Casino mogul Phil Ruffin didn’t want to leave anything to chance in his pursuit of acquiring Circus Circus on the Las Vegas Strip. So, he put in an “over-the-top offer.”
Ruffin, the owner of Treasure Island, said Wednesday that the sale of Circus Circus and an adjacent 37 acres for $825 million is a win not only for him, but also for seller MGM Resorts International. The deal, which is expected to close later this year and includes the neighboring Slots-A-Fun casino, was announced Tuesday.
Edited excerpts of our conversation with Ruffin are below:
When you tossed your hat into the ring, were you confident you’d land Circus Circus?
We were. Normally, we wouldn’t bid that high, but I wanted to do a preemptive bid, so I made what I thought was an over-the-top offer. I knew it was going to be the high bid and (MGM CEO) Jim (Murren) and I met and he took it. We shook hands on the deal maybe a month ago and that’s what happened. I’m very happy about it. This is going to make a lot of money. Where can you find 102 acres on the Strip? This has been a cash cow for a long time and it’s just going to become more and more valuable.
What are your plans for your new asset?
The first thing we’re going to do is renovate Slots-A-Fun, which has not been done in a long time. That’s going to be first priority. I’m a little skeptical whether we can afford to keep the RV park. That’s expensive dirt and I think maybe we could do something else with it. The 37 acres on the corner, that’s also a hot piece of ground. We view that not necessarily as retail, but as an entertainment complex. That’s what we’ll be pursuing, and it could be a billion-dollar deal.
As you’ve pointed out in the past, the Strip’s north side is a busy area for projects these days.
We have Genting (Resorts World) opening next year, the Drew (Las Vegas) and the convention center, so there’s all sorts of activity on the north end of the Strip. We like what’s happening there. The traffic should really start to generate in that area and we’re right there.
Do you plan to do anything with Circus Circus hotel rooms?
You have to be a little careful about spending hundreds of millions of dollars on the rooms. After all, there are 3,700 rooms. There’s always a demand for moderately priced rooms and that’s kind of the niche that Circus Circus has always had. It’s a family-oriented place. A guy comes with four or five kids and they go to Adventuredome and the Midway and they don’t spend a ton of time in the room. If you were to completely redo all the rooms, you wouldn’t get much more revenue from that because that’s not the customer base.
What do you make of MGM unloading Circus Circus and also making the deal for the Bellagio?
They’re looking at Japan and Japan is a very expensive proposition. Jim, who is brilliant and really great at financing, got a sale lease-back on the Bellagio, so the Bellagio will start paying $245 million per year in rent. What you have to remember is that they make $500 million (annually), so they still have about $250 million in free cash flow. Jim has strengthened his balance sheet substantially. I think that was the goal, and he’s done it. Jim was a joy to work with and he’s a very competent businessman. I like doing business with him.
You’re in your mid-80s now, but is it fair to say that you have no plans to slow down?
I’ll be around for a while. I’ll be running (Circus Circus). We have a really strong management team that we’ve built over the years. It’s not going to be a problem. I’m very happy about this deal — it’s going to make us a lot of money.