10-figure payday

By Liz Benston

Friday, June 8, 2007 | 7:16 a.m.

Phil Ruffin was chided in 1998 for buying the money-losing, past-prime-time New Frontier because paying even $165 million for it seemed too much.

Less than a decade later he is closing the most expensive land sale in Las Vegas history, selling his mid-Strip resort - its main attraction is bikini night at a bar with a mechanical bull - for a jaw-dropping $1.2 billion. Not bad work for an unassuming businessman whose biggest business claim was owning the nation's largest manufacturer of two-wheel hand trucks. He'll need a few of them to cart his moolah to the bank.

How did he pull off the deal?

A combination of stubbornness and foresight, he says.

While marquee casino bosses Steve Wynn and Sheldon Adelson each redefined the Las Vegas resort, spending lavishly to attract discriminating visitors, Ruffin's legacy may be defined by not having done that.

Indeed, the businessman from Wichita, Kan., seems an unlikely casino boss on the dressed-up Strip.

His first major business success was introducing convenience stores at Midwest gas stations. He also invested in office buildings, oil wells, warehouses and hotels. He bought a casino in the Bahamas in 1993.

The 70-year-old Ruffin shows up in Vegas dressed in polo shirts and chinos, looking trim and relaxed - fitting for a man who ranked 278th on Forbes' list of richest Americans last year.

Not long after buying the Frontier, which had barely survived a rough-and-tumble labor strike, he was rejecting purchase offers.

Ruffin didn't sell to Wynn or other gaming companies interested in purchasing his property years ago, nor did he sell to a newer wave of private investors, including hedge funds and Australian billionaire James Packer, descending on Las Vegas with money to burn.

Instead, he was content operating a humble property, its casino carpet held together with masking tape and a marquee advertising $1.99 margaritas and $9.95 steak and shrimp dinners. As the Strip went upscale, Ruffin's property took on the appearance of some loud, tackily dressed uncle crashing a fancy cocktail party.

But Ruffin had a plan. He simply stood by as the value of Strip land skyrocketed beyond expectations, partly by his own posturing.

Ruffin rejected offers from more than two dozen potential buyers, setting his sights on how to wrangle the biggest possible deal.

It was Ruffin's unwillingness over the years to part with the New Frontier - a property always destined for redevelopment - that has done more to raise the value of Strip land than any other project or transaction.

"He deserves much of the credit and the blame for rising land prices," said David Atwell, who brokered the sale for Ruffin. "It's becoming very hard to put a price on land.

"It's hard for us locals to believe these prices after watching the Strip sit dormant for years," said Atwell, who has been a Strip broker since 1979. "But this deal is a no-brainer because it's a unique opportunity."

It helped that the shrewd Ruffin didn't need the money.

His hand truck, hotel and other businesses were generating a steady flow of cash. In 2005 he sold his upscale Wyndham Nassau Resort & Crystal Palace Casino and the Nassau Beach Hotel in the Bahamas - a tax-free transaction that allowed him to sock away even more money.

"I had the ability to hold until the market got to where I wanted it to go," Ruffin said.

And just where, exactly, did he think the market would go?

He was rejecting offers that some pundits, at least privately, considered outrageously high.

He claimed his 34 acres were worth at least $20 million per acre, then $30 million . Each announcement boosted Strip casino stocks as Wall Street analysts and casino accountants calculated how much nearby land might be worth based on Ruffin's latest assertions.

Those prices, Ruffin says, reflected what the most astute buyers of Strip property were willing to pay.

While some casino experts couldn't see past the New Frontier's forlorn interior, out-of-town buyers were drooling over opportunities that weren't contemplated even a few years ago, such as multiple hotels and expensive condos. (El Ad Properties, which is buying Ruffin's New Frontier, may sell up to $2 billion in condos, partly defraying its project's $5 billion price tag, Ruffin says.)

So Ruffin exploited those plans, basing the property's value not on current land uses but on new developers' more ambitious projects.

He didn't care what land along the Strip had sold for in the past. That history, he said, was growing more irrelevant by the month.

And he dismissed comparing the value of his property with that of other Strip sites, even those with the most luxurious resorts. "Comps? What comps?" he says. "There's only one location like this."

In his nondescript, second-floor office in the New Frontier, a sparsely decorated space with furniture that looks as old as the casino itself, Ruffin sketches squares on a white board to represent new Strip developments.

"Nobody would have thought that all this would be built," he says, citing the billion-dollar-plus Echelon Place, Encore, Palazzo, Fontainebleau and CityCenter.

Ruffin declared an end to his waiting game when concern grew that Democrats in Congress would raise the capital gains tax above 15 percent. Selling the property after a tax increase could cost him millions. It was finally time to sell.

Luckily, one of his latest offers was also the most promising. New York real estate investors El Ad Properties, whose principals are worth billions of dollars, presented a plan to redevelop the New Frontier into the Las Vegas version of their storied Plaza Hotel in New York.

It would fit nicely into the increasingly gentrified neighborhood happy to distance itself from mechanical bulls.

The sale to El Ad is expected to close in August, with the New Frontier shutting its doors in mid-July.

Ruffin says he has no regrets about cashing out - even if it means walking away from land that will be worth still more in a few years.

"Ten years from now the Strip is going to be like Fifth Avenue in New York, where land is held in trusts and people don't sell their ground anymore," Ruffin said. "What I sold this for is going to be like nothing."

As for those folks still reeling from sticker shock, Ruffin says they're not worth doing business with.

"This is a big - money game now," Ruffin said. "These guys with a few hundred million can't make this work. We were talking to guys worth at least $1 billion."

And then, walking through the casino, he reached down to the worn carpet and picked up a wayward nickel.