Vegas Strippers Incomes 'Cut in Half'; Gaming Revs Plunge; Empty Houses

Discussion in 'Economics' started by ByLoSellHi, Oct 16, 2008.

  1. It's a much broader problem in Vegas, than that, but this hottie is hurting.

    Leigh Sogoloff, a lap-dancing at Rick's Cabaret Vegas, poses for a portrait at the club in Las Vegas, on Oct. 7, 2008. Photographer: Jacob Kepler/Bloomberg New

    Losing Las Vegas Shows How Americans Crap Out in Housing Casino

    By Daniel Taub and Dan Levy
    More Photos/Details

    Oct. 16 (Bloomberg) --
    Leigh Sogoloff, who spends her evenings lap-dancing at Rick's Cabaret Vegas on Procyon Street, says she's making half her income of a year ago.

    ``You don't shop, you don't buy stuff you can't afford,'' the 36-year-old Sogoloff said between dances at the Las Vegas club. She has postponed buying a house and is reading Deepak Chopra. ``I know how to save money. I'm not a dumb stripper.''

    The city that sold Americans on the dream they could lay down a small wager and walk away millionaires is reeling from speculation in the housing market that helped bring down Wall Street. The quick profits that so easily spread from Nevada to Florida, just as casino gambling migrated to 37 states, are now proving what happens in Vegas rarely stays in Vegas.

    Las Vegas leads the nation in falling home prices, foreclosures and stalled construction projects. Rick's Cabaret International Inc., with 20 clubs in seven states and two in Buenos Aires, has lost 74 percent of its market value this year.

    The ``main nerve'' of the American dream runs through this desert metropolis, Hunter S. Thompson concluded in his 1971 book, ``Fear and Loathing in Las Vegas.'' Chopra, the spiritual teacher whose writings Sogoloff has turned to, said that less than 2 percent of the $3 trillion to $4 trillion that circulates in the world's markets daily is used for goods and services.

    `Pure Speculation'

    ``The rest is trying to make money off money,'' said Chopra, adjunct professor at Northwestern University's Kellogg School of Management in Evanston, Illinois. ``Our financial structure which, of course, is an American system but is now global, is pure speculation. It's gambling.''

    More than $10 billion of hotel and casino projects with 10,000 rooms have been delayed on Las Vegas Boulevard, better known the world over as the Strip, according to locally based real estate and economic consulting firm Applied Analysis LLC.

    Gaming revenue for casinos on the Strip fell for the eighth straight month in August from a year earlier, the longest streak of declines since records began in 1983, according to the Nevada Gaming Control Board in Carson City. The 16 percent drop in May was a record. August revenue fell 7.4 percent.

    ``The only comparable period was around 9/11, when we were down for five straight months,'' Frank Streshley, senior analyst at the board, said in an interview. ``This is a very difficult time for the gaming industry.''

    Empty Houses

    A row of bank-owned homes in the Silverado neighborhood of Las Vegas, April 25, 2008. Photographer: Jacob Kepler/Bloomberg News

    All this in a state that led the U.S. housing boom with an estimated 275,000 new homes built from 2000 to 2007, a 33 percent increase that was the highest of any state, according to the Census Bureau. Now, many of those homes are empty and worth less than when they were built.

    The bust that started almost three years ago has brought down New York-based securities firm Lehman Brothers Holdings Inc. and led to the forced sales of investment banks Bear Stearns Cos. and Merrill Lynch & Co., and led to more than 137,000 job losses in financial services worldwide.

    Las Vegas had the biggest home-price decline in the country in July and Nevada had the highest foreclosure rate in August. One in 91 homes in Nevada were in some stage of default, compared with one in 416 for the U.S. overall. California had the second-highest rate and the most foreclosure filings, and Florida had the second- most filings.

    The signs of decline are right on the Strip, where Boyd Gaming Corp.'s $4.75 billion Echelon casino and resort may be the most obvious symbol for the city's economic slowdown.

