The Siegel Group, A Commercial Real Estate and Business Development Company
 

IN THE NEWS

Las Vegas Business Press
May 6, 2008

Yes, That Dust-Coated Guy at Gold Spike Really Is The Owner

By Benjamin Spillman

Steve Siegel during the Gold Spike Casino Renovation
Stephen Siegel, who spent $21 million in February to purchase the Gold Spike, is taking a hands-on approach to helping renovate parts of the downtown casino.

A "hard hat tour" is one of the easiest gimmicks available to keep a casino construction project in the spotlight.

It starts with a fancy invitation sent by a public relations firm to members of the media.

On tour day cheery PR folks herd said media onto a job site, hand out vests and hard hats, then shepherd the awkward group to a photogenic area. That's where reporters and bloggers dutifully transcribe remarks from a seemingly authoritative guy wearing a suit and hard hat. At this point the sound of camera shutters clicking is louder than any work taking place. The suit guy is usually a casino company official who hasn't touched a tool of any kind since posing for pictures at the ground breaking with a painted shovel.

Knowing the ubiquity of the casino hard hat tour in Las Vegas is what made a recent visit downtown to the Gold Spike so interesting.

The Spike is a small, smoky casino west of Las Vegas Boulevard on Ogden Avenue. Even during its heyday under renown casino owner Jackie Gaughan it was known as a bit of a dive, albeit a fun dive.

Gaughan sold the Spike several years ago and subsequent owners took out table games, pared back offerings in the cafeteria and basically stripped the "fun" out of "fun dive."

Stephen Siegel, the new owner, bought the Gold Spike in February for $21 million, nearly $5 million more than the previous owner spent buying the property six months earlier.

Siegel promised he would be the one to spend the money to bring back table games and return some fun to the property. But promises to fix up old casinos are worth about as much as a $1 chip from the Lady Luck, the shuttered property that shares a corner with the Spike.

So the last thing anyone would expect to see happening so soon at the Spike would be major demolition of nearly the entire casino level. An even bigger surprise was to see Siegel in the middle of the activity.

Siegel, who didn't know a reporter was on site, was picking at a mirrored support pillar in the middle of the torn up area while some workers and a colleague with blueprints stood by.

Eventually, after a few others poked at the pillar -- apparently to determine what was behind the decorative facade -- Siegel gave it a good kick. The facade crumbled. Mystery solved.

Later, Michael Crandall, Siegel's right-hand man, said hands-on will be the business philosophy at the Gold Spike.

"If it has to get done we will go in there and do it ourselves," Crandall said.

Although much of the property is now a construction site, the bar and a portion of the casino floor remain open. Crandall said Siegel promised he wouldn't close during renovations.

"We still have not fired one person. We are keeping all our staff," he said.

The plan is to have the casino renovations complete by July, when the company United Coin is scheduled to take over the gambling side of the operation.

Then work will start on the hotel rooms with completion scheduled by September.

Downtown Las Vegas has had more than its share of broken renovation promises. And nothing is going to change the lousy national economy or make downtown as attractive as the Strip.

But seeing a casino owner take interest in a renovation as the real work is done, instead of just during the hard hat tour and the ribbon cutting, is a good start.

Economic fallout from the mortgage mess, inflation and sky-high demand for oil is taking a tough toll on Las Vegas tourism. Gambling win, visitation figures and airline traffic are all down lately.

But the harshest numbers are 440 and 70. Those are the numbers of people laid off by MGM Mirage and Station Casinos, respectively.

The layoffs came not long after top executives at both companies were recognized for success.

On April 11, just a few days before MGM announced 440 layoffs in Las Vegas and Mississippi, The Associated Press reported company Chief Executive Officer Terry Lanni made $9.6 million in 2007. MGM Mirage President and Chief Operating Officer Jim Murren made $6.6 million.

Their combined $16.2 million in cash and compensation would be enough to pay 440 people nearly $37,000.

News of layoffs at Station came just days after company bosses Frank Fertitta III and brother Lorenzo Fertitta appeared posed on the cover of Forbes magazine with the headline, "Ultimate Cash Machine."

They boasted to the magazine about plans for a $10 billion gambling and entertainment resort they want to build on Tropicana Avenue just west of Interstate 15 and took a reporter and photographer for an inside look at their lucrative Ultimate Fighting Championship, a mixed martial arts series they bought for $2 million in 2001 and built into an empire worth more than $1 billion.

A less publicized disclosure to the Securities and Exchange Commission last week reported that in 2007 Frank and Lorenzo Fertitta earned $2.29 million and $1.77 million, respectively, in salary from Station. The executive team did even better in the transaction that made Station a private company in November. Combined, five current Station officers and two former officers reaped stock valued at $421,251,619. That would be enough to give 70 people more than $6 million each.

The SEC filing also noted Lorenzo Fertitta and two other executives are scheduled for "Long-Term Stay-On Performance Incentive" pay just for remaining employed by Station. Fertitta is down for a $333,333 payment in 2004, 2007 and 2010. Executive Vice President and Chief Accounting Officer Thomas Friel had scheduled payments of $125,000 in 2006, 2008, 2010 and 2012.

News of corporate and management layoffs, however, didn't make the cover of Forbes. They were reported inside the Review-Journal Business section April 25. And it was a spokeswoman, not the executives, who fielded questions.