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Barrick Gaming Corp. Plans to Acquire Six Hotels
in Downtown Las Vegas for $82 million
By Jeff Simpson, Las Vegas Review-Journal
Knight Ridder/Tribune Business News 

Dec. 10--A Barrick Gaming Corp. executive Monday said the company's $82 million deal to buy a collection of downtown casino and motel properties was a vote of confidence in the future of downtown. 

Barrick executives aren't sharing details of their long-term plans for the purchases, but they made it clear they expect to redevelop the properties. 

The company announced it will buy four of the five downtown casinos owned by Jackie Gaughan: the Plaza, Western, Gold Spike and the Las Vegas Club, the latter jointly owned by Gaughan and the estate of the late Mel Exber. 

Barrick also plans to buy two downtown Ambassador East motels and has an option to purchase Gaughan's El Cortez. 

"We're looking to spur growth in downtown Las Vegas," Barrick Chief Gaming Officer Phil Flaherty said Monday. "There's not much space left on the Strip, and it's cost-prohibitive. It's cheaper to buy four or five city blocks downtown." 

The Barrick Gaming deal includes 35 acres of downtown land, property with hotel-casinos that will eventually be redeveloped, although Flaherty wouldn't provide details. 

"Our plans have to remain 'to be announced,' " Flaherty said. "But we can say that downtown Las Vegas needs more hotel rooms, and that the Fremont Street Experience can be one great attraction." 

Downtown redevelopment is a specialty for Barrick bosses, he said. 

"(Chairman and CEO) Dave Barrick and (Vice Chairman) Steve Crystal have a history of downtown redevelopment," Flaherty said. "That experience, plus their eye for value and eye for opportunity make this a perfect deal for Barrick." 

Las Vegas Mayor Oscar Goodman, who met with Barrick executives Monday morning, said even though the deal is in its "embryonic stage" it's likely to mean good news for downtown. 

"I think it's premature to say that this is going to be a done deal," Goodman said. "But whenever you get new energy, it's good for a redevelopment area. They indicated they're committed to participating in the revitalization process in the downtown." 

Las Vegas city officials have quietly been hoping for years that Gaughan would sell his downtown properties to someone willing to pump more money into the market. 

Goodman said the Barrick executives didn't reveal what changes, if any, they plan for the properties but that he expects a substantial investment. 

Because the casinos are in the downtown redevelopment area, any new property taxes generated by such investment would go to the city's Redevelopment Agency for use in other redevelopment projects. 

"They said there's only a very limited area for investment on the Strip," Goodman said. "They feel the downtown is really the place for the second coming." 

"This is exciting news for downtown," said MGM Mirage spokesman Alan Feldman, whose company operates downtown's most profitable casino, the Golden Nugget. "New money at the table is always good news. 

"There is a lot of potential downtown, but to realize that potential takes capital," he said. "You also have to have the desire to take a risk and make it work." 

Feldman said MGM Mirage isn't looking to sell the Golden Nugget. 

"We're getting a nice return on the Golden Nugget," Feldman said. "It may not be our leading margin earner, but the Golden Nugget performs beautifully." 

The properties will continue to be operated by current management until Barrick receives a gaming license to run the casinos. 

If licensed, Barrick would then complete the transaction, paying Gaughan and the remaining property owners and taking over the operation of the hotel-casinos and motels, including responsibility for 1,904 employees and 1,850 hotel rooms. 

The deal took eight months to negotiate. Barrick executives began investigating the availability of downtown properties in mid-2001. 

Flaherty said Barrick holds an option to buy the El Cortez, a property that wasn't included in the sale for a simple reason. 

"Mr. Gaughan wanted to stay involved in one property, and, quite frankly, he lives there," Flaherty said. "Whenever he decides he's ready to sell, we'll buy." 

Jackie Gaughan didn't return a Monday phone message. Gaughan's son Michael Gaughan, Coast Casinos' CEO, was in New York Monday and unavailable for comment. 

Employees of the affected casinos were informed of the deal in a Sunday memo. 

Flaherty declined to say where Barrick Gaming's money would come from. 

"We're private and we're going to keep that kind of information private," he said. "But money won't be a problem." 

CEO Dave Barrick was involved with the start-up of Casino Magic in Tunica, Miss., and was a joint venture partner with a former Station Casinos riverboat operation in Kansas City, Mo. 

Barrick Gaming is a subsidiary of Barrick Corp., part of the Barrick family of businesses that also includes banking, mining, ranching, and a number of other business ventures. 

Barrick bosses expect to file the company's Nevada gaming license applications by January, and hope Nevada gaming regulators will be able to consider the applications before next summer. 

Review-Journal writer Jan Moller contributed to this report. 

-----To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to 

(c) 2002, Las Vegas Review-Journal. Distributed by Knight Ridder/Tribune Business News. 


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