Casino City Newsletter: Issue 349 Volume 7 Page 1

May 21 - May 27, 2007

Wynn to deal with dealers
by Howard Stutz, Las Vegas Gaming Wire

LAS VEGAS, Nev. – One day after a vast majority of its casino dealing force cast ballots in favor of union representation, Wynn Las Vegas executives seemed resigned to negotiating a collective bargaining agreement with the New York-based labor organization that will speak for the workers.

The National Labor Relations Board has until next week to certify the results of the weekend election at Wynn Las Vegas, where dealers, in a vote of 444-149, asked to be represented by the Transport Workers Union of America.

Gregory Kamer, a Las Vegas-based labor attorney who represents Wynn Las Vegas, said Monday nothing has come to the attention of Wynn management that would cause the casino operator to file an objection to the election results with the NLRB. Wynn executives referred all calls on the union vote to Kamer.

"Once the (NLRB) certifies the election, we'll look at our calendars and schedule a negotiating session," Kamer said.

Frank McCann Jr., who directed the organizing drive for the Transport Workers, said Sunday the property's roughly 700 dealers expect to see the casino eliminate the tip-pooling program that led to the labor unrest and subsequent union vote. In addition, McCann said, dealers want to have the right to divide their own tips and want job security initiatives.

"Hopefully, we'll be able to sit down and negotiate an agreement in good faith," McCann said. "That's what the workers intend for us to do."

Wynn Las Vegas has just one other union contract, a lengthy agreement with Culinary Local 226 that covers about 4,000 of the resort's estimated 9,000-person work force.

At the crux of the union vote is Wynn's decision to change how the casino splits tips among its dealers.

Wynn executives added certain managers and casino supervisors to the list of those who qualify to share in the casino's often-times lucrative tip pool on Sept. 1. Wynn dealers said that before the tip pooling program was started, they could earn $100,000 or more annually and the change was costing them as much as $20,000 a year.

Wynn Las Vegas management said it started the policy to correct a pay disparity that had dealers earning more than their supervisors. Critics argued Wynn Las Vegas should have raised managers' pay, not broadened the tip pool.

The tip-pooling program has not found its way into other Strip casinos.

MGM Mirage Chairman Terry Lanni e-mailed a message to several company executives last week that said similar tip pooling changes would not be used in any of the gaming operator's 10 Strip resorts. A copy of the e-mail was obtained by Wynn dealers and posted in their break room.

MGM Mirage spokesman Alan Feldman e-mailed Lanni's statement to the Review-Journal.

"While we have stated as much publicly and been quoted in press reports, I want to make the position of MGM Mirage on this topic clear and unequivocal," Lanni said. "Dealer tips are their income. The money they earn belongs to them. Our company will not implement any type of tip-sharing program at any of our resorts. This commitment extends to all our casinos and will be policy at CityCenter when it opens in 2009."

Wynn Resorts Chairman Steve Wynn, in what amounted to an eleventh-hour appeal to sway the dealers from voting in favor of union representation, told employees in three different meetings that it had been a mistake to implement the tip-pooling change.

Wynn apologized to the dealers, saying the revamped tip pooling was a mistake.

However, he stopped short of saying he would eliminate the program.

A tape of one of Wynn's 20-minute talks was secretly recorded by a dealer and e-mailed to the media and other interested parties by pro-union dealer representatives. Las Vegas political commentator Jon Ralston placed a link to the recording on his personal blog.

Kamer didn't dispute the unscripted comments made by Wynn.

"It was a private meeting for our employees and taping it was a violation of company policy," Kamer said. "Steve said he made a mistake, but he didn't want the dealers to make a mistake by voting for the union. He said, however, that he would respect however they voted."

The tip-pooling program has spawned nine months of heated debate at the hotel, including complaints by dealers to the state labor commissioner, a lawsuit filed by two dealers in District Court, and sidewalk protests by dealers.

In addition, Assemblyman Bob Beers, R-Henderson, proposed legislation in Carson City that would ban the tip-sharing agreement. Beers' original bill died in committee but was revived after being amended into another bill and approved by the Assembly in late April.

A hearing on the bill in the state Senate was canceled last week.

Beers said Monday that despite the union vote, he doesn't expect the bill to be revived.

"The only way if will come out of committee and onto the Senate floor is if the chairman (state Sen. Randall Townsend, R-Reno) and the majority leader (state Sen. Bill Raggio, R-Reno) get a call from Mr. Wynn and he tells them to bring it out," Beers said. "Otherwise, with less than three weeks left in the session, I don't think it will come out of the drawer."

More than $1.2 billion: New Frontier sale sets record
by Howard Stutz, Las Vegas Gaming Wire

LAS VEGAS, Nev. -- An Israeli-owned real estate investment group, in what is being called the most expensive large-site transaction on the Strip, has bought the New Frontier and its 36 Strip acres for more than $1.2 billion, the casino's current owner, Phil Ruffin, confirmed late Tuesday.

