If Circus Circus, the iconic casino on the North Strip, is sold by gaming entrepreneur Phil Ruffin, what could take its place?
That’s one of the many questions that surfaced last week when Ruffin revealed he is considering the sale of the 3,767-room hotel-casino — the 10th largest in Las Vegas and 18th largest in the world.
Ruffin has always admitted that it is the 102 acres that adjoin the property that present an opportunity to sell it all for $5 billion and give him enough money to buy another resort, possibly in Las Vegas.
“This iconic property has been part of the mythos of Las Vegas, from its appearance in ‘Diamonds are Forever’ to the thousands of local children who have grown up and gone there for college,” said Amanda Bellarmino, assistant professor at UNLV’s William F .Harrah College of Hospitality.
“I sincerely hope that if it is sold, it will be kept,” she said. “The price tag seems a little high for the property, but the land adjacent to it is a prime site that can be developed.”
Luxury development?
But another industry analyst, Josh Swissman, founder and chief executive of Las Vegas-based GMA Consulting, said that for a $5 billion deal to be attractive to an investor, an ultra-luxury development would have to be built there. Circus Circus is far from that.
“At $50 million an acre, you’d be hard-pressed to build anything beyond a luxury offering,” Swissman said. “So whatever the design is, it has to be at the upper end of the price scale. And that sometimes makes it difficult to have a family-oriented facility. There are a lot of people who think the days of such units have come and gone.”
Circus Circus was a controversial themed resort from the day it opened in 1968 after being built by Jay Sarno, the man behind Caesars Palace. Circus Circus took time to find its financial footing, teetering on bankruptcy in the early years. The property’s next owner, William Bennett, said the property had turned into the town’s babysitter with an abundance of children milling around the resort and it was widely understood that children and gambling do not mix well.
But the property was enough of a cash cow that MGM Resorts International, then known as MGM Mirage, acquired Circus parent Mandalay Resort Group in 2005 and kept Circus Circus in its portfolio.
When Ruffin, who did not comment for this story, bought it from MGM in 2019 for $825 million, Circus Circus was well-established as a family-friendly property that favored Hispanic customers as well as a dormitory for discount-seeking customers. comes to Las Vegas for all kinds of conventions, trade shows and other special events around town.
Analysts watching the drama surrounding Circus Circus unfold say there are several possibilities for what happens next for the property and the northern Strip.
How about a studio?
“As we continue to see our city evolve, there is more potential for that lot than ever before,” Belarmino said. “Could it be used for (Formula 1) or for an NBA arena? Dare I say this could be a place for a movie studio. Whatever might happen, there’s a lot of potential for a transformation at that end of the strip.”
The Swissman, in mentioning the prospect of an ultra-luxury property, noted that most of the major players already have luxury resorts along the Strip with varying degrees of success and competition is intense.
Would Wynn Resorts Ltd., a North Strip neighbor that is successful with Wynn Las Vegas and Encore Las Vegas and has a cache of vacant land across the street from its resorts, have any interest? Caesars Entertainment has Caesars Palace further south on the Strip. MGM has Bellagio, Aria, Cosmopolitan of Las Vegas and nongaming Vdara in its portfolio.
And just because a resort is considered “ultra-luxury” doesn’t always guarantee success. The year-old Fontainebleau Las Vegas, which has been trying to bring its South Beach vibe to the Strip and is privately owned, has reportedly struggled financially. The parent company of Resorts World Las Vegas, which has sought to capitalize on its connections with Asian players and its relationship with Hilton, announced in December that it had its worst financial quarter in two years.
The database is critical
Macquerie Group Ltd gaming analyst Chad Beynon said the battles exemplify the importance of having a robust casino database.
“Ultra-luxury works on the Strip, given hotel prices, Michelin-rated restaurant prices and retail sales,” Beynon said in an interview. “But the lack of financial success for Fontainebleau continues to raise the question of whether an operator can make it without a solid casino database.”
Two companies with a stake in the success of the northern Strip had no comment on the outlook for Circus Circus. Representatives of LVXP, a team of Las Vegas-based real estate professionals hoping to build a 752-foot, 2,605-unit hotel and condominium project with an 18,000-seat arena and a 6,000-seat theater on land between Sahara and Fontainebleau, and for BPS Partners LLC, which is planning a mixed-use attraction with two 600-foot towers and a 439-foot amusement ride at Las Vegas and Elvis Presley boulevards, had no comments about what is happening at Circus Circus.
Swissman also mentioned Tilman Fertitta, which has land-facing strips on the southern Strip, as potentially interested. Fertitta’s status is unclear in light of his possible acceptance of an ambassadorship to Italy.
Swissman also noted a strategy taken by Bally’s Corp. on the southern strip – to split a larger package into several parts, a process that would take government approval.
Soo Kim, chairman of Bally’s and chief investment officer of hedge fund Standard General, has said that 9 of the 35 acres at the former Tropicana site would be used for the Athletics stadium while the remaining land would be for a new Bally’s Las Vegas resort.
Divide the country
Kim, an admirer of Ruffin, has indicated that dividing the land would give the baseball team what it wants — a new indoor stadium — and what Bally’s wants, a modern new resort attached to the stadium.
If such a tactic were used at Circus Circus, one buyer could be enticed to acquire the Strip frontage, another could take a larger portion for a potential new resort, and a third could take the existing Circus Hotel and Adventuredome theme park and either upgrade it and keep it as a low-budget facility or knock it down and put in something new.
Beynon said that could broaden the playing field for potential buyers. He noted that tribal casino companies looking to gain a foothold in Las Vegas like the Seminole Tribe has with Hard Rock Las Vegas and the San Manuel Band of Mission Indians have with the Palms could find a more affordable land deal for themselves.
And the available land doesn’t necessarily have to be for a resort.
“In recent years, Strip owners have found multiple uses that have extended beyond just casino operations,” Beynon said. “These include golf driving ranges, gun ranges, experiential events, bar and restaurant ideas. Would that site need more hotel rooms? Potentially not, but many of the successful integrated resorts are better mousetraps with more rooms that keep people in place. On the other hand, newly renovated properties at the end of the strip that Strat served as dormitories for other places on the strip. With Strat’s upgrades, that’s changing now, but it takes a decent amount of money.”
Macquerie has disclosed that it has provided non-securities non-investment banking services to Golden Entertainment, operators of Strat and Caesars Entertainment.
Even so, gaming is always the most lucrative and profitable use of land dedicated to casinos and there are many moving parts involved in the saga of what’s next for Circus Circus.
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