Vegas Casinos Crapping Out on Recession

The crapped-out economy has hit Las Vegas hard. With the city’s industry crashing like casinos were Chryslers, everyone from CEOs to chambermaids is muttering that “It’s never been this bad.” And, well, it hasn’t. Gambling revenues tumbled, with the take on the Strip’s tables dropping 15% in January (compared to January 2008). Moody’s Investors Service has repeatedly downgraded virtually every casino company — MGM Mirage twice in a week! — citing “aggressive and substantial debt-financed development activity and earnings pressure from slowing consumer spending trends that began in fiscal 2008.” In short: Casinos went into massive hock to expand extravagantly. Then everyone got The Fear, and blowing five grand on blackjack and bottle service became less appealing. Well, not less appealing, but more difficult to get away with on a regular basis.

MGM Mirage (MGM Grand, Mirage, Bellagio, Mandalay Bay, etc.) is struggling to complete its sprawling City Center project. The company was forced to sell the Treasure Island casino to a Kansas billionaire when banks refused further construction loans. The complex’s centerpiece was to be the Harmon Hotel, a shimmering boutique tower designed by celebrated architect Lord Norman Foster — which was chopped in half in mid-build, reportedly due to construction problems and evaporating condo sales. Even with cutbacks and postponements, MGM Mirage is scrambling to restructure debt and float this thing until it opens in the fall.

The Fontainebleau — a sister property to the Miami Beach hotel — is believed to have enough cash to complete construction and open in October. But both Moody’s and Standard & Poor’s are going negative, and some wonder whether the high-tech, high-style resort will sell enough of the all-important condo units to survive.

Another project in limbo is Echelon Place, which was to have contained Vegas’ very own Mondrian and Delano Hotels. Boyd Gaming (Sam’s Town, Orleans, Gold Coast, Main Street, etc.) had to suspend the project when a chunk of financing fell through. Man, they better not have torn down the Stardust for nothing.

The Sands Corporation (Venetian, Palazzo) has been ousting executives and cutting costs — but it’s also opening casinos in Singapore and, erm, Pennsylvania. CEO Sheldon Adelson (Forbes’ third-richest man in America — last year) has expressed confidence in thundering tones, but he’s already had to pour a billion dollars of his own money into the company to meet loan requirements, and may be looking to offload some of his interests in Macau.

Station Casinos (Green Valley Ranch, Red Rock, Aliante, Boulder Station, etc.) is scrambling to renegotiate with bondholders as the clock ticks toward an April 15 bankruptcy filing deadline. Boyd Gaming offered to buy most of Station’s properties, but Station’s Fertitta family rejected them. Boyd persists, meaning we may have a good, old-fashioned casino family war between the Boyds and the Feritttas. Station’s plans for a luxe Strip property — Viva — have died quietly.

So, who isn’t putting a poker face on panic? Well, Boyd Gaming has enough cash to buy other casinos, even if they have halted new ones. Hilton announced that it will take over the foreclosed-upon Cosmopolitan Towers project as one of the launching pads for its new Denizen hotels brand. Wynn Corporation seemed to be weathering the tsunami, but Steve Wynn’s just-announced divorce from wife (and longtime boardmember) Elaine Wynn could cause chaos. Both have lawyered up — Elaine with Don Schiller, who got one of the biggest divorce settlements is history for Juanita (Mrs. Michael) Jordan. Nothing like watching billionaires divorce to take everyone’s mind off of their own bottom line.

Industry Insiders: Chris Barish, Martini Park Ranger

Martini Park and Marquee co-owner Chris Barish on underage promoting, the power of the water-sipping celeb, bringing club culture to suburbia, and growing up with the Governator.

