An ‘interesting and exciting opportunity’

For some years now the north end of the Strip -- anchored by the Stratosphere Tower, Circus Circus and the aging Sahara -- has been considered the resort corridor's poor relation. The site of the old El Rancho Vegas (claimed by fire in 1960) still stands vacant on the southwest corner of Sahara Avenue and the Strip. Across the Boulevard, the Wet 'n Wild amusement park closed in 2004, leaving another gap.

But it looks like that's all about to change.

In March, Los Angeles-based SBE Entertainment Group, in partnership with San Francisco-based Stockbridge Real Estate Funds, agreed to acquire the 1,720-room Sahara from Gordon Gaming in a deal likely valued between $300 million and $400 million. Renovations and new facilities are promised.

Boyd Gaming Corp. is expected to unveil designs by June for its $4.4 billion Echelon development, on the site of the demolished Stardust. And this past week, the company planning to build the $2.8 billion Fountainebleau, just south of the Sahara, sold nearly 20 percent ownership in that project to Australia's largest gaming operator, increasing the likelihood that construction on the 63-story, 3,889-room hotel and casino planned there could soon be under way.

But in what could prove the biggest news yet, MGM Mirage -- currently building the massive $7 billion Project CityCenter on 66 acres between Bellagio and the Monte Carlo -- announced Thursday it has finalized two land deals worth a combined $575 million to buy 34 acres between Circus Circus Drive and Sahara Avenue, bringing its contiguous holdings in the area to more than 100 acres.

Combined with a planned renovation of Circus Circus, that's enough land for an even larger version of CityCenter.

"This land assemblage creates a very interesting and exciting opportunity for our company to create an integrated resort complex on the north end of the Strip," explained MGM Mirage President and Chief Financial Officer Jim Murren. "What's exciting about this purchase is that it fully unlocks the value of the Circus Circus land."

MGM Mirage expects to eliminate the recreational vehicle park and low-rise motel on the west end of the property, opening up an additional 44 acres to be combined with the newly purchased 34 acres.

And Mr. Murren says an enhanced Circus Circus will play an important role in the new development, as other casinos that cater to middle-income customers, like the Stardust, are eliminated from the market.

"We're going to put some money into it and enhance and expand it over time," Mr. Murren says. "Circus Circus will be a gateway to our new development, similar to what Monte Carlo is to Project CityCenter."

The profusion of such grandiose plans starts to sound like "piling on." Newcomers often shake their heads, insisting (based on their experience elsewhere) that growth at such a pace can't continue, that the market has surely reached a "top" and is due for a slowdown, a shakeout, a slump.

For more than 50 years, the smart money has always smiled and taken that bet.

No, that's not to say nothing ever fails here. The renovation of the Moulin Rouge and the brilliant idea called Neonopolis still fail to impress. And a number of planned condominium high-rises have proved to be nonstarters -- even as their better-funded brothers rise to change the city skyline daily.

But eager investors married to seasoned developers continue to bet on this town's ability to please an increasingly affluent tourist trade. And it now appears the north end of the Strip will no longer be "the exception that proves the rule."