There’s a dark horse in the race for a Toronto megaresort … very dark. It’s Onex Corp., known to you and me as the owner of the Tropicana Las Vegas. Onex subsidiary Casino ABS owns four of the largest casinos in Alberta. So Onex owner Gerald Schwarz has some justification for saying, “We know how to operate a casino,” although on the basis of Onex’s Vegas stumbles, many would challenge that assertion. In its favor, Canadian-owned Onex has “favorite son” status. However, Schwarz’s big talk hasn’t been accompanied by a big wallet at the Trop. A promised $265 million in renovations was whittled down to $145 million, and CEO Alex Yemenidjian’s tenure has been marred by a series of contractual wrangles and high-profile defections. It’s hard not to feel as though Schwarz is entering a Shetland pony in a thoroughbred race.
While Caesars Entertainment is still getting its pants on, MGM has sent CEO Jim Murren and a couple of veeps to the Great White North, where they’ve been putting a full-court press on Toronto Mayor Rob Ford, his brother and several other city bigwigs. Caesars’ lumbering entry into the race has all the reflexive, me-too, act-first/think-later characteristics of the Gary Loveman regime: If the CEO of MGM leapt off a tall building, Loveman would take the plunge also rather than miss out on the experience.
Caesars certainly doesn’t have the swag to match the Ontario Lottery & Gaming Corp.’s gargantuan desires. (Although the business model is more Kansas than Singapore: You pay much of the construction cost, then split the revenues with the province.) The OLG’s starry-eyed ideal is Marina Bay Sands, which only cost a trifling $6.3 billion, possibly more. Even had Sheldon Adelson been able to stay on budget, we’re talking a $3 billion investment, minimum. If the province can afford to chip in some of that moolah (can it?), Caesars doesn’t have a couple of billion just lying around and even MGM’s rekindled bromance with Wall Street would be put to the test.
Murren may be thinking that, too. MGM’s site of preference is Toronto’s historic Exhibition Place, which already has the desired convention infrastructure in place (thereby saving money up front), as well as a highly strategic location. It’s also won a sheaf of “Greenest Exhibitor” awards, which makes it a logical vehicle for Murren’s “sustainability” crusade.
The almost certain victim of the OLG’s ambitions will be Woodbine Racetrack, which will lose its 6,000 slots if a casino is built in the metro area. And, as we all know, we the horsey set says that racinos “boost” the horseracing industry, what they really mean is “prop it up.” In the recklessly candid words of Maryland Jockey Club Secretary of Racing Georganne Hale, “I love more money.” Who doesn’t? Unfortunately, most of us don’t enjoy the luxury of having our hobbies publicly subsidized. Judging by Maryland’s desperate reliance on slot money, pulling the one-armed bandits from Woodbine would effectively send it to the glue factor.
Besides … what’s the over/under on when Steve Wynn makes Toronto an offer it can’t refuse?
Counter-intuitive much? In Macao, where tourism has increased 48X over the last 13 years, Adelson, Wynn, MGM and their competitors have been pouring hotel rooms into the market by the thousands. And, despite low midweek occupancies, that’s still not enough. The city’s 23,222 hotel rooms are maxed out on weekends and holidays. Color me surprised, but applying the Las Vegas model to China might work out after all. (Although, in a pointed dig at Adelson, Government Tourist Office GM Al Merschen says, “Some people [read: Las Vegas Sands] call Macao the Las Vegas of Asia. But, in reality, Las Vegas is the Macao of the U.S.” That’s cold.)
Hello? Governor Sandoval? Wow, just think of how dramatically Nevada Gov. Brian Sandoval (R) could reverse the Silver State’s joblessness numbers if he employed the, uh, unique methodology of Wisconsin Gov. Scott Walker (R). But Sandoval is an honest fellow who wouldn’t resort to such chicanery to save his own skin. Now if Jim Gibbons were still around …
Oversight of the Week: How did Gary Loveman not make this list? (Just lucky, I guess.)