    Idle Cranes

    Boyd said on Aug. 1 it would halt construction of the Echelon, a 5,000-room property with five hotel towers, after investing $500 million. The company broke ground on the 87-acre development, on the site of the demolished Stardust hotel at the northern end of the Strip, in June 2007, just before the onset of the global credit crunch.

    Construction equipment, including two excavators and one backhoe, sat idle last week. Six tower cranes stood poised over the project's steel skeleton, which was halted at the ninth story. The tallest tower is to be 58 stories. The cranes may stay there until building resumes, said Ryan McPhee, a Las Vegas developer who monitors construction in town.

    ``With things slowing down, there may not be the demand'' for the equipment, McPhee said. ``There's almost no way to get financing for projects right now.''

    Boyd will delay Echelon for ``three or four quarters, assuming the economy turns and credit markets open up,'' said spokesman Rob Stillwell.

    CityCenter Project

    ``When a home-grown leader like Boyd builds a mega-resort framework, then suddenly says they're halting the project, that's a stunner,'' said George McCabe of B&P Advertising and Public Relations, which creates ad campaigns for Las Vegas's real estate industry. ``It's scary.''

    A relative bright spot on the Strip may be CityCenter, an $11.2 billion joint venture between MGM Mirage, the world's second largest casino operator, and Dubai World, a holding company for the government of Dubai. About 60 percent of the development's 2,647 luxury condominium and hotel-condo units are under contract, with $350 million in non-refundable deposits.

    ``Our product is different and we're selling real estate for future delivery,'' said Tony Dennis, executive vice president.

    At Las Vegas's McCarran International Airport, the total number of arriving and departing passengers in August dropped 9.9 percent from a year earlier, when a record 4.3 million passengers went through the airport. Highway traffic declined 4.9 percent through July, the latest month for which figures are available, the visitors authority said.

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    Flights Cut

    ``We are uniquely positioned to be penalized by the global slowdown, because we're hugely dependent on the consumer getting in a car or plane to get away from their lives,'' said Jeremy Aguero, co-owner of Applied Analysis.

    Southwest Airlines Co., which has more flights leaving Las Vegas than any other city, had a 7.3 percent drop in Las Vegas passengers in August, and starting in January the Dallas-based carrier will cut its daily Las Vegas departures to 227 from 240.

    Occupancy at Las Vegas hotels fell 2.4 percent and the average daily room rate dropped 6.6 percent in the seven months through July compared with a year earlier, according to the Las Vegas Convention and Visitors Authority. In July alone, the latest month for which numbers are available, room rates were down 10 percent.

    The unemployment rate for the Las Vegas metropolitan area rose to 7.1 percent in August, a 2.1 percentage point increase from a year earlier. Those numbers don't tell the story of people such as Dimi Doronis, a banquet server for Aramark Corp.

    Doronis worked just four days in July, six in August and 10 last month catering at conventions, down from about 25 days per month a year ago. She doesn't get paid when she's not given a catering assignment, and the Bulgarian native spends her days reading books about Eastern European politics.

    Digging Into Savings

    ``I've been 18 years in this town, and I've never seen what's gone on like it has this last month,'' the 44-year-old Doronis said. ``I don't know how I'm still alive. I'm digging into my savings right now, but soon it's going to be done.''

    Mark Stubbins, a cab driver in Las Vegas for two and a half years, watched his tips drop to as low as $30 a day from as much as $80 a day before business started slowing down in May. The 53- year-old said he's struggling to meet his company's daily fare goals, which were set a year ago, when more tourists and businesspeople were still coming to town.

    ``You can't do what's not there,'' he said.

    Sogoloff, the stripper from Rick's Cabaret, said she moved to Las Vegas in 1999 because ``I knew it was good out here.'' She's put her plans to buy a house on hold while she watches her money. ``That's why I don't own a home right now.''

