Backstory: Viva Las Merger
Las Vegas Mercury
Thursday, March 03, 2005
By Michael Green
Last week, MGM Mirage, Mandalay Resort Group and Nevada gaming
regulators made history…repeat itself.
Not to minimize the $8.7 billion merger that will, at least for now,
give Kirk Kerkorian control of the MGM Grand, New York-New York,
Bellagio, Mirage, Treasure Island, Monte Carlo, Mandalay Bay, Luxor,
Excalibur, Circus Circus, two turtle doves and a partridge in a pear
tree. It’s a highly significant moment in Nevada’s history–and, in
some ways, American history. But it’s certainly not the first great
concentration of economic power in Nevada.
So, how has history repeated itself?
– On the Comstock Lode, William Sharon ran the Bank of California’s
Virginia City branch. He and the bank controlled most of the
Comstock’s major mines and mills, a water company, transportation
companies and a railroad.
With the Tonopah-Goldfield boom of the early 20th century, George
Wingfield followed in Sharon’s footsteps. He owned most of Nevada’s
leading mines, Reno’s top hotels and several Nevada banks until the
Great Depression gutted his empire.
The next leaders were casino operators. You could make a case for
Meyer Lansky, to whom some Las Vegas operators apparently funneled a
lot of money. Or, in the 1930s and ’40s, Kell Houssels, who owned
parts of several downtown clubs, a popular restaurant and bus and cab
companies. Or Cliff Jones, an attorney involved in gaming and
well-wired everywhere. Or Moe Dalitz, whose finger could be found in
nearly every local pie. Or Howard Hughes, whose story is well-known.
Steve Wynn not only owned several resorts but was politically and
socially influential in a public way that Kerkorian prefers to
avoid. But when some called Wynn Nevada’s most powerful man, they
apparently hadn’t heard of Sharon or Wingfield. Kerkorian certainly is
powerful–and part of a tradition–but hardly grasping in the way
Sharon and Wingfield were.
– Birds of a feather flock together. Sharon faced competition from the
Silver Kings, led by John Mackay, who hit the Big Bonanza, then bought
or built their own mills, banks and transportation firms. Sharon
wasn’t popular with Mackay and his colleagues. But when Sharon bought
the Territorial Enterprise, Virginia City’s great newspaper, he ended
up with about 80 percent of it. Most of the rest belonged to Mackay.
When Wingfield’s empire collapsed, the men around him–attorneys like
George Thatcher and William Woodburn, businessmen like Norman Biltz
and John Mueller–didn’t burn him in effigy. They latched onto Pat
McCarran, the U.S. senator who had fought them and Wingfield for
decades and succeeded Wingfield as Nevada’s political boss.
In early Las Vegas, the railroad ruled the roost. Even if William
A. Clark
wasn’t too hands-on, his company, in partnership with the Union
Pacific, was the seen and unseen hand. Ed Clark, Pop Squires, John
S. Park, Walter Bracken and Peter Buol seemed to invest in everything.
Before corporate gaming, the state frowned on multiple ownership, but
casino operators found ways. Del Webb owned several casinos. Several
investors had points–shares–in several places, from Eddie Levinson
in the Sands, Fremont and Horseshoe to Jackie Gaughan in, it seemed,
every casino off the Strip. They ran their own places but often were
involved in others.
Wynn and Mandalay built the Monte Carlo, then Kerkorian got half of it
and now all of it. And he has a partner in the Atlantic City Borgata,
Bill Boyd, who has a few casinos of his own. Birds of a feather? Yes.
Big birds.
– Kerkorian. In a history filled with business people great and evil,
visionary and predatory, Kerkorian is a story unto himself. He’s
certainly a Horatio Alger story–rags to riches, and no one doubts
hard work has been at the center of it. He’s built and bought
companies and tends not to be sentimental about them. But it’s worth
bearing in mind that he has built the largest hotel in Las
Vegas–indeed, the world–on three different occasions: The
International, now Hilton, in 1969; the MGM Grand, now Bally’s, in
1973; and the new MGM Grand, in 1993. Each time, he set a new
standard.
He also has played a significant role in the entertainment, airline
and auto industries, among others. He obviously is a key figure in Las
Vegas history, but also in American business history generally, and
that combination is rare.
– Las Vegas is not unique. If you read this online via AOL–that is,
Time Warner Turner HBO aol.com–or you watch the Knappster on that
affiliate of CBS, which Viacom owns along with Comedy Central, the MTV
networks, Nickelodeon and TV Land, among other outlets, you should
know monopolies or near-monopolies, for good or ill, are part of the
past and present, whatever the industry or party in power. And the
next merger, between Harrah’s and Caesars, will be even larger than
this one.
Kerkorian, MGM Mirage and Mandalay are part of the story of modern Las
Vegas and modern America. That’s the fun part of this history: It’s
being written as you read it.
PHOTO CAPTION: “Kerkorian: Not the first Nevadan to amass such
economic power”.
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