It’s all come tumbling down

Last week, MGM Mirage told investors it might be labeled a "going concern" by auditors and could default on $13.5 billion in debt. Harrah’s Entertainment offered a second debt trade to bondholders to reduce the company’s approximately $23 billion in obligations.

Wall Street is speculating that one or both of the Strip’s largest casino operators could wind up in bankruptcy court.

MGM Mirage has 10 Strip hotel-casinos. Harrah’s runs eight Strip hotel-casinos. It’s possible most of the major hotel-casinos between Spring Mountain Road and Russell Road — including Caesars Palace, Bellagio, MGM Grand, Paris Las Vegas, Flamingo and Mandalay Bay — might be considered bankrupt.

Deutsche Bank gaming analyst Bill Lerner tried to quell notions about an MGM Mirage bankruptcy. He said the company is taking steps to stay off the court’s docket.

A balance sheet with cash flow, almost $1 billion in cash and $775 million from selling Treasure Island, gives MGM Mirage enough liquidity to cover its debt maturities in 2009 and 2010, Lerner said.

MGM Mirage has other balance sheet options that don’t involve the court.

Meanwhile, Phil Ruffin isn’t deterred by any of the negativity. At 73, he’s almost back on the Strip.

Ruffin made a fortune in oil and real estate when he bought the New Frontier for $167 million in 1998. He sold the hotel-casino nine years later for $1.2 billion. His style made believers out of Las Vegans.

Ruffin earned preliminary approval last week to buy Treasure Island. Gaming regulators said it was good to have him back.

That’s the attitude we need.

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Gaming company stock prices have been pounded in the last 14 months. Just ask MGM Mirage majority shareholder Kirk Kerkorian.

At the market’s peak, the 91-year-old Kerkorian’s 54 percent stake in the company was valued at $15 billion. A year ago it was down to $9.6 billion. Last week, the value of Kerkorian’s stock had shrunk to less than $400 million.

In October 2007, MGM Mirage was $99.75 per share. The current 52-week high is $64.85 on March 25. On Thursday, the casino operator fell to an all-time low of $1.89.

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Treasury Secretary Timothy Geithner’s appearance before the House Ways and Means Committee last week allowed Rep. Shelley Berkley, D-Nev., to illustrate the ailing Las Vegas economy.

Berkley, a member of the committee, said one Strip hotel’s occupancy rate dropped to 27 percent. She didn’t name the property.

However, she urged Geithner to support a pair of tax provisions. One would allow a 100 percent deduction for business meals. A second would restore the spousal travel tax deduction.

"Both provisions would be good for tourism and the convention industry," spokesman David Cherry said.

Howard Stutz’s Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871. He blogs at lvrj.com/blogs/stutz.