Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos (5 page)

Now, I'm not going to compare the game to the movie
Rudy.
But every player on my team came by in the locker room beforehand to let me know that he'd be putting out as much as I would now that I was finally getting my shot.

Chris Bednarz and I went nuts. We dove for and got to every loose ball. I don't think I missed a shot. We won, and our whole team came off the court hollering, high-fiving, and hugging.

You can really get to know someone when you travel with them. Tim just drove and listened.

Everything must've clicked to Tim. A guy who saw his childhood vacation to Disneyland canceled without a word the night before if his dad lost a big bet intuited the symmetry in a partner who grew up knowing exactly when and where his family vacation was going to be: the first week of every August at our family reunion in Grand Rapids, Minnesota. For heaven's sake, I could even tell you what we'd be eating nine months in
advance: steaks and walleye, vegetable stir-fry, with blueberry buckle for dessert.

I had no idea what was on Tim's mind as we continued our tour through Barnsville. If you had asked me to name a successful partnership back then, I might have answered Fred Flintstone and Barney Rubble. Most people don't stop and analyze what goes into making a great partnership—even though we find ourselves partnered up by life all the time. It wasn't until years later, after I met Tony and Danny Bennett, that I really began to understand the chemistry behind how Tim and I functioned.

But Tim sensed the magic from the outset. There were times when he was alone in his office, when numbers were speeding his mind off to some uncharted place, and he didn't want to be disturbed by anybody. Call him up at that moment and he was liable to answer the phone, say, “Not now!” and hang up. He didn't like to have to sit down with an employee who wasn't up to snuff and have to fire him. What better characteristic could he look for in a partner than someone who could communicate and make everybody in the company feel at ease?

Not only were Tim's weaknesses my strengths, but we shared strengths. Tim's company was in the travel industry, and he knew that I'd loved to travel since the days I'd put on a jacket and tie and head off to Scotland when a seat was available on a Northwest Airline flight my dad was piloting. Plus, our passion for sports had given us both a fascination for new technology. Tim used the sports pager and brick cell phone well ahead of their time to get gambling information. And long before there was an Internet, my college internship at Channel 10 in San Diego had forced me to grab information off the wire services on the computer. Even though we didn't know it, sports had set our feet in the future.

By late afternoon, we'd wound our way alongside Lake Calhoun, which was frozen in the dead of winter.

“You know, I've never walked on a lake,” Tim said. He stopped the car, got out with the engine running, and shut the door.

“Aren't you going to turn the car off?” I asked.

He held up another pair of keys and locked the door. “I asked for an extra pair at the rental counter,” he said. “You mean in all your years of living in Minnesota, you never left the car running to keep it warm?”

Never in twenty-two years. But then, when it hit thirty degrees in winter, we were out playing in short pants.

Tim shook his head, rolled his eyes, and headed out to the lake. At first he stepped gingerly, suspiciously chipping his feet at the snow to check the ice underneath. Once he was certain it would support him, he took a few steps and relaxed. Then he started running a few strides and sliding. Soon, he was as giddy as a first grader in a baseball cap with missing front teeth.

I packed a snowball and got ready to throw it, you know, to give him a taste of ice running down the back of his neck. But he turned just in time.

“Don't you fuckin' dare!” he said, pointing a finger like he was Joe Pesci or something.

I laughed, and we walked out even further, hands in our pockets, hearing our feet crunch toward the middle of this empty white sheet.

“You know,” Tim broke the silence. “You should come work with me.”

He'd hinted at this before, but always in a joking way. This time, he was dead serious.

“You're great with people. I'm great with numbers. You love to travel. This is all about travel. It's in your blood. It's in my blood. We'd be partners: fifty-fifty.”

He knew he was asking me to give up my dream. But he also knew that I was beginning to see how difficult it would be to work my way across the country to ESPN. I'd been shocked to discover that broadcasters were changing their names to appear Hispanic in order to get a leg up in certain markets. As much as I liked tamales, I couldn't imagine my German grandfather and Norwegian grandmother flicking the TV on in the living room of their corn farm and hearing me introduce myself as Tomo Banderas.

“Look, if you come into the business with me,” Tim said, “you don't have to depend on other people to advance. You don't have to rely on other people to create your opportunities.
We
control our own destiny.”

He was right. My future was in the hands of some TV station owner or producer I hadn't yet met.

“Trust me, Tom, this is a great business, and it's growing like crazy.”

