Making the News

Philadelphia Inquirer

Originally Published:Sunday, February 28, 2010
http://www.philly.com/inquirer/local/20100228_behind_wynn_s_foxwoods_move.html

Behind Wynn's Foxwoods move
Vegas player sees big money on the table in S. Phila.

By Jennifer Lin
Philadelphia Inquirer

Stephen A. Wynn builds not just casinos, but billion-dollar fantasylands.

In 2005, the $2.7 billion Wynn Las Vegas opened with a Ferrari and Maserati dealership on the premises, poolside blackjack, and a golf course with a waterfall towering 37 feet.

He spent $1.2 billion on the three-year-old Wynn Macau in China, which showcased a tree sculpture of 2,000 branches and 98,000 leaves dipped in 24-karat gold.

Now, the 68-year-old showman has redirected his sights from those gilded environs to a congested stretch of Columbus Boulevard in South Philadelphia, next door to a Wal-Mart.

What on earth is Steve Wynn thinking?

Taking over the foundering Foxwoods Casino project is not as much of a business non sequitur as it may appear, gaming analysts explain. They say it is a sign of the times.

Besides, where else is Wynn to go?

The gaming industry in the United States has experienced a tectonic shift. Increasingly, struggling states are looking at Pennsylvania's newfound success at generating tax revenue from gaming in the last three years - more than $1 billion in 2009 alone - and they are following suit. In the last 16 months, Ohio and Maryland approved casinos, while Delaware this year joined Pennsylvania in allowing table games.

Business is draining from destination resorts like Atlantic City and Las Vegas to casinos in regional markets that play up convenience.

Which brings us to Wynn Resorts Ltd. and the Delaware River waterfront.

The company, which last year brought in revenue of $3 billion, confirmed last week that it had agreed to become Foxwoods' majority partner, with at least a 51 percent stake; the local investor group and the Mashantucket Pequot tribe would cede control of the faltering project. On Wednesday, Wynn is scheduled to travel to Harrisburg to present his plan to the Pennsylvania Gaming Control Board, which must approve a new design.

Whatever his vision for the 16 acres between Tasker and Reed, it is not as grandiose as the original 2006 plan. Wynn told analysts Thursday that he would not build a hotel, but assured them that the property would not be a "slots-in-a-box."

"This will be the cutest casino you have ever seen," he said.

Big national gaming companies used to pooh-pooh regional markets such as Pennsylvania, said Joseph Weinert, an analyst for the casino research firm Spectrum Gaming Group. But with operators like Parx in Bensalem (formerly PhiladelphiaPark Casino & Racetrack) posting revenue of $357 million last year from about 3,000 slots, "only a fool would say, 'I'm not interested in being a part of that,' " Weinert said.

Wynn also posited that a local casino could realize returns that are "much better than what you would get in Las Vegas." One reason: lower marketing costs. For instance, he said, he wouldn't have to build a helipad on the waterfront to shuttle high rollers.

The Philadelphia gaming market is getting crowded: Between Wilmington and Bethlehem, Pa., four casinos already are open, and three more are planned. However, Wynn may see an irresistible opportunity in table games - his strong suit.

Larry Klatzkin, a gaming analyst for Chapdelaine Credit Partners in New York, said: "His casinos cater to large high rollers, the big gamblers."

Wynn Las Vegas and its sister resort, Encore, generate less than a third of their gaming revenue from slots, Klatzkin said. In comparison, Nevada statistics show that other large casinos on the Las Vegas Strip depend on slots for more than half their revenue.

Pennsylvania is providing even more of a lure. The state taxes slots revenue at 55 percent, but legislation passed in January prescribed only a 16 percent tax for table games - one of the lowest rates in the country.

Wynn Resorts already has customers here. Its players' club has 107,000 gamblers who live within 60 miles of the proposed South Philadelphia site, Wynn said. "We know these people. We know what they like."

Wynn has burnished his name into a luxury brand. Philadelphia officials see that as an advantage for the project.

"He's the kind of guy who takes great pride in where his name is," said City Councilman Frank DiCicco, whose district includes the Foxwoods site.

DiCicco said he believed the Wynn group would be more front and center than the current Foxwoods group, led by a partnership for the charitable interests of New Jersey sports-team owner Lewis Katz, developer Ron Rubin, and Comcast-Spectacor chairman Ed Snider. The Mashantucket Pequot, who operate the Foxwoods Casino in southeast Connecticut, were supposed to develop and manage the casino, but could not because of the tribe's financial troubles.

Like Donald Trump, Wynn is a maestro at personality-driven marketing, a trait that goes back to his early days in gaming. In the 1980s, he starred in television spots for his Golden Nugget casinos in Atlantic City and Las Vegas; in one, he delivered fresh towels to headliner Frank Sinatra.

In 2000, after a hostile-takeover battle, Wynn was forced to sell Mirage Resorts - operator of Mirage, Bellagio, and Treasure Island in Las Vegas, and Beau Rivage in Biloxi, Miss. - to Kirk Kerkorian's MGM Grand Inc. Wynn lost his company, but increased his fortune. Last year, he ranked among Forbes magazine's 400 richest Americans, with an estimated wealth of $2.3 billion.

Making a comeback with Wynn Resorts, he did another star turn in a TV ad. Premiered during the 2005 Super Bowl, it showed Wynn standing atop his new high-rise hotel, calmly boasting that Wynn Las Vegas was "the only one I've ever signed my name to."

So will this city see Wynn Philadelphia?

Mayor Nutter said he had been told exactly that, when he met Tuesday with Wynn executives. But industry sources say the company is considering using the initials of its chairman - SW - on the casino. It would be a down-market brand, much like Marriott's Courtyard budget hotel chain.

Whatever Wynn decides to call the casino, he'll have to work at easing any lingering ill will from the last time he made local headlines. In 1998, he secretly bought the Dream Gardens glass-mosaic mural by Maxfield Parrish and Louis Comfort Tiffany. Art enthusiasts were outraged when they learned of his plan to move the masterpiece from the Curtis Center to a Vegas casino.

Ed Rendell, then mayor, dispatched Rubin, the developer, to reach out to his friend and explain the city's attachment to the masterpiece. Wynn withdrew his offer, and the mural stayed put.

Wynn is also familiar with East Coast gambling. In the early days of Atlantic City, he was a fixture. He opened the Golden Nugget in 1980, the sixth casino after New Jersey legalized gaming, but sold it in 1987.

When Pennsylvania approved gaming in 2004, Wynn was among the many gaming executives scouting locations in Philadelphia. The Inquirer reported that he was interested in a Center City site and even toured potential spots with Rubin. However, Mayor John F. Street discouraged Wynn from planting a casino downtown.

More recently, Wynn Resorts was interested in a slots parlor at the Aqueduct Racetrack in Queens, N.Y., but dropped out of the bidding in November.

Now all attention is on Wynn's appearance in Harrisburg. He must present the Gaming Control Board with drawings of the project and details of how he will finance the deal. Not surprising, Wynn is confident about playing his hand. He has a "clear vision," he said, "of what we have to do."

 


Contact staff writer Jennifer Lin at 215-854-5659 or [email protected].

 

Spectrum OSO Asia SPECTRUMETRIX  Spectrum-i 
© Copyright 2007-2017 - Spectrum Gaming Group. All Rights Reserved.

Spectrum Gaming Group • 1201 New Road, Suite 308 • Linwood, NJ 08221 • USA
Phone: 609.926.5100 • Fax: 609.926.5121 • [email protected]


Site Development and Hosting provided by
MasseyMedia