts Wednesday and Thursday. During his interview with the Las Vegas Sun columnist, Wynn outlined what he feels is a recovery plan for Wynn Resorts and discussed the suffering national and local economy.
Wynn said he believes changes in tax structure are the government’s most powerful tools for recovery, and more specifically, tax credits should be used as an incentive for companies to hire.
“If you wanted to create jobs in every sector of this economy and every community … you could do it in less than a month without hiring any federal employees,” Wynn said. “You’d simply say if a company can prove that it has increased its regular work force, with health insurance … we will give you a tax credit to support the payroll of that new hire.”
Wynn said he was “the only person in Nevada” to create jobs in the past year. Wynn hired more than 4,000 people for the opening of his $2.3 billion Encore Las Vegas resort but announced a cost-cutting initiative in February that reduced work weeks and salaries for full-time employees, eliminated 2009 bonuses and suspended the company match to employee 401K plans. Wynn Resorts hasn’t had layoffs at the level of other gaming companies on the Strip.
Wynn has disagreed with Obama on more than the stimulus package. In February, the casino owner joined city officials in their criticism of Obama’s remarks on corporations spending taxpayer dollars in Las Vegas.
Wynn said Obama’s remarks caused State Farm Insurance executives to cancel a $5 million sales conference at Wynn’s resorts. Rather than moving forward with the conference, Wynn said State Farm paid a $3.3 million scrub charge to cancel the conference.
“I think there’s a bias in the government to get a pound of flesh. There’s a meanness against business. The [Obama] administration has a sense of anti-business because of the excessive things that were done on Wall Street,” Wynn said.
On a state level, Wynn said the worst thing Gov. Jim Gibbons and the Legislature could do is come after the gaming industry seeking more taxes.
“I know that if they go after the gaming industry we will have massive, unbelievable cutbacks. The unemployment rate will go to 15 percent,” Wynn said.
Wynn called out others in the business community like lawyers, banks, the construction industry and insurance companies “as selfish people who have refused to take up one spec of their fair share.”
“They’re hurting but they aren’t paying the kind of taxes we are. Over half of the state’s budget is paid by us,” Wynn said.
Wynn Resorts is faring better than some others in the gaming industry, but still reported a net loss of $159.6 million during the fourth quarter compared to a profit of $65.5 million the comparable period of 2007.
Wynn was critical of his Strip neighbors, like MGM Mirage and Las Vegas Sands, who are billions of dollars in debt with ongoing projects in Las Vegas and Macau. Wynn said he has kept to his philosophy of expanding his brand when the cash is there, plus maintaining a reserve.
“This particular form of insanity is when you started a project without having the money to finish it. I find that to be mystifying. I don’t have anything to say, but why?” Wynn said.
Aside from Wynn Las Vegas and Encore Las Vegas, Wynn Resorts owns a 600-room hotel and casino in Macau and has started construction on the $700 million Encore at Wynn Macau.
Wynn said he might be interested in buying back his former properties now owned by MGM Mirage, such as the Bellagio and The Mirage, but only if the price is right and the cash is available.
“Hopefully taking advantage of our proper balance sheet, our cash reserve, our low interest rates and our lack of short-term maturity… we are in a position to be helpful to people on the Strip who would be better served by unbundling,” Wynn said. “I think the unbundling of The Mirage company is a good idea. I thought that the putting together of those two companies was a bad thing.”
The bundling Wynn referred to is MGM Mirage’s 2004 acquisition of Mandalay Resorts, which consisted of the Mandalay Bay, Luxor, Circus Circus, Excalibur and the Monte Carlo. Wynn said the bundling goes against what Las Vegas was built on.
“The town’s history has been based on competition, diversity of ownership -- smart groups of guys fighting it out. Getting the best deals by having competitive advantages,” Wynn said. “When you bundle things up in giant corporations like Harrah’s or MGM Mirage, to me it’s not a Las Vegas thing.”
In a 2005 interview with Ralston, an optimistic Wynn said that short of a terrorist attack like 9/11 or another cataclysmic event, Las Vegas wasn’t a machine that could be easily thrown off. Four years later, with lower room occupancy numbers, slashed room rates and a drop in convention business at his resorts, Wynn has changed his tune.
“We’re not insulated. People that lose their jobs and go broke can’t go and spend money. People that have money when things get this widespread get careful and don’t spend money,” Wynn said. “Everyone is conserving their assets and that is the right thing to do in a situation like this.”
Correction: This story has been changed from its original version to reflect that "The Mirage company" Wynn referred to when speaking of "bundling" was the merger of Mandalay Resorts and MGM Mirage, not MGM Grand and Mirage Resorts.