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Old School: Gaughan’s throwback approach keeps South Point flourishing

​​​​​​​View Date:2024-12-23 21:24:15

Michael Gaughan wields as much influence in the Las Vegas gaming community as the chief executives who oversee some of the Strip’s largest publicly traded resorts.

And the 81-year-old Gaughan carries that respect with just a single 2,100-room hotel-casino that sits on 56 acres along Las Vegas Boulevard, 6 miles south of what is considered the Strip’s southern border.

It only took about two years for Gaughan to realize that he would not be comfortable in the corporate gaming world after he sold his four-property Coast Casinos to Boyd Gaming for $1.3 billion in 2004. He took a seat on Boyd’s board and agreed to oversee the final construction phases of the then-South Coast resort, which was nearly 70 percent complete.

Gaughan immediately had seller’s remorse.

Ten months after the property opened in December 2005, Gaughan traded his stock in Boyd Gaming — valued at $512 million — back to the company in exchange for ownership of the resort, which was renamed South Point Hotel and Casino.

The transaction returned Gaughan to his roots as a solo casino operator — an increasingly rare breed in a casino market now dominated by multibillion dollar corporations. And in a gaming market where the only consistency is change, Gaughan — who shuns the spotlight and had to be convinced to have his photo taken for this story — has been a constant for almost the last two decades, expanding the South Point into one of Las Vegas’s most successful gaming operations.

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“South Point sits on an island. It has its customer bases and just goes about its business without any worry from anyone else,” said Brendan Bussmann, managing partner of Las Vegas-based B Global. “It’s been a successful endeavor that doesn’t have the pressures that others may have being in the heart of the Strip or publicly traded.”

Financial results from the South Point are private. But Ryan Growney, the property’s general manager since 2010, said the resort has zero debt and has used cash to fund millions of dollars of renovations and expansion projects for nearly two decades.

He said his contemporaries on the Strip and elsewhere are always discussing “debt service per day.” Growney, whose father was general manager when Gaughan owned the Gold Coast Casino and Hotel in the 1990s, said Gaughan’s operating methods haven’t changed in decades, even through the recession and pandemic-era operating restrictions.

“We‘re a different business model than the corporate guys. Doing everything out of cash flow makes things easier to operate,” Growney said, explaining how the management team pitches Gaughan on any project.

“We needed to spend $2 million on the parking garage. We could have come in with charts and graphs and figures, but Michael doesn’t want that,” Growney said. “He says if you have an idea, you can sell it on one piece of paper.”

Like the way he operates the resort, Gaughan’s management team meetings are old school — often taking place over lunch at a large round table in the Coronado Café, South Point’s 24-hour restaurant.

“He gives us the freedom to operate,” Growney said.

A small team

Gaughan said he isn’t looking to expand his gaming footprint beyond South Point.

As with Coast Casinos, his management team remains small and loyal. Growney and Steve Stallworth, who oversees South Point’s Equestrian Arena and complex, stayed with Boyd Gaming after the merger but returned when an opportunity presented itself.

Gaughan began his career in 1965 as the casino manager working with his father, Jackie Gaughan, at the El Cortez downtown.

He left in 1972 to open the Royal Inn Casino just off the Strip on Convention Center Drive. He later sold that property to build and operate the Barbary Coast in 1979 at the corner of the Strip and Flamingo Road, now The Cromwell Las Vegas.

During an interview with The Nevada Independent in June, Gaughan suggested he would “take back one of either the Suncoast or Gold Coast.” The comments were made with a slight smile — Boyd has never expressed an interest in selling any of the properties.

Former gaming executive Bill McBeath found the humor in Gaughan’s comment.

McBeath, who began his gaming career working for Gaughan through a casino management training program at the Barbary Coast and the off-Strip Gold Coast, agreed that Gaughan wasn’t suited for the corporate lifestyle and is happy owning just the South Point.

“Michael had partners but was the controlling owner (of Coast Casinos). He built this incredible company and the only way to create liquidity was to go through a sales process or go public,” said McBeath, who served as president of several MGM Resorts International Strip resorts and The Cosmopolitan of Las Vegas and remains a close friend with his mentor.

“After about eight months of sitting in corporate meetings, Michael waived a white flag,” he said.

Following the merger with Boyd, Growney, a graduate of Gaughan’s casino management program, was sent to Florida after Boyd acquired a jai alai facility near Fort Lauderdale. He came back to Las Vegas to work in management at Sam’s Town when Gaughan offered him the South Point general manager job.

“I started out pitching cards and learning how the casino works,” Growney said. “That’s how Michael started and that’s how we learned — through experience.”

Stallworth was the assistant general manager at Thomas & Mack Center when Gaughan tabbed him to help build and operate an arena at the Orleans. He continued to manage the location for Boyd but rejoined Gaughan when the manager of South Point’s equestrian center departed.

“Michael said ‘Get your cowboy hat and cowboy boots, you’re running the arena,’” said Stallworth, who has worked for Gaughan for 24 years but knew little of the equestrian market at the time.

“The equestrian center is something Michael and his wife, Paula, always wanted to do. They saw a need for this type of facility in Las Vegas and it’s been a success,” Stallworth said.

