Don’t expect a leopard to change his spots, not in a marriage or partnership


Steve Wynn at the entrance of the captivating atrium at Encore Las Vegas.  (Photo courtesy of Wynn Resorts.)

Steve Wynn at the entrance of the captivating atrium at Encore Las Vegas. (Photo courtesy of Wynn Resorts.)

The largest shareholder and vice chairman of the Wynn Resorts Ltd. board of directors has sued the company, claiming he has been denied access to the casino operator’s books and records. Kazuo Okada said in documents filed in Clark County District Court and with the U.S. Securities and Exchange Commission that “despite several written demands, Wynn Resorts insists on keeping its books and records hidden” from him. Okada indirectly owns 19.66 percent of Wynn Resorts and is one of the company’s founders, investing $260 million in the predecessor of Wynn Resorts in 2000 and another $120 million in 2002 to be used for casino development in Macau. Howard Stutz, Las Vegas Review-Journal, 1-11-12

Steve Wynn has lived a charmed life in the gaming world, a life with an ever expanding bankroll to fund his dreams – he is now worth $2.3 billion.  Wynn, more than any single individual has shaped the gaming industry by his presence and his ideas.   Steve got his first big bankroll, $6 million, by buying a piece of land that Caesars Palace needed to expand, but could not buy.  Steve did buy the land and sold it to Caesars for a very tidy profit; he took that money to downtown Las Vegas and in time gained control of the Golden Nugget.  After a couple of years reinventing the Golden Nugget into an upscale property in the decidedly non-upscale downtown, he took his money, his guts and enthusiasm to Atlantic City.

In the east Steve Wynn found, his now junk bond buddy, Michael Milken and built the Golden Nugget in Atlantic City with money Milken helped him find.  A few years later after tiring of the heavy hand of New Jersey regulators (he promised never to return until they changed their approach to regulation), he sold the Golden Nugget to Ballys for $400 million.  Mr. Wynn took his now much larger bankroll back to Las Vegas, this time to the Strip. In 1989, Wynn opened the $630 million Mirage; pundits, analysts and his competitors said it would be impossible to make the million dollars a day he needed just to crack the daily nut.  The Mirage more than cracked the nut it made record profits; Wynn followed the Mirage with Treasure Island and Bellagio.  In 2000, Steve sold the bundle to MGM for $6.6 billion – a serious bankroll even for him.

Some people would think that was enough, but not Steve Wynn; he immediately started on his next project was aptly named, Wynn Las Vegas – he double it later with an Encore and a Wynn Macau.  In the 40 years that he has been involved in the world of casinos, Steve Wynn has consistently done the same things.  He has introduced an endlessly stream of new ideas, ballsy architecture and design, he has taken huge financial risks and reinvented the market place time after time.  Wynn has also always been the man in charge, he makes the decisions and hates reporting to anyone and that includes Wall Street and gaming regulators.  He left the public market once, declaring that he hated the process of quarterly reporting to people who did not understand his methods.  That is also pretty much what he told the regulators in New Jersey – they wanted too much control.  In both Nevada and Macau he has found regulators who really, really want him in their jurisdiction and do all they can to please him.

Yesterday, the vice-chairman of the board of Wynn Resorts, Kazuo Okada, a long-time friend and investor in Wynn enterprises sued Wynn, the corporation, not the man, because it refused to give him information about its expenses or involve him in some decisions.  Partnerships are like marriages in many ways and like a marriage it is unwise to enter a partnership thinking your partner will change, they don’t.

Steve may have advisers, experts and specialists to help him make decisions, but he has never had a partner.  Mr. Okada was an investor who became confused and thought he was a partner. It often happens in partnerships; all partnerships are formed to make money.  As long as things are going well the individual partners are apt to get along and respect each other for what they bring to the venture.  But in bad business times or when one of partners has a personal or separate business crises or simply when one of the partners gets older and has different goals and risk tolerances things are apt to come unglued.

Mr. Wynn and Mr. Okada are likely headed for divorce court, probably because they both misjudged the other, or expected the other to change and adjust to a new arrangement they imagined would follow forming the partnership.  Adapting, compromising or taking directions is not something two dominate, alpha males do.  Each of these two is each nearly 70 years old and with a billion dollars or more in the bank they are not going to change – at least not before they turn 90.   Stanley Ho gave up the reins last year, and Kirk Kerkorian sort of has given up the reins of his empire- but they are both in their 90s.

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