Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos (8 page)

He tried to make sense of his funk by looking at the lives of Bill Clinton and Steve Wynn. He wondered what Clinton would do at a relatively young age now that the presidency was behind him. And now that Wynn had just sold more than two decades of his creativity and relentless work on The Golden Nugget, the Mirage, Treasure Island, and the Bellagio to Kirk Kerkorian and MGM, what new ground would Steve break?

Everything Tim had done, everything he was, pointed back to his business. Now he felt like he'd given up his baby. He missed everything about it. It was more than driving hard for bigger numbers and celebrating over T-bones and cigars at Morton's steak house. Tim missed playing practical jokes on Naaygs. He missed the laughter that rocked the office. Even when he'd gotten into a fistfight with a pediatrician over park
ing spaces at our ever-expanding office, he might have regretted it later, but he damn well knew he was alive. Pressure, tension, stress—that's what made Tim's heart tick.

Though he had millions in the bank, Tim felt hollow. His days were no longer filled with Frank Sinatra. Now, he heard Peggy Lee singing “Is That All There Is?” Who could possibly comprehend what he was going through? The kid who had to hope for his dad to make a winning bet the night before a vacation to Disneyland could now provide for his extended family beyond his mother's wildest imagination. There were about fifty million men in America who were wishing for Tim's dilemma. If he so desired, Tim would never have to work another day for the rest of his life. What right did he have to complain?

He didn't tell me or anybody else, but he started seeing a shrink and taking Prozac.

One thing you learn about having a dream come true is that you're going to wake up the following morning. When you do, it's wise to have another dream or goal in place.

I had a goal. I had to see how well I could do on my own. So the transformation after the sale was much easier for me precisely because the questions I needed to answer set a staircase in front of me. One of those steps took me to a seat on Expedia's board of directors in February of 2002, just as Barry Diller bought a 60 percent share of the company from Microsoft. Suddenly, I found myself preparing to sit at the same conference table to work side by side with the guy who'd screwed Tim and me over when we'd tried to sell him Travelscape!

“Is Tom still mad at me?” Diller wanted to know before I joined the board.

There are people who would've refused to enter a room with Diller if he'd done to them what he'd done to us. Make no mistake about that. But Sumner Redstone, the CEO of Viacom,
says he doesn't let history get in the way of the future. Anyway, that's just the attitude I took.

That first board meeting with Diller was a big day in my life—one of those days when you're up before the alarm clock rings. Say what you want about the guy, but the list of people who've worked with Diller over the years grabs your lapels and gets your attention. Michael Eisner, who became the CEO of Disney, mentored under Diller. So did Jeffrey Katzenberg, who started DreamWorks with Steven Spielberg. At one point, they called those guys the Killer Dillers. I simply needed to know if I could hold a seat in the room at that level.

I was staying in New York at my favorite hotel, the St. Regis. I put on my best suit. My best shirt. My best tie. Maybe I looked like I belonged in a Barry Diller boardroom. But inside I was still the same guy who had a hard time figuring out trigonometry. The same guy who'd been rejected by his high school basketball coach. The same guy whose dad would be deeply wounded if I ever sacrificed my solid Midwestern values for the almighty buck.

I didn't go out and buy a fancy house as soon as the money became available. I sent some to my parents, who'd given me those solid values. I sent some to my older brothers, who'd probably stunted my growth with all those Piledrivers and helped create my Charlie Hustle attitude. I sent some to my younger brother, John, who is so close to me that we talk five times a day. I sent some to my old backcourt partner Chris Bednarz for helping me learn how to synthesize. I gave some stock to a school that Andre Agassi and Perry Rogers were establishing for inner city kids in Las Vegas. Let me tell you, it's a great a thing to be able to give the Nevada Cancer Institute a million bucks. Well, yeah, I also bought a Ferrari—which gave Tim the perfect opportunity to twist in his needle. “No, Tom, you haven't gotten
away from those humble Midwestern roots. You're just driving a
Ferrari
!”