Point of Origin: I’m from New York. I started throwing parties at my parents’ home when I was young. We’re talking really young, like 15, 16 years old. You know, there used to be fun clubs in New York. They would have an off night, and I would come in and make a deal with whomever the owner was, because either they were failing a bit or they wanted to make a little extra money. I’d promote to the various people I had met in grade school who had then graduated to high school. When you think about it, we were really young, and I can’t believe these clubs would let us do it. It was New York, and it was a different time, different era, different laws, and a different mayor.

Occupations: I started off investing in Moomba because I just knew that it would be a great success. Jeff Gossett (Moomba owner) had become a good friend and asked me to invest. It became my little playground. In the last 18 years nothing has reached that level. It was celebrity heaven. You had to be in in to go. Which was the opposite of what I ended up doing with Light in midtown.

Light opened September of 2000. I remember we opened on a Tuesday night. There were maybe 20 people in the room. I was nervous. Then Thursday night, Charlie Sheen, who had stopped drinking, did me a favor and came in and only drank water. By 5:30 that evening, there was a line wrapping all the way around the block.

We opened Light Vegas a year later in the Bellagio — same name, but a nightclub. We did something that Vegas had not done in a long time. We flew in over 30 movie stars, athletes. We got a business Boeing jet and flew up Leonardo DiCaprio, Tobey Maguire, Jeff Gordon, and Sting. Charlie Sheen and Denise Richards were there and happy. We got press everywhere [for that]. We then opened up a place called Caramel at the Bellagio and a place called Mist at Treasure Island. When I turned 30, I got a nice offer by the Bellagio to get bought out after only being open two years. By 2005, I started scouting locations around the country (for Martini Park). I felt like there was a need in the marketplace for people in their 20s, 30s, 40s, and on for an upscale nightlife experience that starts after work and leads into the rest of the night. We’re a hospitality-driven nightlife experience for everyone — for people like me. It’s a playground for grownups. We opened in a [Dallas] suburb called Plano, Texas. Then opened up in Chicago and now we’re about to open in Columbus, Ohio, in late October. We will open three to four next year.

Side Hustle: I love film. I produced a short film [called “Kill the Day”] for a very talented friend. I like to play tennis. I’d like to be a yogi, but I can’t really find the time. I’m a new daddy now so everything changes.

Favorite Hangs: When I’m not traveling, my home away from home is Da Silvano. Besides Silvano, I’ve been a fan of Raoul’s for 20 years. When I did go out before [my wife] Michelle’s pregnancy, I’d go to Soho House, Rose Bar, and Waverly Inn. I know it sounds predictable. My favorite old school bar is Merc Bar. It will never close. John McDonald is the owner and a good friend.

Known Associates: I admire, respect, and am good friends with Mark Packer, the owner of Tao. I think he’s one of the best operators out there. Noah [Tepperberg] and Jason [Strauss] from Marquee are colleagues and great friends of mine. Also, Steve Hanson from B.R. Guest Restaurants. He owns about 17 restaurants in the city. He’s a friend who I can email or text, and I know within an hour he’ll text back. Also, my father (Keith Barish) was in the film business and produced 18 films. When I was 12 years old, I walked down the stairs, and there was Arnold Schwarzenegger. He and Dad did The Running Man together and became partners in Planet Hollywood. He did this great thing for my engagement party. He warned me, “First come the engagement ring, then the wedding ring, then suffe-ring.”

Industry Icons: Steve Hanson is someone I want to emulate. He works day and night. I’m naming friends, but they are also people in the industry. I’ve seen a younger generation do great stuff. For example, I’ve watched Jason Pomerantz from the Thompson Hotel do his hotel expansion and he does a very good job. Eric Goode and Sean MacPherson. I don’t know Sean, but I know Eric really well. Here’s an example of someone who started off in nightclubs, had success in restaurants, and now has the Bowery Hotel and the Maritime Hotel. His taste is unbelievable.

What are you doing tonight? I’m going home early from work and I’m testing out our stroller. My wife and I are taking baby Bea out and seeing if we can get our Yorkie to fit in the undercarriage so she doesn’t feel left out.

Photo by Chelsea Stemple.