Tim went into the full sales pitch. He'd doubled his company's revenue from $800,000 in the first year to $1.6 million in the second. The Vegas boom was just beginning, and the business was growing so fast that it was overwhelming. He couldn't do it by himself. He needed somebody who'd work as hard as he did, somebody he could trust.

“You'll be around friends,” he said. “You won't be picking up and leaving every year or two and starting all over to advance your career. You'll have a foundation, and we'll be building something huge. We'll each get $25,000 in salaries, and that's just to start.”

Twenty-five thousand was twice what I was earning—and I'd have equity in a company. Endless possibilities were rubbing against the end of a dream. It was confusing and overwhelming, but I felt a tingle inside. It
was
an incredible opportunity.

“You know, Tom, when I was in college I read that of all the people who created great fortunes, none of them got it by working for somebody else. Nobody makes it to the Forbes 400 punching the time clock.”

What could I say? There was really nothing to argue. I told Tim I needed some time to think about it. Really, I wanted to talk it over with my dad. The first time my father met Tim, he'd reacted with clear-eyed Midwestern skepticism though he didn't express it directly. “Las Vegas,” he said instead, “that's not the real world.” But I sensed that I already knew my answer.

“Thanks,” I told Tim, and we shook hands.

There was a silent moment, and then Tim howled, “It's freezing! Let's get out of here!”

When we got back to the car, the heater was pumping and it was nice and warm in the Caddy. This was a guy who was thinking ahead.

A
few weeks later, I got in my Honda Accord with a hundred dollars in my wallet and headed to Vegas.

There was no corner office waiting for me when I walked in for my first day of work at Las Vegas Reservation Systems on January 25, 1993—just a conference table next to Tim's desk. It didn't take long to figure out that the setup was a lot of the reason behind our success.

Our company was like a little boat on the ocean—we felt every wave around us. If a massive operation like American Express had come up with the same idea as Tim and executed it properly, it would have owned the world. But American Express was built like an ocean liner, heavily structured, and the executives at the wheel were way above the swirling foam. They didn't seem to see the sea change occurring in travel booking—until we grew into a big boat and they wanted to buy us.

The more I began to understand what we were doing at LVRS, the more I realized there were a lot of smart people who didn't get it. “Explain this to me again,” asked J. A. Tiberti, the owner of a construction company that had built a good chunk of Las Vegas over half a century. “Your company doesn't have anything. But it sells things?”

He was right. Our inventory was virtual: blocks of rooms that didn't physically exist. We didn't have to pay ahead to get the rooms. We didn't have to load them up and take them to a warehouse. We didn't have to maintain an inventory.

All we had to do was sell the rooms and find ways to get more of them. That came as naturally to me as starting a conversation to pick up a new customer on my paper route. Only in Vegas, the ante was raised.

After awhile, I was walking into the Excalibur, where we'd been allotted five rooms per night, and asking for fifty. The hotel fit our market perfectly. It was new, with a medieval ambiance that appealed to families with kids. And it offered inexpensive food and entertainment. The trouble was, the hotel had been consistently selling out on its own. Why in the world would management hand its rooms over to us at a discount?

But nearly twelve thousand additional rooms came into the market when the Luxor, Treasure Island, and MGM Grand were finished. Excalibur was now competing against those twelve thousand rooms, and it was beginning to feel the squeeze.

We were right on top of it. Our proposal to take fifty rooms was timed perfectly, and they came back with an offer to give us twenty-five if we prepaid for them. We didn't have that kind of money to put up. But we had the friendships sealed at Bishop Gorman High School.

“I gotta go see Lorenzo,” Tim said.

The guy whom he'd once given an 11-1 parlay on Sugar Ray
Leonard returned the favor by loaning us $300,000 to prepay for the rooms.

We immediately started to sell twenty-five rooms a night, and soon the Excalibur offered us fifty. Once the other hotels saw us selling those fifty, they knew they could trust us with larger blocks.

There's an old saying, “The harder you work, the luckier you get.”

Tim began to save great cigars in the humidor to celebrate when we reached milestones like grossing $10,000 a day. We constantly seemed to be moving to new offices at three in the morning (the downtime for calls) to keep up with the demand for more desks, more phones, more operators, and more parking spaces. American Express had those same brick-and-mortar offices stationed all over the world. We were like a kid who kept outgrowing his shoes. Our company would move to bigger offices ten times in eleven years.

