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As I See It

28 March 2003

After the first week of NCAA action, we always look back to see how we fared. Did we win or did we lose? Was our investment worth the time and energy spent on our return of capital dished out? Did we do a lot of work and "lose" both our time and our cash? Did we win our "big bet?" The one think we know is that we have a much better chance of reaping a reward for constant research, watching and getting updates as the game unfolds. In our business, 2 to 3 hours later we know whether the investment or bet was worth all the trials and tribulations that it took to get us to that point.

It's really no different than the rest of the business community, but our results come a little quicker. What is all this leading up to, you might ask? Every now and then you must make a "big bet" if you want to keep your posture in the business you are in just to show everyone else how big your teeth are and to keep you or, in this case, your company high in the pecking order. Well Las Vegas is no different than any other entity, no matter what you are selling, and this week one of the big companies took a stand on a relatively new concept.

Park Place Entertainment, which owns numerous hotels both in Vegas and other jurisdictions, made a $95 million dollar bet on Celine Dion.

The other night, with all the pomp and circumstance that is afforded to these type of openings, she opened up at the new Colosseum at Caesars Palace in front of a capacity crowd of 4,000 people. First of all, the new Colosseum is basically where the old Omnimax theatre was located, with the Forum Shops the next skip over. She will play 200 dates a year and the rest of the weeks will be played by fill-in acts.

The shows, from what I understand, are sold out for the first three months and according to her publicist they could sell even further down the line, but will wait to make sure that everyone has a shot to see the show (thus trying to keep "scalpers" at bay). This is understandable, if that is the case, but remember this came from their camp. The stage was completely built for her new show; this pattern actually started with "Lefty" Rosenthal when he designed the Stardust showroom to accommodate Siegfried and Roy, Steve Wynn added on that concept when the Mirage opened in '89 and now, with the "Cirque" shows that dot the city, a lot of theatres or showrooms have changed in the last decade.

In Vegas bigger is always better when they design these things and now, by making a show or revue with such celebs as Celine, you must think bigger even before the first nail is pounded. She included Franco Dragone, who is the mastermind behind Cirque du Soleil, to make it an event as opposed to a show. You know... the same thing you do when you buy a game from 7 to 7½ to feel you really got the best of it. I had read that there are 50 people just on his support staff and Celine has 50 of her own, which includes 5 doctors who care for her voice along with 5 lawyers, 2 health service specialists, a yoga instructor and a physiotherapist. It is all the part and parcel of the industry, but the price tag keeps getting higher and the return on investment is also narrowing.

That is where the rest of story now lies.

You see, in the old days casinos looked at these type of openings and events as "loss leaders." Translation: if we pay $5 dollars and it shows a loss over here, that is okay, but over here we are showing a plus of $20 dollars because the minus 5 got everyone through the front door.

MICHAEL'S Restaurant, in the Barbary Coast, has stood the test of time and is still regarded as a must place to eat when you come to Vegas. It's still hard to get in, but everyone tries. There is probably not a night that goes by that you will not see a celeb or, more importantly, a valued customer from another casino that is eating there. As Michael Gaughan once said, "...if I had to rely solely on MICHAEL'S to show a profit, he would be back down at his father's casino [El Cortez] running a shift..." That is what a true loss leader means in Vegas.

That does not cut it anymore as, with the corporations now firmly entrenched, they feel that every department must stand on its own legs or cuts, changes or both will be implemented after the first reviews are in. This is usually a 6-month to a year process.

Now Celine has a no-cut in her contract and the feeling is that she will do great business the first go round, but there are always two sides to every debate. She is no doubt an international star with some staying power, but she must remain an international star or it simply becomes a "concert" that is playing for 200 nights a year.

Caesars palace is taking a calculated risk to try and pump-up a tired and old property to take its place again as one of the beacons of the Strip. Obviously the Mirage was the first to take some steam away, then comes the Bellagio and the Venetian, so Caesars has been scrambling ever since. Personally, I believe they will always be a step behind because they have been piece milling the joint for 15 years and newer is better and always will be. There has been a constant ring of construction around the property for the past five years with no end in sight. It is like having construction people in your house all the time and you are always sweeping off the front porch. There are a lot of reasons why this will work, but also just as many that might hinder this "bet" that Park Place has made.

Again, I was nothing more than a mid-management employee at these joints for almost 25 years but you did see and hear things that would make you draw your own conclusions on major changes. For openers you will see a lot of big shots take their bows if this is successful, but a lot of mid-major guys will be looking for a new job if it does not reach the heights it should or could have. The messengers will be the first ones gone.

I am sure there was a lot of thought process that went into it and also they had to find the right act to pull it off. After all Limp Bizkit and Marilyn Manson might be right for the Palms, but not for the Palace. Conversely, I do not believe that Celine would do that well at the Hard Rock.

Now I have given you a laundry list of items to digest and I am sure you can, and will, draw your own conclusions and now I will give you mine.

As we sometimes lay a huge price when we know we have the winner, we are always concerned about the back door cover. Caesars has definitely got the favorite at probably an inflated number, but I believe they can overcome the extra points that go with the bet. It is definitely not the same as it used to be as they will undoubtedly pick up plenty of ancillary money with the selling of souvenirs and what-not, which will be extensive. It has to sustain for 40 weeks a year at a big number, however, and remember that the yoga instructor has to eat also.

When I look back to when Sinatra played at Caesars and Presley played at the Hilton, it was usually 2 or possibly 3 times a year. Here is where I find the fundamental difference: everybody who was anybody wanted to be there and, since you could only see them once or maybe twice a year, there was a certain anxiety that went along with your trip and the casinos played the part of complimentary host to the "T." Pounding a 4,000-seat arena on a nightly basis with a copy of 100 to 200 dollars might get a little old by the second year.

Do not forget the most important sign: the one you saw at the 21 or craps tables when both Frank and Elvis were performing. The Hilton had a $25 minimum bet and Caesars had a few $25 tables, but mostly were black chip and up when you were looking to swat some cards or make that 10 with a nice line bet with double odds behind.

I have no idea what Caesars has planned for limits, but I would believe that not much would change as this is a work in progress as opposed to the way they used to do it.

This I can tell, as I was pretty close to some people who were privy to the numbers when Sinatra played there: the drop was astounding. Meaning, they could extract as much cash from the two weeks as they might in a normal 3-month period. Some of the old-timers who ran these joints would rather do it this way. Have you around a few times a year then release you to go home get fresh cash and show again down the line. In other words, take a pint of blood a few times a year as opposed to have that needle sticking out of your arm constantly.

These joints are no different than you and me as we all take our chances when we go to the window. They have a much better chance to overcome mistakes, and they make plenty, but you seldom hear about them. Also, under normal circumstances, this is a pretty good investment, but in these trying times they better be double sure. Personally I have nothing against Celine Dion, but if she were singing in my backyard I would be sitting on my front porch.

For the time being, though, they will be the biggest with their 4,000-seat Colosseum which, as I stated earlier, is synonymous with Vegas. Just 50 crap table lengths away to the north, however, is another guy who thinks bigger is always better and that would be STEVIE boy.

So Chuckie Esposito just punched the future ticket on Celine Dion from the sports book and only time will tell whether the ticket has any value or goes into the garbage as so many do.

Take care,

Jimmy V

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