The Biggest Bet in Vegas
Impresario Steve Wynn has broken ground on a $1.95 billion hotel, Le Reve
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Wynn maintains that the recent downturn on Wall Street has brought the market back to being a more fundamentally sensible and alluring place; that, he says, accounts for his interest in reentering the public arena. Incontestable is that a little bit of irrational exuberance would have made life easier for Wynn when he was on the road, trying to raise money for his project. He made 44 presentations and found only 12 financial institutions willing to buy into an undertaking that will not earn a dime before 2005. "The IPO period was very nerve-racking," admits Wynn, usually the picture of confidence. "When you are out there, face-to-face with all the institutions and mutual funds, you see guys who are frightened. They want to wait [on investing]. But [he told them], 'I need the money now.' You get that 20 times from people and there is a cold breeze in the room." For Wynn, the stakes were incomprehensibly massive: "You've got all this money you invested, people who depend on you, a partner who believes in you. If that's not enough to make you think twice, then you shouldn't have the money in the first place. If that doesn't bother you, you are the wrong person to be trusted."
The miracle in all of this is that Wynn managed to put together his $1.95 billion in 30 months as mutual fund redemptions were through the roof. "Gathering this kind of capital, on the strength of an idea, requires unbelievable good timing, energy and the transfer of energy; it's like the creation of the universe," Wynn says, adding that it represents the largest casino project financing in the history of the United States. "Creating a company of this size overnight is harrowing. It's not the kind of thing you take lightly. If you do, if you are that confused going in, before you are done you are either dead or you got a lesson. You live through this by hooking up your aorta right to the project, and so do a bunch of other people. That is the heaviest thing of all: you let them down and you cause a train wreck."
But Wynn got his money, he's getting his mountain, and Le Reve seems poised to bring his dream to fruition. In Vegas, a notoriously cutthroat place where hoteliers routinely steal business and entertainers and ideas from one another, Wynn's success at raising the billions is viewed with optimism by his competitors. "It stirs the pot for Las Vegas tourism, and we all benefit from that," says Rob Goldstein, who plans on leading one of the first foursomes to play Le Reve's golf course as soon as it opens. "Additionally, Le Reve boosts the town's image and puts us on front pages for the next three years. It creates awareness, excitement and energy. Hopefully, we at the Venetian will be right behind Steve, developing phase two of our hotel."
Regardless of the optimism in Vegas, plenty of analysts on Wall Street are still hedging their bets. "I think Le Reve will be a success, but it's a question of how big a success," says Dennis Forst, an analyst with McDonald Investments. "They're investing close to 2 billion and I doubt they'll get a 20 percent return on it. When the IPO came up, the buzz was that Steve Wynn is an impressive guy who can build tremendous operations. The issue was his propensity for building the biggest and best properties without regard to cost."
Not expressing any of those doubts is Phil Ruffin, who owns the old Frontier Hotel, directly across the Strip from Le Reve. Ruffin has acknowledged that his green light to build a San Francisco-themed property hinged on Wynn raising his capital. The Mandalay Bay is expanding in the shadow of Wynn's construction and the Bellagio will be building a new restaurant for haute cuisine star Alain Ducasse and a new $375 million tower, with 300 state-of-the-art rooms (including a batch of high-rolling penthouses) that will sit atop an expanded spa. And as much as Lanni likes to discount the influence of Wynn upon his decision making, even he has to admit that the timing is more than coincidence (after all, when MGM built its ultra-lush mansion, it was in direct response to Wynn's Bellagio). "You need competition to be good at what you're doing," Lanni says, poised to illustrate precisely how Wynn's renewed activity will kick off a building boom on the Strip. "Le Reve provides an impetus for us to reinvent what we do. It also makes it easier when we go to the board and request money to expand. The competition is an impetus for us to move ahead faster than we ordinarily might have." After stating that the new Bellagio tower will open six or seven months ahead of Le Reve, Lanni adds, "Le Reve will be a good competitor, but we will be up for it."
It's a sporting sentiment that jibes well with the positive vibe that Wynn seems to be emoting these days. "God bless all the people that believe in this project and have long-term views," Wynn says, sounding genuinely grateful -- for his investors and competitors. "A lot of [the success in raising money] had to do with the city, a lot of it had to do with my track record, a lot of it had to do with salesmanship. But most of all, it had to do with the analytical ability of professional investors who can understand Las Vegas and know that someone who has experience in the town and presents his case efficiently and effectively can be trusted. It was a vote of confidence for Las Vegas from people who know the difference. They didn't have to give me my money, but they did."
Wynn takes a breath. Behind him, dusk settles over the Vegas Strip. Lights from the Frontier Hotel flicker on and throb rhythmically. Asked about the role he might play in igniting the next spate of building here, Wynn visibly relaxes for the first time all afternoon. He wheels back his chair, stretches his legs, and smiles as tension drains from his face. "This project has sort of become an icon of the future," Wynn says. "The thinking is that if Wall Street and Steve Wynn believe in the town, then its best days are yet to come. The money is here and stacked, everybody's heaved a sigh of relief, and I've been adopted by Las Vegas as a symbol. Everyone's rooting for me because they're rooting for themselves. So I've become a homeboy. At age 60, I am Las Vegas's quintessential homeboy." Steve Wynn allows this image to hang in the air for a moment, then he softly concludes, "What a lovely spot to be in."
Michael Kaplan is Cigar Aficionado's gambling columnist.