Circu Circus Casino
Mirage Resorts Inc. CFO Dan Lee used a slide taken from the rules of the Parker Bros.
game to explain the advantage of having a single owner for a number of hotel-casinos in
one row: “If a player owns all the lots of any color group, the rent is doubled.” That
Mirage’s latest property acquisition happens to be called Boardwalk only enhances the
analogy. (The Monopoly board actually is designed around an Atlantic City, New Jersey,
street plan, but in a town that boasts its own New York skyline and is building a faux
Paris, complete with a scale-model Eiffel Tower, that hardly seems a problem.)
“You want to stack your hotels and try to get the customer to land there,” says
Glenn Schaeffer, president and CEO of Circus Circus Enterprises Inc. The company has
taken the Monopoly strategy to extremes by placing three properties-- the
medieval-themed Excalibur, Egyptian-themed Luxor, and the soon-to-be-opened
Mandalay Bay-- in a row along the west side of the Strip. There they abut Monte Carlo,
jointly owned with Mirage. And it’s aiming for more. Indeed, Circus is “the only
company that has a contiguous mile of frontage,” which should provide it with enough
land for a decade of future expansion, Schaeffer says. “We know what Project Z is, where
it sits, how many rooms it has, how it fits with the tropical theme of Mandalay Bay.” The
only question, besides financing, involves when enough new visitors will justify a new
round of building. “We’ll see about the absorption rate in Las Vegas,” Circus’s president
says. “Then we’ll act when the dust clears.”
Both Schaeffer and Lee have proved themselves adept at business techniques that
would serve Monopoly players equally well.
Take friendly alliances, for example. Few are warmer than theirs. Former
neighbors, they worked closely together on Monte Carlo, and continue to exchange
finance-related information from time to time. “We sort of share best practices between
us,” says Schaeffer, including, for example, what terms they get on bank loans. “It doesn’t
hurt our negotiating stance” to enter talks aware of arrangements other companies have
worked out, he says. Further, the two men are in contact about possible monorail service
connecting their properties north and south of Monte Carlo. (They are at odds, however,
over a Mirage-Circus deal in Atlantic City that went sour. Schaeffer calls their personal
relationship “compartmentalized” to allow for such disagreements.)
Lee and Shaeffer are adept, too, at blocking positions--strategies purchases of land
that stop rival players. Working together, the Mirages and Circus CFO’s pulled off a
doozy a few years ago, buying a Carrows lease that prevented MGM Grand Inc. from
buying the restaurant, tearing it down, and using the land to expand its profitable New
York-New York property. “It must be the most expensive least of a Carrows in the
U.S.,” notes Schaeffer, but it’s worth it to Circus and Mirage because “we just don’t want
our competitors to own it,” Lee calls New York-New York “a [next page]