You only have to get rich once.
When you understand that, you understand there is absolutely no reason to risk a fortune. Lose it, Ed Borgato will be happy to remind you, and you’ll have to make it all over again.
But advice like that has little impact on Tim. That’s because, for Tim, life is not really about the money. For Tim, money is only a measurement of how well he’s succeeding at his passions. Once Tim thought he could have the best of it owning a casino, he was going to have one. It didn’t matter if he needed to put all his chips on the table to get it.
Probably the best way to describe the blood that runs through Tim’s veins comes from Jack Binion, who’s taken some of the largest bets in the history of Las Vegas at Binion’s Horseshoe and who just may be the smartest guy in gambling.
Manufactured emotion—that’s what Binion calls gambling.
This is how Binion explains manufactured emotion. Just say you’re in college. You’re going to USC. When USC plays a basketball game, you’ve naturally got a rooting interest. Your spirit is in that game. You’re screaming for your team, and your heart’s pumping when that last-second shot goes up at the buzzer. Now, just say USC doesn’t make it to the Final Four. But Georgetown does. You’ve never gone to Georgetown. You have no attachment to the school whatsoever. But you believe Georgetown is going to win its next game—so you place a large bet on Georgetown. Welcome back, school spirit!
Tim had gotten back the old school spirit, all right. He was even willing to go through the rigors of a gaming license investigation in order to own a casino.
But I’ve never been a gambler. So the situation looked completely different to me. The idea of working with Tim again definitely gave me a tingle. But Tim was already bounding along the high board and about to take the dive of his dreams. This put me in a strange place—two places, actually. I was with Tim in spirit. At the same time, I was watching him race toward that dive from a detached distance.
Tim was asking me to put up $25 million in an industry that I was still learning about. And when I started asking people in the industry what they thought, many seemed shocked. “What? You want to go back to working like dogs again? Do you know how hard this business is? Especially with a property that needs a lot of work!”
It wasn’t the work that made me apprehensive. It was stepping into territory I knew little about. I wrote out pages and pages of questions for Tim. That drove him nuts. When one partner is gunning the gas and the other is hard on the brake, you can get locked up. That’s why it’s helpful to bring in people you trust to smooth the ride—which is where Perry Rogers and Andre Agassi came in.
Andre and Perry first met when Andre was eleven and Perry was twelve.
Perry had just won a junior doubles title playing alongside Curt Magleby—the same Curt who years later won and quickly lost $1,200 at the blackjack table with Tim at the Dunes, and then watched in amazement as Tim punished himself by dunking his head in the fountain out front.
After Curt and Perry had won their doubles championship match, Perry wandered over to a girl who’d caught his eye. She was cheering for Andre in the single’s championship. Turns out she was Andre’s sister.
Andre lost his match and was none too pleased when he came off the court. When he saw Perry next to his sister, he asked “Who are you?” in a tone that Perry took to be dismissive. The lingering scent of the remark made Perry want to kick Andre’s ass.
Word got around about the affront, and the more it did the more it twisted in Perry’s belly. Now, Perry really wanted to kick Andre’s ass.
The story takes a fork in the road here depending on which of the two is doing the telling. Later that day, Perry got a call to meet Andre at the Red Rock Theater. He thought he was being summoned to duke it out, and he had his mom drive him over. But he arrived late. He entered the theater and walked down the aisle in darkness. There was an open seat next to Andre. When Andre saw Perry, he offered the seat up.
Perry was thinking, “How can you kick the ass of someone who’s just saved you a seat?”
The film was a horror movie, and horror movies make Perry queasy. The guy who’d come to kick some ass was now cringing and covering his eyes all through the feature. Afterward, they went to a donut place called Winchell’s, where the friendship was sealed during a short conversation between Perry and the guy behind the counter.
“That sign at the door,” Perry pointed out, “says you’re open twenty-four hours a day.”
“That’s right,” said the guy behind the counter.
“And you’re open seven days a week?” Perry asked. “Three hundred and sixty-five days a year?”
