LV resorts agree: Entertainment quality must improve

ANALYSIS

Even if it sounds doubtful, this tale may be enlightening:

A few months ago, a Las Vegas casino mogul called his counterpart at a rival Strip resort to ask for tickets to a sold-out concert by one of his favorite performers.

The request was relayed to the resort's reclusive owner, who nixed the ticket bid because of fierce and growing competition between the two properties for high-end players.

Stiffed and miffed, the mogul then tried to get choice tickets to a famed rock band's private performance at another resort, but was offered only two rather mediocre seats.

"It was a wake-up call," an insider, who insists the incidents occurred, says. "It showed him that smaller players than he is were able to attract big-name entertainers who could draw large crowds to their casinos."

After the rebuffs, the casino mogul began a wide-ranging overhaul of his resorts' entertainment policies, despite their successes to date.

It's a process that's spreading through Las Vegas as players large and small vie to bolster their entertainment offerings in a double-barreled bid to draw more customers to their casinos and boost nongaming revenues as well.

From upstarts such as the Hard Rock and the Rio to the big properties that have long defined tourists' perceptions of Las Vegas entertainment -- Caesars Palace, MGM Grand, The Hilton, Mirage and the like -- hotel-casino operators have dispatched booking agents around the planet to sign up big-name performers.

They're also raiding the ranks of experienced entertainment directors, who after years of relatively lean times are enjoying renewed demand for their services.

And they're building new places to stage events, too. Las Vegas already boasts such big-event and concert venues as the 16,150-seat Grand Garden at the MGM and the 19,000-seat Thomas & Mack Center.

Now, Circus Circus Enterprises is adding another 12,000-seat arena at its Mandalay Bay project opening next spring. The Mirage may add a 15,000- to 18,000-seat arena. A 6,000-seat arena is planned for North Las Vegas, joining similar-sized venues at the Rio and Primadonna Resorts.

Other resorts are revamping their showrooms, adding television production facilities, special-effects equipment and elaborate stages.

At the Las Vegas Hilton, for example, "We wanted to be sure we could do live television better than anyone else in town," Foster Wilson, the hotel's vice president of entertainment, says.

"We'll be staging a concert Oct. 10 with the group Alabama, which has had 41 No. 1 hits, more than any other performers in history," he says. "It will be a pay-per-view event that will feature them performing all 41 of those hits.

"What we're determined to do besides offering quality entertainment is have the ability to reach out through television to millions of homes around the country. As we're speaking, nobody else in Las Vegas has the ability to do that now. We're a quantum leap ahead of everyone else."

Foster says the Hilton's main showroom has 1,604 fixed seats but is capable of seating almost 1,900 persons for special events.

"But it still retains a feeling of intimacy, which is an important factor," he says.

"Some of the artists who've performed here say they can make a lot of money when they work the big arenas, but to those who've reached the pinnacle, money is no longer the issue.

"They need a certain feeling when they perform that they don't get in those huge, vast arenas," Foster says. "They need the closeness and intimacy. And once they reach a certain point in their careers, they opt for something smaller."

Joel Fishman, vice president of entertainment for Circus Circus Enterprises Inc., says Mandalay Bay's 12,000-seat indoor arena, its House of Blues nightclub and an outdoor arena in its waterpark area capable of seating 3,000 to 5,000 customers will make the $950 million resort "Control Central for the Entertainment Capital of the World."

"Our arena is going to be spectacular," he says. "There'll be no pillars to block anyone's view, it will have extremely comfortable seats, it's being built with the latest acoustical technology and it will have all the amenities needed for customer satisfaction.

"There's only a few headliners who can fill an arena that size, and it's all about who's on tour and who can bring them in first," he says.

The Mandalay Bay facility will also serve as an arena for boxing, hockey and other sporting events and can be used by conventions for large gatherings.

Mirage Resorts Inc. is contemplating construction of an arena in the wake of its hiring of Hollywood producer and talent manager Sandy Gallin as chairman of Mirage Entertainment & Sports Inc.

Gallin says he'll continue to manage clients such as Neil Diamond, Mariah Carey and Dolly Parton but will devote most of his time to strengthening the entertainment offerings of Mirage.

"I'll be looking at everything from the piano bars and lounges to the big rooms, theaters and arenas that inhabit all the Mirage hotels," Gallin says.

Mirage already boasts the two biggest-grossing production shows in Las Vegas history -- Siegfried & Roy at The Mirage and Mystere, a Cirque du Soleil staging at Treasure Island.

But Gallin says he plans to tap into the film and theater communities, as well, to bring "the greatest entertainment available anywhere in the world" to Mirage properties.

Gallin was recruited by Mirage Chairman Steve Wynn, whose experiments with an erupting volcano outside The Mirage and a pirate battle outside Treasure Island broadened the definition of Las Vegas entertainment.

