Former Golden Nugget owner Steve Wynn once said his brainchild "never had a losing year." Well, Timothy Poster and Tom Breitling changed all that. After scarcely 12 months at the helm of the Nugget, the self-proclaimed "Golden Boys" are fleeing Glitter Gulch with exponentially mounting red ink at the Downtown casino—and a walloping $110 million profit from reselling their flagship property to a restaurant chain. Clearly, these two did something right, above and beyond playing the local media like a harp and racking up a land-speed record for gossip-column appearances.
Two dotcom millionaires, a corporate board short (read: utterly devoid) of casino experience, a challenging market and a risky strategy—wide-open high-roller play. What could go wrong?
"It was clearly performing below expectations in the short time they owned it," remarks one stock analyst. In announcing the takeover, Landry's Restaurants CEO Tilman Ferttita said his company would bring "operating skill and steady leadership" to the Nugget, as if to imply that those qualities had been hitherto lacking.
So, can outsiders succeed in the Vegas market?
Obviously not. File Breitling and Poster (henceforth P&B) with Swiss Casinos and London Clubs, two other Vegas newbies that found that, even if they could make it anywhere they still couldn't make it here.
"Here's another group of guys coming to Nevada thinking it's easy pickings," says casino consultant Dennis Conrad, "but at least they come out of it smelling well." "They didn't have deep pockets," adds CRT Capital Group analyst Steve Ruggiero, "but they [also] didn't know the business. They didn't have experience, that's the bottom line and that was their Achilles heel."
But P&B are making out like bandits, aren't they?
Although Landry's inherits P&B's entire debt load (plus what Ruggiero describes as a "marquee property in fine condition"), the escalation in Las Vegas land values is a rising tide that's lifting all boats—even the ones Downtown.
I guess that reality show (Fox's defunct The Casino) wasn't such a good idea, huh?
Oh, it was splendid—provided you covet the image of a sleazy place where customers inadvertently pick up transvestites and are forced to listen to Lt. Gov. Lorraine Hunt sing.
What does Downtown need?
A reason to go there other than gambling or jury duty. The first you can get anywhere and the second you try to avoid. P&B were very aggressive in their marketing and their entertainment offerings but won't be around to see if their long-range plans pay off.
Barrick Gaming, which has acquired a nearby gaggle of also-ran casinos faces the same challenge, as its business plan hinges on people moving back Downtown in significant numbers. "They look like they've got some fairly deep pockets," says Conrad. "They're thinking big." Las Vegas Advisor Publisher Anthony Curtis agrees that Barrick appears to be "in it for the long haul." Is Barrick hospitality supremo Larry Magnum, P.I. Manetti their secret weapon? "No comment," Curtis laughs. "At least they're doing things."
Will the Nugget continue its high-risk play?
The new owners, parents of Joe's Crab Shack, are unlikely to follow the P&B policies that resulted in a $9 million loss to a single high roller. Landry's is talking about "franchising" the Nugget nationwide, giving mixed feelings to some. Curtis says he's "sorry to see the Poster-Breitling factor go away" because they were ambitious, even if too much so for their own good. Now, he wonders, "is it going to become the Golden McNugget?"