Ruffin said El Ad Properties, which controls several landmark New York City buildings, signed the purchase agreement last week for the hotel-casino site.

Ruffin, a Wichita, Kan., businessman who paid $167 million for the New Frontier in 1998, had been seeking an equity partner to help finance redevelopment of the New Frontier into a 2,750-room Swiss-themed resort.

He said a $100 million deposit on the deal arrived Monday.

"We're under contract, and that means we're doing the deal," Ruffin said. "We've been successful with the property, but it got to a point where it was better to let someone else come in and redevelop the site."

Ruffin had been in negotiations with El Ad since March. An Internet-based real estate Web site reported a deal had been struck to sell the New Frontier to El Ad for $1.5 billion on March 19, but Ruffin denied the reports.

Ruffin and gaming sources familiar with the deal said El Ad will close the aging Western-themed hotel-casino when the transaction is completed in 90 days. The 984-room New Frontier will be demolished, and El Ad will build a replica of New York's landmark Plaza Hotel on the site.

El Ad bought the Plaza in 2005 for $675 million and is remodeling the renowned property, which includes converting some units into Manhattan's highest-priced condominiums.

Ruffin said the 1,000 New Frontier employees were being informed of the sale this morning.

Phone calls to El Ad officials, whose offices are in New York City, were not returned late Tuesday.

On its Web site, El Ad estimates its holdings in Manhattan at more than $2.5 billion. In addition to the Plaza, the group owns 21 Astor Place, The Grand Madison and the O'Neill Building.

"They are setting records for the prices they are getting for the condominiums at the Plaza," said John Knott, executive vice president of the Global Gaming Group from CB Richard Ellis, who was familiar with details of the transaction.

Ruffin said the deal with El Ad does not include the seven acres on the backside of the New Frontier site which hold the $1.2 billion Trump International Hotel & Tower. Ruffin said the nongaming towers will continue to be owned in partnership with New York billionaire Donald Trump.

The initial 1,282-unit Trump International first tower is expected to be topped off in a May 25 ceremony and opened sometime next year.

"Donald has already heard about the deal, and he was thrilled to death," Ruffin said. "This is going to be a really good deal for the towers, and it will help them out tremendously."

Gaming and real estate analysts have estimated prime Strip land values at between $20 million and $30 million an acre. Recently announced transactions involving the Sahara and land on the north end of the Strip have been estimated at between $17 million to $23 million an acre.

The New Frontier's acerage increased in value as activity took place on the surrounding properties. Wynn Las Vegas opened in 2005 at a cost of $2.7 billion across the Strip on land that once housed the Desert Inn. Wynn Resorts is building Encore, a $2.1 billion addition to Wynn Las Vegas that is expected to open in 2009.

On the north side of the Desert Inn Super Arterial, Boyd Gaming expects to break ground next month on the $4.4 billion Echelon on the site of the Stardust, which was imploded in March.

At more than $1.2 billion, the 36 Frontier acres sold for more than $33 million an acre, which Knott said is the most expensive large-site transaction on the Strip.

Harrah's Entertainment paid the equivalent of almost $85 million an acre for the 4.3 acre site at the northeast corner of the Strip and Flamingo Road that houses Bill's Gamblin' Hall, formerly known as the Barbary Coast. Harrah's swapped land with Boyd Gaming Corp. for the site.

Ruffin was ranked 717th on Forbes' global billionaires list in March with an estimated net worth of $1.4 billion. He was considered the savior of the New Frontier when he acquired the casino from the Elardi family.

The property had been the site of the nation's longest ongoing work stoppage when more than 550 employees, backed by the Culinary Workers Union, walked off the job in September 1991.

The workers spent 2,325 days on the picket line, going back to their jobs at 12:01 a.m., Feb. 1, 1998, when Ruffin took possession of the casino.

Over the years, Ruffin had floated several ideas for redeveloping the New Frontier, the most recent being a $2 billion, 2,750-room hotel-casino called Montreux and themed after the Swiss resort near Lake Geneva.

The property originally opened in 1942 as the Hotel Last Frontier and renamed the New Frontier in 1955. Reclusive billionaire Howard Hughes bought the property for $14 million in 1967 and dropped "New" from the hotel's title. The Frontier was controlled by the Summa Corp. before it was purchased by the Elardi family. Ruffin added the "New" back to the name.

The New Frontier launched the Las Vegas career of Elvis Presley, who played his first-ever show at the casino on April 23, 1956. The Frontier was the site of the final performance of Diana Ross and The Supremes on Jan. 14, 1970.

Magicians Siegfried and Roy had a seven-year run at the Frontier starting in 1981 in "Beyond Belief." The show racked up 3,500 performances for more than 3 million showgoers before the duo signed a $57.5 million deal with casino developer Steve Wynn to perform at The Mirage.

More recently, the New Frontier has been known as the home of Gilley's Saloon and Dance Hall, which features bikini bull riding three nights a week and live mud wrestling twice a week.