When hotels started to give us large blocks of rooms, they began to feel linked to us, and their feedback guided our expansion. The hotels wanted us to fly people in. They wanted us to create air-hotel-car rental packages. They wanted more than a one-time guest. They wanted us to capture markets from all over America, just as the Las Vegas Convention and Visitors Authority was targeting markets for huge trade shows.

We weren't going to set up charter flights. And the largest carrier into Las Vegas, Southwest Airlines, worked exclusively with a competitor and was off limits. So we set our sights on a few others.

And now you'll see why it was so fun to come to work every day. You couldn't create a reality TV show better than what we had going on in our office. It was an amusement park of energy. Even people who weren't working for us—guys like Bob Nagy,
“Naaygs” to us—wanted to come by and dive headfirst down the waterslide.

No scriptwriter could possibly invent Bob Nagy. Naaygs made even the most ordinary backyard picnic introduction unforgettable. We were at the home of our friend Tito Tiberti when Naaygs was presented to us along with two sentences. “I apologize in advance for introducing Bob to you,” Tito said. “I take no responsibility for what happens to you next.”

How could I possibly describe Naaygs? You can start by trying to imagine a cross between Don King, Archie Bunker, and Louis Rukeyser running a midsized investment firm. A
cheap
cross between Don King, Archie Bunker, and Louis Rukeyser. Tighter than two coats of paint, Tim used to say, shaking his head. The fact that Naaygs was a multimillionaire only made his antics all the more exasperating and comical.

But Naaygs was very successful and capable of lightning-bolt ideas. He was one of those guys who read everything, and for the first five minutes of a conversation could appear to be an expert on whatever subject was tossed his way. He was so persuasive he could convince you to turn off on a highway exit even when you knew it wouldn't take you to the place that you wanted to go. Naaygs pleaded to be part of our presentation to bring the airlines into our fold. It was sheer passion. He wasn't making a cent.

Okay, okay, we said, not exactly sure how he was going to blend with his partner on the assignment. Now, imagine Naaygs paired with our vice president of sales—Richie Rich.

That was our nickname for Michael Reichartz, whose dad had been president of Caesars Palace and who'd grown up playing soccer in the halls of the Waldorf-Astoria.

Richie Rich showed up immaculately dressed for the first airline presentation. Naaygs arrived in our office with the rem
nants of an omelet on the lapel of his suit—a suit, by the way, which had gone out of style twenty years before. The hem on his pants was coming loose. And his cream-colored socks clashed horribly with the dark hue of his suit. Tim went berserk, half-appalled and half loving it.

“Look at yourself!” he howled. “You got egg on your suit! Your pants are coming undone! Your lapels are too wide! Your tie is too big! Naaygs, what the fuck?”

So Naaygs washed off the eggs, grabbed a stapler, stapled the cuff on his pants leg, turned to Tim, and fired back, “Well,
now
what've you got to say?”

No, this just wasn't going to happen at American Express. And it was only the beginning.

We got Naaygs a new tie and some dark socks and sent him off with Richie Rich to meet an executive from TWA. The meeting was three weeks after the tragic midair explosion of a TWA jet leaving JFK for Paris, and on the drive over Richie Rich cautioned Naaygs about bringing up the incident. Remember, he said, this is simply about putting together vacation packages with Las Vegas Reservation Systems.

As soon as they sat down with the TWA executive, Naaygs opened the conversation with “So what do you think it was?”

“What do I think
what
was?” the TWA exec asked.

“The explosion that took down Flight 800. I think it was a missile. I don't see any other explanation.”

Richie Rich ground his teeth and bit his lip all through the meeting, and he really let Naaygs have it on the ride back to the office. By the time we'd all gotten through with him, Naaygs looked like a slapped puppy. He begged us to let him make up for his blunder the following day in the meeting scheduled with United Airlines.

Looking back on it, I can't believe we let him go. But Tim
and I loved him so much we relented. He really was a smart guy. His heart was in the right place. Remember, the guy wasn't getting paid a cent!

The next day, Naaygs and Richie Rich showed up for the meeting with United. The airline's sales manager was an elegant woman named Julia Wong. Very classy. Naaygs was on his best behavior at the start, but as the meeting loosened up he told a story that led to the line, “Yeah, and this guy didn't have a Chinaman's chance of getting promoted.”

Ms. Wong let the comment pass, but when she excused herself a few moments later, Richie Rich stood up and started pummeling Naaygs.

“How could you do this to me two days in a row?” he screamed through clenched teeth.