    Home Prices Fall

    Las Vegas's housing market is the worst in the U.S. Home values in the area at the end of the second quarter had fallen to March 2004 levels, according to the S&P/Case-Shiller Home-Price Index. Las Vegas prices fell 30 percent in July from a year earlier, the biggest drop among 20 U.S. metropolitan areas.

    The median price in August was $210,000, and three out of four home sales were bank-owned properties that were foreclosures, the Greater Las Vegas Association of Realtors said. Nevada's foreclosure rate was the highest of any state for the 20th straight month in August, according to RealtyTrac Inc.

    Hotels are using new promotions to try to win budget- conscious visitors. Harrah's Entertainment Inc., the world's largest casino company by revenue, offered a ``Two Cent Tuesday'' deal this month at its Harrah's Las Vegas property. The promotion allows guests to stay for that price as long as they book two nights before or after Tuesday at the regular rate, said spokeswoman Suzanne Trout.

    Cranes tower above Boyd Gaming Corp.'s Echelon casino and resort construction site after work was delayed on the project in Las Vegas, on Aug. 4, 2008. Photographer: Jacob Kepler/Bloomberg News

    The Flamingo

    At the 1.9 million-square-foot Las Vegas Convention Center, visitor volume declined 1.1 percent this year through July, and attendance at some retail and merchandising events fell, according to the visitors authority. The MAGIC apparel convention was cut to three days in August from four days a year earlier.

    Gambling was legalized in Las Vegas in 1931, the same year work began on the Hoover Dam. Mobster Benjamin ``Bugsy'' Siegel, a member of the Meyer Lansky crime organization, popularized Las Vegas in 1946 when he opened a hotel named The Flamingo, the nickname of his girlfriend, dancer Virginia Hill.

    Since then, the city has become the destination of millions, who come for the shows, the gambling tables or just to sit bleary- eyed in front of the slot machines, pumping in coin after coin, ``still humping the American Dream, that vision of the Big Winner somehow emerging from the last-minute pre-dawn chaos of a stale Vegas casino,'' as Thompson wrote in ``Fear and Loathing.''

    $6,000 Stripping

    Some also come for entertainment that justifies the Vegas slogan, ``What happens here, stays here.'' Rick's Cabaret Vegas was known as Scores Las Vegas until Houston-based Rick's bought the club last month. A dancer whose stage name is Louanna who works with Sogoloff said she made $6,000 performing in September, down from $8,000 a year ago and $30,000 in January 2007, her best month in the two and a half years she's been performing.

    Vegas workers may see their pay continue to shrink as tourists, turned off by the casino-style wagers they placed on their homes and retirement funds, stay away, said Faith Popcorn, who tracks cultural trends and spending habits as chairman of New York-based Faith Popcorn's BrainReserve. ``When we talk about gambling, that's a word we don't want in our vocabulary.''
  3. She doesn't look like 36 at all! I don't think she will have trouble finding 'home and shelter' (read: sugar daddy) should things get worse :cool:
  4. Money spent in Las Vegas is the first kind that gets cut out of a squeezed budget. Couldn't they have seen this coming?

    Maybe Las Vegas can hedge in the future by buying DEEP OTM puts on broad indices. Just a thought.
  5. I'm shocked!! Gaming tables and strippers are essential for human survival :D
  6. C'mon guys. A little sympathy? She's subjecting herself to Deepak Chopra, for G_d's sake.

    Leigh Sogoloff, who spends her evenings lap-dancing at Rick's Cabaret Vegas on Procyon Street, says she's making half her income of a year ago.

    ``You don't shop, you don't buy stuff you can't afford,'' the 36-year-old Sogoloff said between dances at the Las Vegas club. She has postponed buying a house and is reading Deepak Chopra. ``I know how to save money. I'm not a dumb stripper.''
  7. That's Chopra's problem.......never had a lap dance.

    DSB is a killer
  8. Yes you are! :D

    BTW, go to Bright Trading and get a real job! :eek:
  9. She's the Boot Camp instructor. That' s how they fill it up.
  10. Dan44


    #10     Oct 16, 2008