But there was probably nothing $105 million could buy to make me feel as good as the tape I received in the mail from Chris Bednarz's dad not long before that board meeting with Diller. It was a recording of that basketball game against Totino-Grace. The Ferrari is long gone. But that win will always be with me. Now, I needed to know if I could seize the moment like that in Barry Diller's boardroom.

It was about five months after 9/11, and tension from the destruction of the World Trade Center still hung over the city. I stepped out of the street and into the anxiety of the boardroom. Everybody attached to Microsoft was anxious to find out where he or she would fit in now that Expedia would be under Diller's control.

Diller was very cordial. I sat between him and Greg Maffei, the former chief financial officer of Microsoft. I could hear my heart beating as I wondered when to jump into the conversation and how to time my comments so that I didn't sound as long-winded as Tim would have you believe I am.

After that three-and-a-half-hour meeting, I was no longer a kid who'd stepped into an amazing opportunity on a frozen lake still trying to find his way in the world. I knew I belonged at that table, and I was deeply aware of how much I'd changed in a decade.

The changes were confirmed over the next year and a half when Diller bought the remaining 40 percent of Expedia. I was placed on a special committee in charge of negotiating the price with Diller on behalf of Expedia shareholders. It was a tough negotiation. Believe me, Diller ended up paying more than he wanted. But in the end, everyone got a fair deal. And Diller and I sent each other notes wishing each other the best.

Closure always makes it easier to open the next door.

That door was opening now that Tim was emerging from his funk. Once again, Bishop Gorman High School had come through for him.

While depressed and uncertain what to do next, Tim complained to Perry that I wasn't around enough. Perry helped him see the big picture. He explained to Tim that I needed to learn what I was capable of doing on my own. It was the same reason, Perry intuited, that he'd needed to add Shaquille O'Neal to his own business. Otherwise people would've thought that he was successful only because Andre Agassi happened to be his best friend. He had to prove that his success as Andre's agent wasn't luck. He had to prove that to everybody around him. And he had to prove it to himself.

Then Lorenzo invited Tim to join the board of directors at Station Casinos. The board met quite often, and being around gaming began to light a spark inside Tim. That spark began to kindle when he got a call from another Bishop Gorman grad, Curt Magleby, who many years before had learned a lesson in discipline at the blackjack table with Tim at his side.

One day, during their junior year, the water was turned off at Bishop Gorman, and the students were let out early. Tim and Curt went to lunch at the Barbary Coast and then wandered over to the Dunes with about $50. They must've looked at least twenty-one years old when they ran it up to $1,200 on the blackjack table, because they were able to convince the hotel to comp their dinner, as well.

Knowing he'd gotten “the best of it,” Tim wanted to leave after dessert. Curt wanted to use the $1,200 as a base to “take the joint down.” So they strolled over to a $100 blackjack table and ten minutes later their pockets were empty. Ratcheted between disbelief and fury, Tim headed out the front door, weaved to
the fountain out front, and dunked his head in the water as a reminder never again to betray his instincts.

That dunk became more memorable to Curt than any of Michael Jordan's. He went on to become an investment banker who specialized in arranging gaming partnerships and buyouts. When he heard that the longtime owner of the Imperial Palace was in bad health and trying to sell the hotel before he died, he phoned Tim to ask if he'd be interested in buying.

Curt's call was like another slam dunk in a fountain. Tim came up blinking with the realization that he was actually in a position to take a shot at his dream. Curt was an expert on raising money for these investments. If Curt thought Tim was qualified, so would everybody else.

The desire to own a casino was in Tim's DNA. And after we'd been apart for more than a year, what better way was there for Tim to bring back the old magic than to include his best friend?

One day I went to meet Tim at his office. He was poring over a desk covered with spreadsheets. I should have seen it coming.

“Hey, buddy, have you got 25 million bucks?”

Y
ou 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.”