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Boyd Gaming's Most Ambitious Project Ahead is the
 Redevelopment of the 63-acres Which the Aging
 Stardust Resort & Casino Stands On

By Howard Stutz, Las Vegas Review-Journal
Knight Ridder/Tribune Business News

Mar. 7, 2005 - Boyd Gaming Corp. is coming off a year in which the company reported record earnings, bought out a rival casino operator and had its stock price soar to an all-time high.

So it's natural to suspect incoming President Keith Smith might feel pushed to continue Boyd's upward climb.

But Smith, 44, who becomes Boyd's president on March 31 following Don Snyder's retirement, said he's prepared for the pressure.

"Don announced his retirement almost a year ago, so that has helped me get up to speed and it's less traumatic on the organization," said Smith, who's now the company's chief operating officer.

"The challenge with success is repeating it. We've had a successful run since 2003 and particularly in 2004. Now, everyone wants to see in 2005 what we can do to best that."

Smith joined Boyd Gaming as corporate controller in 1990 and was part of the management team that took the company public in 1993.

He has also been on the corporation's executive team for 12 years, playing a role, the development of the Borgata in Atlantic City and last year's $1.3 billion buyout of Coast Casinos.

"Keith came to this company 15 years ago already with a strong background in our industry," said Snyder, who retires after an eight-year tenure.

"He has been an integral part of every major planning exercise and every major transaction in the intervening years."

While assuming Snyder's high-profile position, Smith acknowledged the company's true direction comes from higher up in the hierarchy: company Chairman and Chief Executive Officer Bill Boyd. "Our chairman sets a lot of the direction for us," Smith said.

"He's our leader and we've been very successful. I think the business will run much in the way it's been run in the past."

Gaming analysts found comfort in Smith's appointment. Deutsche Bank gaming analyst Marc Falcone said because Smith has been involved in daily decisions, the transition should be seamless.

"He's been an active part of the company's leadership and Boyd has a pretty well-rounded management team," Falcone said. "I don't really see much change in the company's landscape."

Smith inherits Boyd as the company embarks on its most ambitious project to date: the redevelopment of the 63-acre Strip location on which the aging Stardust stands.

Company executives have stated that Boyd will take the better part of 2005 to master-plan the site, which could accommodate multiple properties or other possible developments, such as high-rise residential units along with hotel and casino enhancements.

"We think (the Stardust site) is the most valuable acreage on the Strip, and we're excited to develop it," Smith said.

"It's a wonderful piece of real estate and basically everything is on the table at this point, from one large property to multiple properties; with a partner or without a partner; including condominium projects and not including condominium projects.

"There is so much available to us that our challenge really is defining what should be the most successful."

The Strip's future is unfolding quickly. Wynn Las Vegas will open April 28. Construction of the Palazzo next door to The Venetian is proceeding.

Development plans for the New Frontier location are being drawn up. And countless other possibilities are on the horizon for the Strip's north end. Therefore, Smith said, Boyd Gaming needs to think beyond 2005.

"We're trying to determine what is the right project four or five years into the future when it opens," Smith said.

"Every new property that opens in Las Vegas tends to raise the bar. You look at what Steve Wynn is doing the question for us is what do we build that will be competitive in this marketplace, not in today's world, but competitive in 2009."

Smith suggested Boyd may develop its multiacre Las Vegas site in the way the Borgata site was developed in Atlantic City. Borgata, a joint venture between Boyd Gaming and MGM Mirage, took four years to master-plan and develop. Borgata won $638 million from gamblers in 2004, second-highest of the Boardwalk properties. Gaming analysts credit the hotel-casino with reinvigorating Atlantic City's market.

"The process we went through with Borgata, in defining and understanding the market and the customers' needs, is a process we will use here when we look at the Stardust site," Smith said.

"It's a process that worked well for us and we'll go through something similar as we decide what this project should be."

Smith said it's safe to speculate that the current Stardust property will be demolished, but he suggested parts of the hotel-casino may remain open during construction. He added, however, the site needs to be looked at as a "clean piece of dirt."

Boyd's executive transition comes after a year full of transitions. Boyd Gaming has gone from being considered a takeover target to being considered a serious player in the booming gaming industry.

Boyd's purchase of Coast Casinos last year significantly expanded the company's Southern Nevada presence. The Coast properties, which Boyd has operated for six months, contributed $341 million in total revenue to the company in 2004 -- 20 percent of Boyd's total revenue of $1.73 billion.

"To a large degree, the thought of us (Boyd) as a takeover target reflected the thoughts of people not familiar with our company," Smith said.

"We have not sold anything. We're a buyer, not a seller."

Boyd's stock price has soared since the end of 2003 when it was trading $16.14 a share. On Feb. 15, the company hit $52.67, an all-time record.

With construction of the $500 million South Coast on the Strip's south end moving toward a 2006 opening, a planned $200 million expansion of the Borgata set to start and $150 million in enhancements well under way at the Blue Chip in Indiana, Smith has plenty to keep him busy.

"The challenge for all of us is making the right choices and not to get too much on our plate while running the business," Smith said

"One of the things we've been successful at is having a profitable operating business as well as successful growth. We need a combination of both to stay focused."

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To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to http://www.lvrj.com.

Copyright (c) 2005, Las Vegas Review-Journal

Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. BYD,

 
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