“Correct,” the guy behind the counter nodded.
“Even holidays?”
“Even holidays.”
“Then why,” Perry asked, “is there a lock by the front door?”
Something inside Andre screamed, “Whoa!”
He couldn’t articulate it then, but he can now. What appealed to him in that moment, he’ll tell you twenty-six years later, is Perry’s knack for questioning parameters. Why are things this way? Why do these rules apply? Once he saw Perry question boundaries, he began to question boundaries himself. Once he began to ask those sorts of questions, it made him realize that how he responded to the answers could have an impact over whatever situation he found himself in.
Any true friendship comes down to a single word: trust. But the partnership between Perry and Andre functioned a little differently than the one between Tim and me.
If you looked at Tim and me as gas pedal and brake, you might see Andre and Perry as a game of leapfrog. You might even call it leap the lock. Whenever Perry or Andre seemed to be walled in, the two of them could always figure out a way to vault over the wall.
When Perry needed money to go to law school, he asked Andre for a loan. Andre was doing well as a professional tennis player at that point, but he didn’t answer. When Perry asked why, Andre said, “Because you need the money. Why would I need to respond?”
Perry went to law school. But law school classes were not his priority. His mind was focused on setting Andre free.
Andre had been trapped by three words. He was a rising tennis star who hadn’t won a Grand Slam tournament when the agency that represented him set up an ad campaign with a camera company. A single television commercial turned Andre’s world upside down. It painted one of the most intense people you’ll meet into a party boy with flowing hair who seemed to revel in making money off his good looks and flair as opposed to winning tournaments. The commercial framed Andre with a slogan that couldn’t have misrepresented him more: Image Is Everything.
Catchy for a camera company. Punishing for a world-class athlete who’d never won a Grand Slam tournament. The image followed Andre like a second shadow and drove him crazy.
Perry set up an office in his room. His law school years became devoted to helping Andre leap over those three words. By the time Perry graduated, Andre had won at Wimbledon. A U.S. Open championship soon followed. Image Is Everything was soon behind them. And Andre’s success had leapfrogged Perry to new ground.
Now, Perry was twenty-six years old and negotiating directly with Phil Knight at Nike on what would be one the largest sports marketing deals ever. Perry seized the moment and thought beyond traditional formulas. He didn’t want to do the deal in cash. He asked for and received Nike stock, which linked Andre’s ascent to the rise of one of the most powerful companies in the world.
The deal took Andre to a place where he’d never have to worry about finances again. It allowed Andre to devote himself to performance. Andre would use that freedom to become one of only five men to win all four Grand Slams. He’d lead the U.S. team to victory in the Davis Cup, win an Olympic gold medal, and capture more ATP Masters tournaments than any other player. He’d earn more than $31 million in prize money. And he’d use that freedom to live a full and complete life.
All of this only widened Perry’s horizon. People took note of what Andre and Perry were accomplishing. It wasn’t long before Shaquille O’Neal approached Perry and asked if he’d represent him. The partnership with Shaquille expanded Perry’s business and led to meetings with new partners that set in motion a hotel deal for Andre in Idaho. Andre became involved in so many deals with Perry that he might actually be in a position as a businessman to leap far beyond what he accomplished as a tennis player.
Perry and Andre’s partnership was never about getting the other to a specific location. It was about one making a move so the two of them could advance. After awhile, their movements were so fluid that their simple game of leapfrog had turned into a blur that led to the construction of the Andre Agassi College Preparatory Academy. Now, there are 630 kids from Northwest Las Vegas going to school tuition-free who’ll have a chance to play leapfrog with Andre and Perry. Who can possibly have any idea where that will lead?
That’s the energy that Tim and I got when Andre and Perry joined us as partners, a force that immediately took Tim and me to new ground.
