What happens in Vegas stays in Vegas, or so the slogan goes. But what’s happening there in terms of development, says Glenn C. Christenson, CFO of Station Casinos Inc., is hard to keep secret. According to the U.S. Census Bureau, Nevada is expected to grow faster than any other state over the next two-plus decades, with many new residents settling in and around Las Vegas. That growth might not matter to the megacasinos on the Strip, which mostly target vacationers, but it’s great news for Station Casinos. Unlike its major competitors, the $1.1 billion (in revenues) gaming company caters to the local community. And with a lock on land designated for future gaming, Station Casinos, says Christenson, is as close to a sure bet as you will find in Sin City.
In April, you added a 15th property — Red Rock. As the most expensive resort off the Strip, does it change your business model?
We really pioneered the concept of the “local market,” and now we are enhancing it. There are, after all, many people who live in the area who aren’t looking for the experience on the Strip but one away from it. For example, at Red Rock we have the National Park, six or seven golf courses, hiking, and other activities. And if people still want to eat in a particular restaurant or take in a show on the Strip, we’re only a 15-to-20-minute drive away.
At $925 million, Red Rock is obviously a hefty investment, and much has been made of the 3.1 million crystals used in the chandeliers and the surprise concert on opening night by Sting. Was there anything you said no to?
No. Our chairman and president [brothers Frank and Lorenzo Fertitta, respectively] have their fingers on the pulse of what makes these local properties successful. My primary concern is making sure we have the right financing. Besides, we have probably had [concerns about the size of our investment] on the past eight projects. One of our first, in 1994, was Boulder Station, and investors questioned how much money we were spending then…. But Boulder has one of the highest, if not the highest, cash-on-cash return on investment [EBITDA divided by the cost of the project] of any property built in Las Vegas to date.
Why are you so sure that the local market is the key to your growth?
I have the benefit of having lived here for almost 34 years, and there have been 5,000 to 8,000 people per month moving to Las Vegas for as long as I can remember. As baby boomers make their way toward retirement, Las Vegas is a very attractive option because of all the activity and because we don’t have state income taxes. For at least the next 5 years, things should be strong here.
If those statistics pan out, what’s to stop competitors from copying your business model?
Back in 1997, the Nevada legislature passed Senate Bill 208, which limits where these local properties can be built. There are only a few sites that can be developed as casino properties, and we control the majority of them. In fact, we own more gaming-entitled nondeveloped land in Las Vegas than any other company. And there is no way that anyone can duplicate that.