Las Vegas Sun

January 20, 2018

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A month after T.I. buy, Ruffin discusses downturn

Billionaire businessman critical of lower room rates, excessive debt

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  • Phil Ruffin interview

Treasure Island

Phil Ruffin, the Strip’s newest casino owner, weighed in on cash-strapped MGM Mirage, the local economy and his latest casino purchase during a television interview Wednesday night.

Ruffin purchased Treasure Island from MGM Mirage for $775 million in a deal finalized last month. During his interview on “Face to Face with Jon Ralston,” he called the 20 acres the casino sits on an “irreplaceable asset.”

“You always buy location,” Ruffin told Ralston, a Las Vegas Sun columnist. “When I was at the Frontier, I always coveted the Treasure Island location.”

The Kansas billionaire purchased the casino in one of the worst economic times the Strip has seen, but it came at a price tag lowered by the economic downturn.

Ruffin said he remembers calling MGM Mirage CEO Jim Murren last December, offering to buy Treasure Island for $700 million in cash. Murren called major stockholder Kirk Kerkorian and said they would do it for $850 million, Ruffin said. But during a walk-through of the property a day later, Kerkorian and Ruffin agreed to meet in the middle at $775 million.

Ruffin paid $600 million in cash for Treasure Island on March 19 and will finance the final $175 million over three years.

Unlike the position many casino owners and companies find themselves in, Ruffin said he doesn’t want to carry loads of debt.

“We had the cash and that was the reason we did the deal,” Ruffin said during the “Face to Face” interview.

MGM Mirage spent $84 million on a room renovation project at Treasure Island shortly before Ruffin bought the property. He estimated a property like Treasure Island would cost $2.7 billion to build today, with the cost of land and building of the property.

His choice to buy a newly renovated casino like Treasure Island rather than build a new one was a cost-effective one, Ruffin said.

The economic downturn has prompted casino operators on the Strip, including Ruffin neighbor Steve Wynn, to slash room rates, in some cases by hundreds of dollars. Ruffin said he refuses to do so, adding that other casino operators also should resist such large price drops.

“If they can’t afford $125, $130, that’s someone else’s customer then. You don’t need to be at 100 percent [occupancy] all the time. We’re not going to give our rooms away and I wish they would stop giving their rooms away,” Ruffin said.

Still, the Treasure Island room rate calendar shows prices as low as $79 on some weekdays through May.

As for taking another MGM Mirage asset off their hand -- such as The Mirage next door -- Ruffin said he would be interested but likely couldn’t nail down the financing in such a difficult economy.

Ruffin defended MGM Mirage’s CityCenter project, calling it a “great project” but ill-timed because of the economy.

“If the condo market would have continued it would have been sold out, but the condo market died,” Ruffin said. “[Donald] Trump and I are in a condo deal but there are no sales there and that’s going to take a while. Even the people who put up 20 percent can’t find the balance.”

Ruffin is Trump’s business partner in Trump International, including the $1.2 billion Trump International Hotel & Tower, which opened in April 2008.

Ruffin said the problem with casino operators today isn’t that they aren’t bringing in the money. It’s that their large amount of debt has exceeded their revenues.

“Banks were lending money like crazy. They were stumbling over themselves to do deals. It’s not that the hotels don’t make money, it’s that they just can’t make their debt service,” Ruffin said. “If you have a lot of debt, you have a lot of problems.”

Unlike other casino operators, Ruffin said he isn’t going to speak his mind on national and state politics. Executives like Wynn, and some city and state officials have commented in recent weeks on President Barack Obama’s remarks about Las Vegas. Ruffin said he’ll stay out of it.

“I don’t like to talk about that and I don’t think we should talk that here in Las Vegas. Just let that slide,” Ruffin said. “It was a stupid comment and let it go. I like Mayor Goodman but he shouldn’t amplify it.”

Wynn was vocal as a guest on last week’s “Face to Face” about the tax burden the gaming industry carries, saying other businesses, likes banks and construction companies, have not paid their share.

Ruffin said casinos are doing their part to fill local and state coffers.

“We pay $20,000 in utilities and $20,000 in property taxes a day so we pay a lot of taxes,” Ruffin said. “Whether the others have paid their fair share or not, I don’t know about that.”

But Ruffin did have this to say about Nevada politics: It would be a terrible time to raise taxes on struggling casinos.

“I think the gaming industry supplies a lot of customers and a lot of employees,” Ruffin said, “so right now leave it flat until the economy gets a little better.”

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