The day after Steve Wynn landed the Desert Inn, his competitors for the 50-year-old property each had the same basic message: "Congratulations, Steve. We'll be back."
Las Vegas-based Boccardi Capital Systems, casino developer Mark Advent and a group of anonymous investors from the midwest each placed competing bids for the Desert Inn with Starwood Hotels & Resorts Worldwide Inc. At least one bidder, the midwestern group, apparently outbid Wynn's $270 million offer by $30 million.
But in the end, Wynn offered Starwood a deal that none of the competitors could match. In addition to nearly matching Sun International Ltd.'s original $275 million offer for the Desert Inn, Wynn gave Starwood a nonrefundable $30 million deposit and the right of first refusal to develop timeshare properties at the Desert Inn.
Moreover, Wynn's offer "is not subject to any due diligence, financing or licensing," and is expected to close in just two months -- elements that are incredibly favorable to a seller.
"What they liked most (about Wynn's offer) was that he was willing to put more money on the table, put more at risk from day one," Advent said. "If we had to overpay, it would adversely affect our returns."
Indeed, Starwood Chairman and Chief Executive Barry Sternlicht said the "speed and certainty of this transaction made it the most attractive to shareholders."
On Friday, none of his competitors were willing to begrudge Wynn.
"Business is business," Advent said. "I really tip my hat to Steve Wynn, and I sent him my most sincere congratulations. He is a remarkable developer, and both on a personal level and professional level, I'm quite excited as to what Steve might be creating next for the north end of the Strip."
Advent did not disclose how much he offered, though his offer was lower than Wynn's. Advent said his offer was backed by financing from Deutsche Bank.
Advent vowed to move forward with plans to build a megaresort somewhere else on the Strip -- and said Starwood might be part of those plans.
"It's my opinion our relationship with Barry Sternlicht ... is fully intact, and possibly stronger than ever," Advent said. "I think it was a well thought out process, in terms of deciding between Steve Wynn and our proposal.
"I'm very optimistic we'll be doing a lot of business with Starwood in the future. We have on our list back-up sites that are currently available in Las Vegas."
In contrast to the cordial talks between Advent and Starwood, talks with Boccardi Capital got off to a decidedly rocky start. Within hours of Boccardi's $200 million bid -- the first public offer for the D.I. after Sun's pullout -- the offer was immediately rejected by Starwood as inadequate.
Headed by Italian developer Fabrizio Boccardi, the Las Vegas company hoped to create a new megaresort on the vacant land parcel at the northeast corner of Las Vegas Boulevard and Sands Avenue.
"Quite honestly, we didn't know Steve Wynn was involved until very late," said Corey Porter, president of development for Boccardi. "We didn't really believe we were competing with him when we made our offer.
"Needless to say, we were considering bumping our offer (upward) ... but not to $275 (million)."
Despite the strange start to their talks, Porter said Boccardi did engage in talks with Starwood officials up until the Wynn buyout, though nothing was put into writing. She said the company was more interested in the 32-acre land parcel rather than the entire Desert Inn complex.
"We are very pleased it is Steve Wynn that got the property," Porter said. "With his uncanny ability to create successful gaming properties ... maybe everything (on the Strip) will start moving north."
Porter said Boccardi, like Advent, plans to continue its hunt for another opportunity to build on the Strip.
"We have other options, and we're definitely pursuing them in earnest," Porter said. "We want to position ourselves in another prime location on the Strip. We'll be part of the Strip family soon."
Little is known about a third bidding group for the D.I. -- a group of individual investors from the midwest who placed a $300 million bid for the Desert Inn in mid-April. These "five or six" investors did tour the Desert Inn property, though Matthew Callister, their local counsel, would not disclose who they were.
"They think Steve Wynn is an excellent developer," Callister said. "They wish him the best of luck, and they'll continue to look for opportunities in Southern Nevada and elsewhere."
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