“What I do?” Naaygs wanted to know.

Well, we ended up getting the account and developing a great relationship with United. (TWA went out of business.) And there was no way Tim would ever keep Naaygs from coming back through our doors because he loved to tell stories about Naaygs as much as he did smoking those landmark cigars.

We were lighting up quite a bit. Our sales numbers were heading through the roof:

 

1991: $1,600,000

1992: $2,800,000

1993: $3,600,000

1994: $4,800,000

1995: $6,200,000

1996: $8,500,000

 

No matter how much we grew or where we moved, though, the frat-house element remained in the air. Tim's Aunt Mary, his first unpaid employee, wandered around and scolded whom
ever she heard cursing “Watch your mouth, boys! This is not a bar and grill. This is a fancy business. You don't use words like that in a classy place.” Our rottweiler, Bally, roamed the hallways. And we were always up for a good prank.

Once, after hearing about Nagy's endless negotiations with several computer companies to get the absolute rock-bottom prices when he reoutfitted his investment office with twenty desktops, we couldn't help ourselves. We snuck into his office after his computers had been delivered and removed the ball at the base of every new mouse. When Nagy arrived the next day, he went ballistic, phoning the computer company and screaming, “My mice have no balls!”

We were like college kids having the time of our lives without a notion of the technical revolution that lay ahead: the Internet.

Like any curious kid, I started to wonder what we could do with the computer. My college internship at Channel 10 in San Diego had opened my eyes to how a computer could access information in seconds. But, hard as this is to believe for many college students now, when I came to work with Tim in 1993 most people still didn't have cell phones. People used pagers back then. If a businessman was on the road, he could see the number of the person trying to contact him, and he might stop at a pay phone to return the call. Back then, if you wanted to research a topic you reached for the bound volumes of
Encyclopedia Britannica
that lined libraries and bookshelves across America. Before 1995, there was no such thing as Internet Explorer or Netscape Navigator for people to link up with the Internet. And even when the two Web browsers got up and running in 1995 and gained popularity in 1996, traditional companies like American Express were still living in the past, putting out slick brochures that listed prices on excursions months and maybe even a year in advance.

The future started appearing to me in fragments. At a conference in Chicago run by SABRE, the computer system that American Airlines used to tap into the industry rates, I heard the founder of Netscape speak and immediately realized that information available only to travel agents would soon be accessible to anyone who owned a computer. If our company started a Web site, I figured, we could create a brochure that could be continually updated.

This would allow us to make two major breakthroughs. We could raise or lower our prices in an instant based on demand. Also, we could show our customers rooms offered at our hotels and quickly update the pictures if the rooms were recently refurbished. This might not have been a big deal if we were only selling rooms at the Hilton. A room at the Hilton is a room at the Hilton whether it's in Birmingham or Chicago. But
we
were selling rooms in Las Vegas. The hotels we were offering had exotic themes. People were curious about the pirate motif at Treasure Island, the pyramid designs at the Luxor, and the medieval décor at Excalibur.

When we first launched a rudimentary site in 1996, feedback was immediate. Customers loved seeing pictures of the hotels and discovering the amenities on the properties. The computer screen was much more compelling and efficient than a reservation agent. An agent could only describe the hotels. An agent could pass on rates only as fast as the customer could write them down. Now, in the snap of a finger, the customer's eye could take in columns of rates listed on our site.

It was a huge leap. But our initial Web site was still no more than an electronic brochure. Once the customer saw it, he or she then had to call our 800 number to make the reservation.

Then came an ordinary phone call that nobody would pick up. No matter how many people we hired to work the phones,
we never seemed to be able to keep pace with the ringing telephones. Many times, I would jump in and lend a hand, but that would drive Tim crazy.

“Tom, what are you picking up the phone for? That's not your job. You're
in charge
of the company!”

But I just couldn't help myself. If somebody was calling up for our business, I couldn't bear to stand by and let the phone ring. One day, I picked up and, in the best spirit of my mother, got into a conversation with the customer.

“When are we going to be able to book over the Internet,” he asked, “without making a phone call?”

I didn't have an answer. So I started to answer more calls. I asked everyone if they'd prefer to book their reservations over the Internet from start to finish. Many said they would. Then I examined all of our e-mails. People were asking about full Internet service there, too.

Usually, I'm the brake and Tim's the accelerator. But I just felt like I had to hit the gas pedal on this one. Still, it wasn't in my nature to go roaring ahead without talking it over.