Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos (19 page)

That was as high as we were going to take Tilman. Soon we would see how low he would try to take us. It was time for the boys from Skadden, Arps to come in.

Lawyers on both sides started working on the purchaser's agreement. The numbers were complicated. We didn't want the final purchase price to be linked in any way to the level of our recent earnings. We wanted Landry's to buy at the point where our profits would've been if Mr. Royalty had never set foot in the place, and if we hadn't budgeted so much on marketing to build the business up. We wanted Tilman to buy at the numbers that he would've seen with normal cash flows after our transition year. There were also complex financing terms involved, including bond payments and a $23 million revolv
ing line of credit. If I began to describe all the twists in the deal through all the numbers on the table you'd be reading another book. And it would be a confusing book, because the numbers never really meant what the numbers seemed to be. Sure, Tilman could offer $330 million. But it wasn't
really
$330 million if it didn't assume The Nugget's $23 million revolving line of credit. There were countless ways for that $330 million to get chiseled down.

So I'm going to boil all the figures down to a simple concept.

Here it is. There's only one number that counts when you're selling a property. That's the money that goes into your bank account at the end of the deal. As precise as all the other numbers might be, they're just pencil marks on legal pads.

The lawyers worked through the points with give and take on both sides. Landry's agreed to assume The Nugget's revolving line of credit. We agreed to allow Landry's to define the purchase price on its press release. As we inched closer and closer, I remained at a strategic distance. I knew a shot was coming, and I waited for it with a poker face.

When it arrived, I still couldn't believe it.

It occurred, amazingly, in a room full of lawyers from Skadden, Arps. Neither Tim nor I was there. At the end of a long day of negotiations, Scheinthal walked to the easel at the head of the room and started reviewing the agreement. As he strolled through the purchase price, he tried to push off two bond payments at roughly $7.5 million apiece on Tim and me.

They were trying to siphon $15 million from our end of the deal in full view of Ed Borgato and some of the best lawyers in the country. Ed blinked in disbelief. “Hold on, Steve, you're forgetting something. That's not the deal at all.”

Scheinthal tried for an Academy Award. “Ohhhhhh, we thought those payments were going to come out of
your
end of the deal.”

Lawyers from both sides looked at each other. Ed stopped the meeting and asked Scheinthal and a few others to adjourn to another office.

“Steve,” Ed cut to the chase, “what's going on?”

“Ed, we can't do the deal at this price. It's too high. Our board of directors won't allow it. We can't get a fairness opinion from our banker.”

First, they had to have The Nugget. Now, they can't possibly do it. The boys from Skadden, Arps had never seen anything like it—and they'd seen it all. I was determined to remain disciplined and keep my poker face as the lawyers went home and the deal disintegrated. It was hard to know if it was simply ridiculous, or merely posturing for the next round.

“Tilman will be back,” Tim said. “He's got the green felt disease. I know. I had it once myself.”

The green felt disease is local lingo for a syndrome that wealthy businessmen are prone to when they get around Vegas. They just have to buy a casino. Maybe Tilman had the green felt disease. Maybe he was competing with his cousins. Maybe he'd overextended himself while getting us to the table. He was making interest payments on all the money he'd borrowed to do the deal. That had to be burning a hole in his pocket. If he really wanted The Nugget, we had him over a barrel. But playing this kind of poker with a guy like Tilman can put your stomach in knots and drive you to the nuthouse. It's like being at a poker table with a guy who won't make a decision. You're sitting there waiting for an answer. Are you in big-time? Are you out? Make up your mind already!

We figured he was going to take his shot—and he had. But now we got a call that he wanted to talk to us personally. He was
flying to Vegas to work it out. We had no idea what he had in mind. Perhaps it was just as confounding for Tilman to figure
us
out.

Tim and I had assumed contradictory roles. He was the guy who wanted to surge ahead and get the deal done while I remained stone-faced and leery. While these were roles, there was some truth to them under the surface. Tim is impatient. He believes that when too many people are around the negotiating table the deal tends to slow down. So he has a tendency to go off on his own and solve problems as if he were the Lone Ranger. I needed to hold him back and exercise patience. That was one reason we'd directed all communication through Ed.