Perry is the type of guy who surveys the terrain, sets a goal, and then relentlessly pursues it. Andre intuits his way, gets closer and closer to where he needs to go, and then lasers in. Just being around their confidence made me feel comfortable, and added an intensity that Andre compares to surfing a huge wave. When you’ve got four guys dropping down the face of a wave simultaneously, all of you understand in the same instant what it’s like to be in deep, that one misstep will bring the wave crashing down. When everybody can appreciate what everybody else is feeling, it makes the ride that much more exhilarating.
We started to look around for a hotel. Buying a casino is not like going to the store to find a new suit. You’re literally buying the clothes off somebody’s back. And the guy selling usually doesn’t want to undress in public. So the process starts with phone calls that few people know about and continues behind closed doors.
You want to buy a hotel-casino, like any other business, when it’s underperforming and you can sense a lot of upside. The Imperial Palace was underperforming all right, and it had a great location on The Strip. But nobody wanted to go out on the town looking like the Imperial Palace. If it were a suit, it would’ve been ready for the trash bin. As a hotel, it was begging for the wrecking ball.
We turned to the Hard Rock, then to The Golden Nugget. Not for sale, not for sale.
The Las Vegas Hilton was, and it caught our eye. It was a landmark with sixty acres—more of a real estate play, really, but filled with history. Barbra Streisand had headlined in the showroom back in the day. Elvis filled up the joint every night until his death in 1977. The Hilton had recently started to slide when its owner turned its attention toward its newer properties on The Strip. That’s what made it a great deal. It was only a block away from the convention center, and it had acres of developable land. It was the land that really gripped Tim. Anybody who’s grown up in Vegas has heard somebody older tell tall tales about the amazing increases in land value over the years that aren’t really tall tales at all because they’re true. Land value appreciates in most places. But in Vegas, property prices have always had the capacity to turn eyes into the size of teacups. “Oh, nobody will ever pay that,” people always say. But somebody always does. And when everybody looks back, the price always seems cheap.
The Hilton was a great deal. The asking price was somewhere around $300 million, and it would cost a whole lot more to replicate the towers holding 3,000 hotel rooms on a property that size. But $300 million is still $300 million. Our range was well below the asking price. We figured that if Tim and I each put up $20 million, and Andre and Perry put in another $10 million, we could borrow $175 million and make an offer on a property for roughly $225 million. Yeah, it’s a great deal when you can get a $2,000 suit for $1,000. But it’s not so great if you’ve got $600 in your pocket.
Tim’s instincts urged him to hit the gas. He started working with numbers and finance guys to try to make it happen. His mind was back in the day when he could write a check to the L.A. Times advertising department on Wednesday with no money in his checking account because he felt in his gut he’d be able to come up with the cash by Monday morning.
It goes without saying that my instincts reached out for the brakes. My pain-in-the-ass questions kept forcing Tim’s big ideas to the ground. That pissed him off. But I kept reminding him that when you’ve got nothing, you’ve got nothing to lose. When you’ve got $100 million, you’ve got $100 million to lose.
But after everything we’d been through, he was just counting on me—and my $20 million.
“What the fuck, Tom, just trust me!”
Of course I trusted him. I trusted him like a brother. But I wasn’t the guy on the frozen lake anymore. I’d been cautiously negotiating with Barry Diller. I understood due diligence. It didn’t matter how much I trusted Tim. A deal is a deal. I was going to understand every aspect of it. Until I did, I was going to plow through it with the same due diligence whether I was dealing with Tim, Barry Diller, or Phyllis Diller.
“Tom, are you looking for a way not to do the deal?” Tim would say. “Seriously, we’re trying to get into this business. Keep your mind open.”
“My mind is open. This is going to cost us $300 million and then we’re going to have to renovate.”
“They just redid the rooms.”
“They say they redid the rooms. They redid the carpeting and some fixtures in some of the rooms. It’ll cost another $100 million to do them all right. So now we’re at $400 million. If we borrow to reach that number, we may not even be able to make our interest payments.”
I’d inspected the place down to the boiler room. Tim kept insisting that I had lost sight of the big picture.
