In December Billionaire Phil Ruffin Sr. bought MGM’s Treasure Island Casino in Las Vegas for $775 million, reported the Wall Street Journal.
“I knew to build a 3,000 room hotel today would cost $3 billion,” Mr. Ruffin told the Wall Street Journal. “I think it is a good value.”
Lesson 1 – Know Your Numbers
Mr. Ruffin, who made his first fortune leasing gas stations and convenience stores, was one of only a handful of potential buyers who had the cash on hand to complete a purchase.
Lesson 2 – Cash is King…”No man's credit is as good as his money.” ~E.W. Howe
Mr. Ruffin is buying back into Vegas after having sold his previous venture at the height of the city’s real-estate boom.
His Las Vegas record has so far been a lesson in restraint, and impeccable timing. In 1998 he bought his first Las Vegas casino, the New Frontier – a low rent property mired in a six-year union strike – for $165 million. Less than a decade later, he sold it for $1.24 billion at the height of a Las Vegas land-buying frenzy.
Lesson 3 – Buy When No One is Buying and Sell When No One is Selling
Years earlier, while other Las Vegas operators took on billions in easy debt to outdo one another with ever-more extravagant gambling palaces, Mr. Ruffin cancelled his own $2.7 billion plan to tear down the New Frontier and build a new resort in its place. “It wasn’t a difficult decision because the numbers didn’t work,” he said in a phone interview. “I’m pretty good at math.”
Lesson 4 – If the Numbers Don’t Work, Don’t Do It
When asked about the recent email promotion Treasure Island recently sent out for $49-a-night rooms he laughed and said, “We know it is going to be soft for a couple of years. That’s OK. We won’t have any debt, so we’ll be OK. That’s what gets everyone in trouble, they pile on that debt.”
Lesson 5 – Debt Closes the Doors of Opportunity
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