Tourists intrigued by the free spectaculars staged on the Strip flooded into the Mirage and Treasure Island to see what other wonders might be inside. It's a philosophy Wynn's continuing at Bellagio, the $1.8 billion resort that will be fronted by a free water, light and music show created by a designer hired away from Walt Disney Co.

The need for Las Vegas to differentiate itself from other gaming venues is driving the ever-increasing emphasis on entertainment.

"The major defining element of Las Vegas resorts has become more critically important than ever before in history," Wynn says. "That critical central element to all resort experiences is entertainment.

"We realize that to a very large degree the future vitality of our hotels will be directly dependent on the strength, the ingenuity, the overall creativity of our entertainment presentations."

That's a philosophy becoming more prevalent among other casino operators.

"The production values of the shows will rise because you have to provide customers with something they can't get in their hometowns," Circus Circus President Glenn Schaeffer says.

"They've already got gaming in the backyard. They want something more."

That's nothing new to Kirk Kerkorian, the majority owner of MGM Grand Inc. For years, he's believed that gambling would become a socially acceptable entertainment option.

And when Kerkorian bought control of the MGM-UA studios and Metromedia International's entertainment divisions last year, he formed a task force of casino and studio executives to integrate the cash-flush casino's marketing expertise and streamlined studios' vast film libraries and creative forces into a vehicle that can maximize profits from their respective brand names.

The casino company is already airing advertising spots on MGM Gold, the studio's Asian satellite television channel, and is considering possible TV programming originating from Las Vegas.

"We're becoming more like Hollywood in the way we conceptualize Las Vegas," MGM-UA Chairman Frank Mancuso says. "The entertainment opportunities are expanding within the hotels themselves, providing new opportunities for income.

"These casino entertainment functions aren't the loss leaders they used to be, but income-producing elements of the entire experience.

"Hollywood has always been the dream factory of the world. And Las Vegas is moving toward that."

MGM Grand is in the midst of a $700 million revamping of its flagship Las Vegas resort into "The City of Entertainment," designed to make better use of the casino company's storied links to Hollywood.

The new look, MGM Grand Chairman Terry Lanni says, makes casino customers "feel like guests coming to a premier of one of the world's greatest movies."

It also features the MGM Grand Garden, a big arena that has hosted heavyweight title fights and such Hollywood headliners as Barbra Streisand and Elton John.

"We have relationships with performers that date back for years," MGM Grand Chief Financial Officer Jim Murren says.

"The trick is to get the right customer profile. It's an art to get the right acts that make money in the showrooms and drive the casino needle as well," he says.

"The content is the key. We have the box and are filling it with the best acts in the world."

The increasing emphasis on entertainment is welcomed by securities analysts who follow the gaming industry.

"If you want to drive incremental increases in visitor volume, you have to do something more than simply add rooms," Andrew Zarnett of Ladenburg Thalmann & Co. says.

"The three things that bring people to a property are your slot product, your food and your entertainment. The slot product is evolving because Las Vegas operators have to look to their casino floor to create excitement.

"The food is improving with addition of the world's best-known restaurateurs. But the entertainment has been pretty stale for the past few years and needs to be livened up. Las Vegas has to keep pushing the envelope."

Circus Circus' Fishman agrees, saying, "Las Vegas went through a cycle in which the people who were performing here were near the end of their careers, then to an era featuring a lot of new performers, and now to one in which the most incredible types of entertainment are being offered.

"One of the reasons I came to Circus is its commitment to doing things more far-reaching than anything I've ever seen, especially from a customer-service perspective."

This has led to a new type of entertainer, Hilton's Wilson says.

"You're starting to see a lot of performers in Las Vegas that you wouldn't see 10 or 12 years ago -- younger, hipper, aimed at a different audience," he says.

"This town used to be perceived as a graveyard for performers. That wasn't the reality, but it was what a lot of entertainers believed. For a time, it wasn't hip to play here. Now it is."

Mirage's addition of Hollywood heavyweight Gallin could accelerate the trend toward more varied entertainment offerings throughout Las Vegas, Jason Ader of Bear Stearns & Co. says.

"It shows they're turning up the volume on the entertainment product and are determined to go head to head with MGM and the Hard Rock to bring in the type of entertainment that will draw high-end players," he says. "This will do more than just help Mirage. It will benefit all Las Vegas."

"Steve Wynn says entertainment is the 'white-knuckle' part of the business," Joe Coccimiglio of Prudential Securities says. "When you get in the entertainment world, you get hits and misses trying to get it right.

"For years, Las Vegas has shown the ability of celebrities to attract people to casinos. Now it needs to reach out to a wider range of people with varied entertainment, because it's already got the gamblers."

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