The famous Mirage, created by Steve Wynn, is nearing the end of its life.
MGM purchased the Mirage from Wynn in 2000. The property was transferred to a REIT in 2016, but MGM continued to operate the resort. In 2021, Hard Rock International purchased the operations for $1 billion.
On May 15, 2024, Hard Rock International announced that the Mirage would be closing for a complete makeover on July 17. It was a quick decision. Two weeks ago at a Nevada Gaming Control Board hearing, Jon Lucas, an executive vice president for Hard Rock, told regulators that the company’s plans were not finalized. Two weeks later, Lucas was back before the Board to explain the decision to close the Mirage.
In a way, it is the story of a company with too much on its plate and a lack of focus. In another way, it is the story of the post-pandemic economy.
Lucas said the capital market was unstable and challenging and construction costs are escalating. That is the story of every major project being built in the last two or three years: Financing is difficult to obtain and expensive. At the same time, costs continue to increase throughout the construction and projects typically cost significantly more than the original estimates and budgets had forecasted.
“We also have properties under construction in Bristol, Virginia, Rockford, Illinois, and Ottawa, Canada,” Lucas said. Under those circumstances it was just too much to completely rebuild the property and manage an ongoing business. “We looked at the scope of the project and realized that the guest experience wouldn’t be what it needed to be with the type of service we like to deliver. It would be so disruptive that the best option was to shut the property down.”
The Nevada Gaming Control Board (NGCB) was okay with the decision and excited by the plans. The NGCB also liked the idea that Hard Rock was paying $80 million in severance packages and making every effort to find new jobs for the employees.
Commissioner Brian Krolicki said, “It’s exciting to see what you’re doing. Your humanity in this as you make billion-dollar decisions is appreciated and being watched.”
When finished, Hard Rock will have a 600-foot-tall hotel tower shaped like a guitar where a volcano once erupted regularly. The Steve Wynn era on the Las Vegas Strip is officially over. The white tigers, dolphins, and volcano were just a mirage in the desert that is gone or will be in 2027 when the guitar takes up residence.
The Mirage opened in November 1989; it was the first new resort on the Strip in 16 years. The $630 million property was the most expensive casino ever built at that time; the hotel had 3,000 rooms and was one of the 10 largest in the world. To break even, the Mirage had to generate a million dollars a day in gaming revenue; virtually no one — except Steve Wynn and his team — believed it could be done. Yet not only was the Mirage profitable from the beginning, it was also the most successful casino in Las Vegas. Within a year or two, it became the model for other new resorts. Compared to previous casinos, the Mirage had a smaller casino and fewer table games and slot machines. The ratio of rooms to casino floor space and games set the standard for industry for the next decade.
The Mirage also pioneered some unique forms of entertainment, including the famous volcano on the Strip, habitats for white tigers and dolphins, Siegried & Roy, Cirque du Soleil, and a string of other original productions. And it pioneered another trend, departmental profitability. Wynn expected not to lose money on his restaurants, entertainment, and hotel. Each was expected to produce a profit. Before the Mirage, restaurants, entertainment and sometimes even hotel rooms were loss leaders to lure in gamblers. The Mirage changed the paradigm and today all major casinos expect to generate positive cash flow from those areas.
Wynn wanted to create a new type of casino-resort — more exciting, popular, and profitable. He succeeded beyond anyone’s imagination. But he wanted to create something else, a WOW. Wynn wanted people to stop and stare and say, “Wow, did you see that?” Since its beginning, casino operators had identified either with the desert or the old west. Wynn wanted to leave behind the sand and sun and to pull people into a mirage, an unexpected, even impossible place to find in the middle of the Las Vegas landscape. A tropical paradise. It was indeed a mirage caused by the shimmering desert sun. It lasted for 35 years and changed the Las Vegas Strip forever. The Mirage will be a hard act to follow for an aging rocker’s guitar.
