LAS VEGAS — Restless Los Angeles financier Kirk Kerkorian announced Wednesday that he has agreed to buy two venerable Las Vegas hotel-casinos--the Sands and the Desert Inn--from the remnants of billionaire Howard Hughes' empire for $167 million.
The purchase by MGM Grand, a new company that Kerkorian controls, represents his third foray into the gambling business, this time at age 70. Kerkorian, hewing to his long-time aversion to the limelight, made no comment about the deal Wednesday, leaving that chore to his trusted aides.
During the past 18 years, Kerkorian has built three of the biggest hotel-casinos in Nevada--the International Hotel in 1969, and later the MGM Grand in Las Vegas and its sister, the MGM Grand Reno. The International was sold to Hilton Hotels before the MGM Grand in Las Vegas was built in 1972. Just last year, Kerkorian sold his controlling stake in MGM Grand Hotels Inc. to Bally Manufacturing of Chicago.
Land a Major Feature
Kerkorian had owned about 70% of MGM Grand Hotels, and controls about the same stake in the new MGM Grand company, which began a luxury airline service from Los Angeles just this week. Public shareholders, who owned the remaining 30% of MGM Grand Hotels, have the right to buy that much of the new company when its stock is sold. Securities regulators are currently reviewing financial documents for an offering of MGM Grand stock.
Land was a major feature of the Desert Inn and Sands purchase, according to the head of Tracinda Corp.--the Kerkorian private holding company that currently operates MGM Grand. The deal involves almost 250 acres of prime Las Vegas real estate, including 63 acres of undeveloped land. Most of the empty land is near the Sands.
Tracinda President Terry Christensen and Fred Benninger, president of MGM Grand, both said that it was too early to say what will be done with the land. However, Benninger said casino purchasers often are interested in having space to expand. "We just can't say where or how."
Landmark on the Strip
The Sands, a fixture on the Strip since 1952, was the second of six hotel-casinos purchased by the reclusive Hughes in the 1960s. In 1980, the Hughes organization sold the Sands to Pratt Hotels of Dallas for $80 million, but Summa Corp.--Hughes' private company now controlled by his heirs--agreed later to take it back during an industry recession and has operated it ever since.
The Desert Inn, constructed by resort owner Wilbur Clarke in 1950, was Hughes' first purchase in Las Vegas, and he lived in seclusion in its penthouse from 1966 until he departed mysteriously on Thanksgiving Day, 1970. It went through a $60-million face lift in 1978.
Summa made no statement Wednesday about the Kerkorian deal, although it made copies of the announcement issued by MGM Grand available to those who inquired. It has been known that Summa was willing to sell the hotels for some years.
Unrelated negotiations by Summa to sell two other Las Vegas casinos--the Frontier and the Silver Slipper--to unidentified parties fell through recently.
Kerkorian almost bought the troubled Dunes hotel-casino here a few weeks ago, but was outbid by a Japanese group headed by Masao Nangaku.
According to Christensen, the Kerkorian forces began dickering on the Desert Inn and the Sands in mid-August.
Although Kerkorian's original agreement, by which the MGM Grand hotels were sold to Bally, was intended to keep him from re-entering the casino business as a competitor for three years, that restriction was removed several months ago, Christensen disclosed Wednesday. Asked if Bally was given a consideration for dropping the restriction, Christensen said that Kerkorian had given Bally the right to use the name Grand in the Atlantic City casino market.
Near Castaways Casino
Kerkorian had retained rights to the MGM Grand name after the sale to Bally. Christensen said that it has not been decided whether the name will now be used in conjunction with the Sands or the Desert Inn. The Sands is located across the Strip from the former site of another Hughes' casino, the Castaways. That operation was sold earlier this year to the Golden Nugget, another casino firm, which recently demolished it to build a new, 3,300-room hotel-casino.
Completion of the Sands and Desert Inn sale is expected by year's end, following receipt of necessary approval from the Nevada casino regulators, MGM Grand said.
Not a Secret
Kerkorian has made no secret of his interest in getting back into the casino business with his new company, MGM Grand. He has often returned as well to the airline business--a favorite since his days as pilot after World War II--most recently with Tuesday's launch of MGM Grand Air, which offers luxury transcontinental service from Los Angeles.
As previously reported, MGM Grand also has been in discussions with Pan American World Airways about a possible Kerkorian investment in that troubled airline.