Our arguments kept bringing us back to our original game plan. We could comfortably offer $225 million. That’s just what we did, and we were rejected. The rejection couldn’t have been timed better.
Just as the “no” arrived from the Hilton, we got a “yes” from The Golden Nugget. Its owner, MGM Mirage Corp., was now interested in selling it to focus its energies on its larger properties, pay down debt, and buy back stock. It was perfect timing squared. The overall valuations of casinos in early 2003 had fallen to an unprecedented low due to the slow recovery from the aftershock of 9/11.
The only downside to The Nugget was its location. It was downtown. If you start at The Strip and drive toward down-town on Las Vegas Boulevard, one of the first things you start to notice is how the prices begin to sag all around you. The $350-a-night room at the Bellagio slowly gives way to a motel with a cactus on the marquee advertising rooms at $29 a night, which descends toward a $19 motel room further down the boulevard. By the time you reach downtown, signs are advertising fried Twinkies for 99 cents.
The mayor, Oscar Goodman, was constantly trying to figure out ways to revitalize downtown. Any man who can go from an attorney who represented mafia figures to the mayor of one of America’s fastest-growing cities cannot be counted out. So there was a glimmer of optimism.
On the other hand, as the investor Warren Buffett has cautioned, turnarounds rarely turn around. Downtown Las Vegas certainly was a turnaround. The Golden Nugget wasn’t, though. It was making $30 million a year. Tim went to check it out.
We’d been to The Nugget dozens of times to discuss rooms for Travelscape. But this was a different trip. Tim wanted to see if he could imagine owning it. He stood before the iconic arched entranceway flashing neon and stepped inside. There was a painting on the wall in the lobby—a portrait of the casino back when Steve Wynn first ran the place. The brilliant colors make it instantly recognizable as the work of LeRoy Neiman. But if you weren’t tipped off, you might not notice the faces at the bottom left hand corner. There was Steve, Kenny Rogers—The Golden Nugget’s director of entertainment at the time—and Frank Sinatra. The vibe coming off this painting was exactly what Tim wanted to bring back.
He stopped and recalled the great TV commercial back in the ’80s that Wynn did with Sinatra, the one where Frank walks in and Steve heads over to greet him. “Hi, Mr. Sinatra,” he says. “I’m Steve Wynn, and I own this place.” Sinatra tucks some cash in Wynn’s palm and says, “Make sure I have enough towels.”
The thought of owning the same joint where he’d had the buffet breakfast as a kid after Sunday mass made Tim smile. But he had to make sure it felt right in the present.
He passed the sixty-one-pound golden nugget on display that we later found out was a fake, a replica of the real golden nugget that the MGM Mirage had locked away. But the phony was behind glass, and how the hell would anybody know the difference? It sure looked like history. The marble floors in the lobby were buffed. The crystal chandeliers were cleaned by hand. The joint was old, but it was old in the way the Waldorf-Astoria is old. You don’t think of the Waldorf as old. You think of it as classic.
The MGM Mirage had put some effort into polishing The Nugget up. The casino floor was small, but that made every trip a short walk. Nobody would have to check in at the front desk, walk way past the casino to reach the elevator to go to the fiftieth floor, stop sixteen times on the way up, then walk a half mile down the hall to get to his or her room. On the way down, the elevators emptied right into the casino. You always felt like you were in the middle of the action. It was comfortable—a four-star hotel with two-star prices and a clientele that had been coming for years. There was a feel to The Nugget, impossible to describe or re-create, that let you know you were in a place like no other.
Tim walked over to a blackjack table and conspicuously pulled out a wad of cash. It was the first time in his life that he wanted to lose money. He wanted to see if a host would come over and offer him a free meal and a player’s card, find out where he lived, maybe get a phone number to invite him back. A host did come over. He did ask Tim if he had a player’s card. When Tim said no, that he was just messing around, the host left him alone. If we buy the joint, Tim thought, that might be the first guy fired.