But now it was time for us to move. The good guy/bad guy routine can be useful if you're trying to keep your rival off balance. But Tilman wasn't showing us all of his cards. So Tim and I had to come together and put ours on the table.

Exactly how much money did we need to put in the bank in exchange for everything we'd put into The Nugget? It was a serious conversation, but it could have been a scene in a comical movie. That's because Tim was preparing for a part in a movie at the time, a movie we were shooting on the property. The movie was called
Bachelor Party Vegas
—and Tim had agreed to play a part as a casino owner. As he pored through spreadsheets to determine the number we needed to see in order to make the deal work, he paused again and again to rehearse his lines. But finally, we crunched all the figures down.

Tim, our partners, and I had put up $50 million of our own cash to buy the joint. Tim and I were in for $37.5 million. Andre and Perry were in for $7.5 million. And Chuck Mathewson had put up $5 million.

We could negotiate all night with Tilman about bond debt payments and the revolving line of credit, but that would only
sidetrack us. We needed to stick with a single, firm number and not waver—just as we did with Expedia. The number we'd agreed upon before we were sidetracked was $163 million. That was still our number. All Tillman had to do was put $163 million in our bank accounts and The Nugget was his.

“Any regrets?” Tim asked.

“No regrets,” I said.

Someone knocked on the door to tell Tim it was time for makeup.

Tim had to shoot and reshoot a scene where he snapped a pool cue in half and went wild admonishing a bunch of young guys having a bachelor party. It took about fourteen broken pool cues to get it right, and Tilman was left waiting until after midnight for the shooting to end. As soon as it did, Tim and I went to meet him.

Tilman explained that his board wouldn't let him go in for the additional $5 million. Tim became as focused as a laser. He walked to a white board and picked up a marker. And he wrote the number that mattered to us most: $163 million.

Whatever Tilman needed to do to make the final purchase price put $163 million in our bank accounts was fine by us. Whatever Tillman wanted to do on his company press release was fine by us. But
that
was the number we needed to see in our bank accounts.

There was discussion, agreement, and a casual conversation that ended at 3:00
AM.

The lawyers soon returned to The Nugget and began to move forward. We were close enough to begin sending Tilman a copy of our DOR every morning. And then a not-so-funny number appeared on the DOR midway down the page on the left-hand column.

One of our big players came into town and asked for the
high limits to which he was accustomed. It was a tough call. The limits had been strapped down ever since we stopped taking Mr. Royalty's action. But this guy wasn't Mr. Royalty. He was a nice guy, and we liked him. Tim came to me and asked what I thought we should do. We figured if he were lucky, he'd beat us for a million. If not, we'd probably take him for three million. It was almost like a last fling. We let him bet big—and the guy won a million bucks.

Naturally, the dreaded parenthesis appeared on the DOR. Of course, we could say this was abnormal, that we'd win it back and recover by the end of the month. But if you were Tilman, you woke up one morning to find out the property you were purchasing was worth a million dollars less than it was the day before. What if this pattern continued? Even Tim acknowledged that Tilman had a legitimate beef. The problem was the way he decided to cook it.

Tilman and Scheinthal walked in uninvited on a meeting between Ed and our lawyers holding a copy of that DOR.

“This is a problem. You're telling us that everything is fine, but it isn't. We're paying big money here, and we can't buy it at this price if this is what's really going on.”

The more they got into it, the more heated the exchange became.

“Listen,” Ed said, “there's an ebb and flow on the casino floor. It swings both ways. When you get the keys to the place you can change the odds and limits and run a different kind of a casino.”

But logic is only kerosene on the fire to someone spoiling for a fight. This was not a logical confrontation, and it built to the point where Scheinthal lost it.

“Tim Poster sat right here and said that business is going good,” he said. Scheinthal grabbed a pad that had a hard back,
slammed it on the table and broke it in half. “Tim Poster is a fucking liar!”

