Inside Asian Gaming

June 2013 | INSIDE ASIAN GAMING 21 of its own themed off the group’s crown jewel, the Plaza Hotel in New York. They happily forked over something above $31 million an acre for Mr Ruffin’s 38 acres. Mr Ruffin had bought the venerable Frontier in 1997 for $50 million he borrowed from himself and a $110 million note from the hotel’s sellers. The rooms already were 30 years old. The entire place was badly showing its age. The Culinary Union had been The New Frontier closed in July 2007 and was imploded that November. Not four months later, Bear Stearns imploded. In September 2008, Lehman went under. The bubble had burst and there was blood everywhere. IN FOCUS picketing out front for seven years. He quickly settled with the union and spent the ensuing decade talking up various multibillion-dollar plans for the property, which he renamed the New Frontier, and none of which amounted to anything. So in the end, the wily Kansan walked with a 675% profit on his investment, good for a cool $1.08 billion, about $100 million a year for every year he was there, not counting what he made off the gambling and the rooms and the restaurants over those years. He would later buy Treasure Island from a cash-strapped MGM Mirage (now MGM Resorts International) for $775 million. El Ad closed the New Frontier in July 2007 and imploded it four months later. Bear Stearns imploded not four months after that. Lehman went under six months later. The bubble had burst. Credit markets were frozen. There was blood everywhere. Boyd halted construction on Echelon, never to resume it. As for El Ad’s $1.24 billion patch of sand, it may be the most expensive empty lot of all time, save for some temporary fencing and a line of parched, hastily planted evergreens to conceal it from the tourists—a reminder, like the half-finished Fountainebleau and Echelon’s gaping substructure next door and the empty lot up on Sahara Avenue where James Packer’s $5 billion Crown Las Vegas never got built, of how badly things can go wrong. The company says Plaza Las Vegas is still a go. But they’re already in the hole for four times more money than Las Vegas Sands generates in EBITDA on the Strip in a year. MGM Resorts hasn’t turned a profit in five years. Caesars Entertainment’s 2012 operating loss exceeded $313 million. And Genting Group has snapped up the Echelon disaster zone, which is more than twice as large, for $350 million, less than one-third of what El Ad spent for the New Frontier. El Ad’s problem really is this, which is not to belabor a well-worn point, but Las Vegas’bottom line, although it has improved measurably since the worst of the Great Recession, is designed around average Americans spending the kinds of money they thought they could spend when ballooning home values had them thinking they were rich, when in point of fact they are now considerably poorer. From the height of the boom to the depths of the bust, $16 trillion in national wealth disappeared. This is according to a recent report by the Federal Reserve. Less than half of that wealth has been recouped, adjusting for inflation and population growth, and that’s mostly due to gains in the stock market. This is supported by Census Bureau data analyzed earlier this year by Pew Research Center, which found that between 2009 and 2011, while the mean net worth of the 8 million households of the wealthiest 7%—the people who invest in stocks and bonds—surged 28%, that of the 111 million households in the other 93%, whose wealth is mostly bound up in their homes, dropped by 4%. “A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,” the Fed stated. This is not going to change anytime soon. US Labor Department data shows private employers added about 175,000 jobs in May, which is in line with the average over the last 12 months or so. It’s a rate at which it will take five more years before unemployment is down to pre-recession levels. Unemployment actually ticked up to 7.6% from 7.5% in April. Wages, in the meantime, are up only about 2% and barely keeping pace with inflation. Yet, consumer confidence rose to a five- The half-finished Fountainbleau