Less than three months after gaining control of the Sands hotel-casino in Las Vegas, financier Kirk Kerkorian has agreed to sell it for $110 million to a trade-show producer who often brings conventions to the Nevada resort city.
The buyer is Interface Group, headed by Sheldon Adelson, which has produced the giant Comdex computer trade show in Las Vegas for several years, among dozens of other shows staged annually around the world.
With the cash price set at $110 million, a profit is anticipated--but no one is certain just how much, according to Fred Benninger, president of MGM Grand Inc., the Kerkorian-controlled company that acquired the Sands and Desert Inn on Feb. 1 from Summa Corp., the company controlled by heirs of billionaire Howard Hughes.
MGM Grand paid $167 million for the two hotel-casinos, but Benninger said appraisers have not yet completed the task of allocating costs to the two properties.
With the 36-year-old Sands casino and hotel, Interface is acquiring 58.7 acres on the Las Vegas Strip--enough to build its own Las Vegas convention facilities if Interfaces chooses, Benninger said, adding that "I think it's going to give (Adelson) a wedge."
Despite the seeming importance of conventions to Las Vegas, some hotel-casino operators have been reluctant to set aside rooms for convention-goers because they gamble less than the usual Las Vegas tourist, according to Harold Vogel, a vice president at Merrill Lynch Capital Markets.
"Comdex and (similar) shows were bringing a lot of people into there who didn't gamble," Vogel said.
In a prepared statement, Adelson said: "We are committed to the growth and prosperity of Las Vegas, and this acquisition will provide us with the opportunity to participate more directly in that growth." Interface Group, a private company based in Needham, Mass., also owns the largest tour operator in New England and a travel division with four L-1011 jetliners.
At first glance, the Desert Inn would appear to be the more valuable of the two MGM hotels because it has undergone a major renovation in the last decade and occupies 165.7 acres on the Strip.
But Benninger noted that the Desert Inn leases 142 acres, or nearly all of the site, which includes an 18-hole golf course, "from some investors back East."
Benninger reiterated MGM Grand's intention to stay in the gaming business, with an expansion of the Desert Inn.
Lee S. Isgur, a gaming industry analyst at Paine Webber, said he did not interpret the Sands sale as a sign that Kerkorian would abandon his other Las Vegas investment. "Kerkorian has always been a trader," the analyst said.
"He's just making a nice trading profit, that's all," said Merrill Lynch's Vogel.
Earlier this month, Kerkorian stirred speculation about the future of one of his other holdings, MGM/UA Communications, when the 70-year-old Los Angeles financier disclosed that he might be willing to sell all or part of his 82% stake in that motion picture and television production company.
Kerkorian sold the predecessor motion picture company two years ago, then formed MGM/UA Communications with the repurchase of the United Artists film library and certain other MGM assets and film projects.
The Sands was the second of six hotel-casinos that Hughes purchased in the 1960s. It was sold for $80 million in 1980 to Pratt Hotels of Dallas but reacquired by Summa during an industry recession.