Ed's fist slammed down on the table. “Don't you ever call Tim Poster a liar in this building! In fact, you can all get the fuck out right now.”

Scheinthal and Tilman began to jabber that they weren't going to be taken advantage of.

“Hey,” Ed came back, “let's not pretend that this is anything more than you guys trying to lower the price. You're paying a fair price—and you know it. If you don't understand the ebb and flow and economics of the casino business, maybe you ought to go back to Texas and continue to up-sell cheesecakes!”

This is just about the spot where I innocently opened the door and stepped into a room that suddenly went quiet.

“Hey, guys, what's going on?”

You couldn't help but breathe the tension.

“Tom, we're going to wrap up here in two minutes,” Ed said. “Can we see you a little later?”

As much as I tried to maintain my poker face afterward when the heated back-and-forth was related to me, there's just so much a guy can take before he says “What the fuck?” I thought the deal might be dead yet again. Tim took being called a liar less personally than I did. He sensed it was just posturing. His response was to return the gesture. When a group of Landry's lawyers unpacked for their own session without knowledge of what had just gone down, Tim walked in and asked them what they were doing.

“We're going to have a meeting.”

“No you're not,” Tim said. “Pack up your shit and get out.”

He came back to my office. It wasn't long before Scheinthal was slinking in to apologize to Tim. Tim didn't hold it against
him. Then Steve asked Tim if he'd go talk to Tilman for ten minutes.

I wanted to go with Tim, but Tim thought that it was personal. “Let me go alone,” he said. “Tilman wants to apologize and get things back on track. I feel it. Let's see if there's really a deal here. I'll be back in ten minutes.”

Tim left. I stayed seated at my desk while Ed and the boys from Skadden, Arps paced back and forth, and Bally licked her paws and wondered what was going on. Fifteen minutes passed. No Tim. Twenty. No Tim. Half an hour. No Tim. I sensed the Lone Ranger was at it again. The boys from Skadden, Arps were not happy with the situation, whatever it was. I worked the phones to keep Andre and Perry appraised, and kept the door closed so that none of the tension would leak outside.

It's kind of crazy to describe the room in terms of tension when I think of my father landing an airplane carrying hundreds of passengers after an engine has failed. But I did get more and more anxious as the lawyers paced in front of me. They were worried that Tilman would seize on Tim's desire to sell and get the price lowered. They were worried that things were out of control. As time passed, I began to feel like a pilot whose passengers were entering the cockpit to find out just who was flying the plane. After forty-five minutes, I couldn't take it.

I headed to Tilman's suite with Ed. From behind the door, we could hear laughter ripple through the air. Like a couple of buddies who'd just returned from a morning of hunting with a sack of quail.

I rapped on the door.

There were some footsteps. Then Tilman answered.

“What's going on here?” I asked. My heart was pounding.

Tim popped up from a chair.

“Tom, Tom, everything's fine. Tilman just wanted to talk to me.”

I remained expressionless as they quickly summarized their discussion. Tilman wanted to pick up the negotiations at the point where they were before he'd seen the parenthesis on that DOR. He wanted to get the deal done.

Tim, Ed, and I excused ourselves and walked through an archway in the suite to an adjoining room.

“If they're willing to do the deal at the number we agreed upon the other night,” Tim asked, “are we still willing to trust the guy and do the deal?”

Trust was the last word I wanted to hear at that moment.

“You told me you were going to be back in ten minutes,” I said.

Tim had taken the apology and used it to smash through the wall and get the deal done. But he was looking at a guy who didn't give a shit about money when it's measured against the word “trust.”

We were no longer lucky whiz kids who hit it rich because of the Internet. We were no longer the boys who'd been chumped by Barry Diller. We were now men who'd used our very different strengths and everything at our disposal to be able to knock down the wall and finalize this deal. But in the end, we were still Tim and Tom. And so we stood a few feet apart, arms crossed, fuming.