Tim blew about three grand at the blackjack table and felt good when nobody approached him to comp his dinner. If a host had done everything that Tim thought he should’ve done, we might’ve felt that there was little to improve upon. But there was plenty. The Nugget was bringing in $30 million a year. Maybe we could get it up to $40 million.
Tim stepped outside, wandered through some of the other casinos, and then along Fremont Street. It was sad that a jewel like The Nugget was glittering across the street from a jail. But there were more people walking on Fremont Street than there were in front of Treasure Island on The Strip. They were much more likely to pass through the doors of The Nugget because The Nugget was the grand dame of downtown. People didn’t come downtown to play at Fitzgerald’s. If you were strolling downtown, sooner or later you’d wind up at The Nugget.
When I drove over with Tim not long afterward, I saw many of the same images. It was busy, not bustling. Polite, but not overly friendly. Good, but not great. It wasn’t exactly a turnaround job, but there was a huge upside.
We were lucky that the MGM Mirage execs didn’t want to sell to just anyone. They didn’t want to see The Nugget in the hands of one of their corporate competitors. They liked the idea of handing it over to young guys with energy and fresh ideas.
We offered $190 million.
They asked for $225 million.
After several rounds of negotiations that got down to the real sixty-one-pound golden nugget that was locked away in a vault, we settled at $215 million. We still had to get financing and a gaming license. But if everything worked out, we’d get The Golden Nugget property downtown, a sister hotel-casino in Laughlin, and the real golden nugget that was locked away. We made the announcement and met the staff. It felt great when Bobby Baldwin, an MGM executive and a legend at The Nugget for decades, joined us to assure everyone working at the hotel that they were in good hands.
Not long afterward, we went to Andre’s home to celebrate the completion of the first stage. It was one of those meals that you never forget. Andre’s kids were running around, his son hitting a ball dangling from the ceiling with a baseball bat, while his wife, Steffi Graf, tried to keep up with them. Andre had a large barbecue fork in his hand. Steaks were marinating. Andre wouldn’t let anybody see his marinade. It was top secret.
“How do you want your steaks?” he asked. “Exactly how?” We tried to go outside to see him working by the grill, but he said, “No, no, you guys stay inside.”
When he put a steak down on my plate, he threw his hands up in the air and said, “Now, tell me that’s not the best steak you’ve ever had!”
It was the best steak I’d ever tasted. Sure as hell beat the one I’d had in the first-class section of Northwest Airlines as a kid.
But the beauty of the moment was seeing how hard Andre was working at being a host. There were no chefs around. He was doing all the work, and nothing was beneath him. Tim and I had been talking for a long time about hosting, how we wanted to treat people once they entered The Golden Nugget—and the best model for what we wanted to do was right in front us.
We all paused for a moment around the table and said grace, thankful for the food and the friendship.
Some people might have suspected that we wanted Andre along for his name. Extra cachet, as they say in Vegas. They didn’t understand. Andre has the chance to do dozens of deals, and he and Perry are very careful about the ones they select. Substance is everything to Andre and Perry—and it was one of the keys to our partnership.
The substance of our travel business enabled us to attract a seventy-year-old industry icon named Chuck Mathewson as an additional investor. It lured Mark Burnett and Fox to offer us the chance to star in our own reality TV show. When you’re putting up a lot of your own money, when you’ve got folks like Andre Agassi and Perry Rogers on your team, you get trust in return. We crisscrossed the country to raise money for the deal and landed in Las Vegas ten days later with all we needed at an interest rate lower than we’d anticipated.
The power of substance became even more apparent when another of our investors, in for $2.5 million, got cold feet. As soon as Andre heard, he volunteered to go in for more money.
“You know what I’m gonna bet on every time?” Andre told Perry. “I’m gonna bet on us and the people who we grew up with.”
“I’m with you,” Perry said. “But there are a lot of other deals we’re looking at.”
“Don’t worry about the money,” Andre said. “Just make the bet. I know them. I trust them. And I’m throwing it down on them.”