The facility has grown beyond its original 4,600-seat arena, adding two smaller event spaces, a practice facility and 1,200 climate-controlled horse stalls. The venue is booked annually for 46 weeks of equestrian events.

As he provided a tour of the venue in early July, Stallworth said the American Quarter Horse Association had just finished its event and the venue was preparing an event for mustang horse enthusiasts.

“I learned quickly it’s not just rodeo,” Stallworth said.

McBeath said Gaughan’s connections with the equestrian community helped 10 years ago in keeping the National Finals Rodeo (NFR) in Las Vegas. Operators of the 10-day NFR were ready to move the rodeo to Orlando, Florida, taking away an event that fills hotel rooms and casino floors in early December — an otherwise slow time for the casino industry.

Gaughan, McBeath — chairman of the Las Vegas Events board — and former Las Vegas Convention and Visitors Authority President Rossi Ralenkotter renegotiated a new contract in the 11th hour. McBeath said Gaughan was by his side when an extension was reached in June that will keep the NFR in Las Vegas through 2035.

“Michael has such incredible insight into the Western people and how they think,” McBeath said. “I have my ranch and I’m a cowboy, but Michael is a cowboy all the way.”

‘A hybrid property’

Gaughan has invested millions of dollars into South Point, including adding hotel capacity that grew the resort to 2,163 rooms and suites. A boost in business came when the Silverado Ranch Boulevard overpass was completed, giving the South Point direct access from Interstate 15.

“Michael offered to pay up to $4 million to help build the overpass,” Growney said. “He knew what it would mean to South Point’s business. It was then moved up on the list when they heard him say that.”

Even with the traffic influx, Gaughan refuses to charge for parking at any of the property’s 5,000 spaces, which are commonly filled, especially on weekends and holidays.

Growney estimated South Point’s business is about 50 percent locals and 50 percent tourists, and often draws higher from the tourist side during busy holiday weekends. The equestrian center can skew visitation numbers given the events bring in competitors and horse enthusiasts from across the nation.

The tournament bowling plaza that South Point built in 2013 in conjunction with the United States Bowling Congress (USBC) is another customer magnet. The organization has brought multiple events to the facility in the last 10 years, including a recently concluded five-month tournament that drew 55,000 bowlers from across the county. The USBC booked 500 rooms each week throughout the event.

“The original agreement was nine events over 12 years. Now, we have events through 2039,” Growney said.

South Point, he said, is a “hybrid property” because its hotel towers are adjacent to the 2,000-unit Grandview at Las Vegas timeshare development.

“There’s a two-lane road between us, so we look at ourselves as having 4,000 hotel rooms,” Growney said. “We have the amenities a hotel needs and the locals like, such as the buffet. They cost a fortune and they lose a lot of money. So I understand (other resorts) taking them out.”

Gaughan did provide a few pieces of financial information about the property. He said the resort loses upward of $1.5 million a month from its 11 restaurants and the Garden Buffet.

Gaughan and Growney said South Point serves between 10,000 and 11,000 meals a day but any losses from food are easily recovered through the casino and other non-gaming attractions.

“I don’t have a food and beverage manager. I have a restaurant manager and a bar manager,” Gaughan said. “They’re both good and have been with me for a long time.”

There are success stories in the South Point restaurants. Gaughan opened the first franchise in Nevada for the popular Midwest hamburger and milkshake restaurant Steak ’n Shake in 2010. He said the location is the No. 1 for sales for the restaurant chain. South Point’s Starbucks also boasts the most transactions of any franchise in the state.

“It’s not by revenue because other locations charge more,” Gaughan said.

Gaughan expanded the casino shortly after reacquiring the resort. The extra floor gaming space allowed him to add a multiscreen movie theater above the casino floor. In addition to the tournament bowling facility, South Point has a 64-lane bowling center for the public.

The casino has 2,400 slot machines, 60 gaming tables, a 600-seat bingo hall and a 300-seat race and sportsbook.

Separately from South Point, Gaughan has managed the slot machine concession at Harry Reid International Airport for almost 38 years. It passed the $1 billion mark in gaming revenue for the facility in 2022, according to a news release from Gaughan’s company.

According to a Reid Airport spokeswoman, Gaughan’s company operates more than 1,000 slot machines in the airport’s terminals. In 2023, the airport’s share of the gaming revenue was $58.5 million.

As a private operator, the investment community doesn’t follow South Point. However, analysts take an interest when executives from Red Rock Resorts and Boyd Gaming — the primary competition for Las Vegas-area customers — mention South Point had boosted marketing and promotional efforts.

“You can’t compare Michael to other operators,” said Kenny Epstein, chairman of the El Cortez in downtown Las Vegas and Gaughan’s former partner at the Coast Casinos. Epstein acquired the El Cortez from Jackie Gaughan, who continued to live in a suite atop the hotel until he died in 2014.

“Michael is old school, but he’s up to speed on what everyone else is doing,” Epstein said. “Michael is a special guy that helped all of us learn the business.”

___

This story was originally published by The Nevada Independent and distributed through a partnership with The Associated Press.

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