Winner Takes All
Wynn, Adelson, Kerkorian and the megaresort capex race.
Summary
Christina Binkley covered Las Vegas for the Wall Street Journal and wrote this account of the three men who built the modern city: Steve Wynn, Kirk Kerkorian and Sheldon Adelson.
The business history covers the transformation of Las Vegas from a gambling town into a resort and convention destination. Wynn built the Mirage in 1989, financed with high yield debt through Michael Milken, which established the model of the destination resort whose non-gaming attractions draw visitors who then gamble, and followed it with Treasure Island, Bellagio and later Wynn Las Vegas. Kerkorian built the International and then the MGM Grand, and assembled the largest casino company through acquisitions including Wynn's Mirage Resorts. Adelson built the Sands Expo Center and then the Venetian, and identified the convention business as the mechanism for filling rooms midweek, before taking the model to Macau.
Binkley covers the financing, which is central: casino development requires enormous capital and the industry was transformed when high yield debt became available to it. She also covers the personal rivalries, the labour relations including the Culinary Union, and the transition of the industry from private and sometimes criminal ownership to public companies. The book is journalism and stops before the 2008 collapse that damaged several of these companies severely, and before Macau became the industry's centre of gravity.
Key takeaways 7
- High yield debt financing made destination resort development possible, and the industry was transformed when that capital became available.
- Wynn's Mirage established the model in which non-gaming attractions draw visitors who then generate gaming revenue.
- Adelson identified the convention business as the mechanism for filling rooms midweek, which changed the economics of a resort.
- Casino development requires enormous capital committed years before any revenue, which makes financing the binding constraint.
- The industry transitioned from private and sometimes criminal ownership to public companies, which changed what capital was available.
- Kerkorian built scale through acquisition while Wynn built through development, and the two approaches produced different companies.
- The book stops before the 2008 collapse and before Macau became the industry's centre of gravity.
Who should read it
Investors in capital-intensive hospitality and gaming who want the development and financing history of the modern Las Vegas industry.
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