It's show time at the circus--Vegas style. As a high-wire artist warms up above a bleacher filled with popcorn-munching kids, the kids' parents stuff nickels into rows of clanging slot machines nearby. But the star attraction isn't in the next ring; it's two floors above the casino's din. Spread around a wood-paneled boardroom lies the future of Circus Circus Enterprises Inc. There, artists' renderings depict a Venetian-palazzo-style hotel, a cluster of Egyptian-style villas, and a thrill ride set against King Tut's tomb.

It was in that same boardroom a year ago that shareholders forced William G. Bennett, Circus Circus' 70-year-old founder, to quit after months of corporate infighting and slumping profits. Circus--long a Wall Street darling--had lost its luster. From 48 in late 1993, Circus' stock slumped to 20 a year later. "It was a pretty bad time," admits Clyde T. Turner, Bennett's understated successor, "one we intend to put behind us."

GLORY DAYS. In Las Vegas, where the only way to win is to wager, that means spending big. A rejuvenated Circus intends to do just that. Over the past year, Circus had to sit on the sidelines while rivals such as Mirage, MGM Grand, and Hilton poured on new rooms. Now, Circus is piling its chips on the table, too. On Aug. 28, the board approved Turner's plans to spend upwards of $400 million to expand its splashy Vegas showpiece, the pyramid-shaped Luxor Hotel & Casino, with 1,780 new rooms, high-tech rides, and new meeting areas. And as Circus moves into Atlantic City for the first time, Turner will spend as much again: He has joined with Mirage Resorts Inc. in a $1 billion bid to build two hotel-casinos that won city council approval in early September. In all, says President Glenn Schaeffer, spending could run into the billions as Circus adds up to four major casino-hotels by 2000.

The building boom marks an effort to return to Circus' glory days. Under Bennett, its formula had long been unique: Eschewing credit and high rollers, Circus caters to heavy-betting blue-collar gamblers by offering low-priced rooms and cheap buffets. By adding clowns and theme-park-style amusements, Bennett--who had run Circus with an iron fist since 1974--was also the first to make Vegas family entertainment. As a result, cash flow and margins have always topped the industry.

But Circus' luck recently ran cold. Soaring construction costs sent earnings down for the first time in 1993, while rivals began making inroads into Circus' hold on the mass market. Both the MGM Grand and Mirage's Treasure Island hotel have opened with cheap rooms and meals aimed straight at Circus' clientele.

Having opened two new casinos itself in the past year, Circus' earnings are recovering: Operating income for the first six months of 1995 was up 8%, to $151.9 million, on a 6% sales gain, to $621.7 million. But most of the gains came from Circus' new Tunica riverboat in Mississippi, and a jointly owned casino in Reno. At its three largest casinos--Circus Circus Las Vegas, Excalibur, and Luxor--profits have suffered. The company has also faced big internal problems: Unwilling to give up control, Bennett had systematically purged a host of potential successors over the years. By mid-1994, as shareholders clamored for change, outside board members led by ex-congressman and former Wertheim Schroder & Co. Managing Director Tony Coehlo pushed Bennett out. Bennett, who declined to be interviewed, has resigned from the board and sold most of his Circus stake.

The purges left Circus' management ranks painfully thin. Some big shareholders questioned whether Turner--the longtime chief financial officer at Mirage before he joined Circus in 1992--was up to the CEO's job. Under heavy board pressure to beef up management, Turner paid $500 million for Gold Strike Inn & Casino, an operator of small casinos. The real lure was its executives. Some 100 of Gold Strike's managers had once worked at Circus, including Schaeffer and Michael S. Ensign, both former heirs-apparent to Bennett. Turner installed Ensign as COO and Schaeffer as president and CFO. The move has reassured jittery shareholders--Circus' stock is up to 32--and the board. Says Coehlo: "This deal gives us the management depth that had been systematically eliminated over the years."

The Circus alumni's first chore: finish the 3,024-room Monte Carlo casino-hotel they're building down the Strip from the Luxor and Excalibur. The $325 million project, a joint venture with Mirage that Gold Strike had signed before Circus bought it, should open next summer. But the key to Circus' future lies a mile south of the new casino on a 120-acre plot next to the Luxor that Turner bought for $153 million. By building up to four new casinos and linking the site to the Excalibur and Luxor with monorails and moving sidewalks, Turner aims to control a mile-long block on the hottest stretch of the Strip.

Turner and his new team hope to have nearly 20,000 rooms in Vegas by decade's end--double Circus' size today. By building new rooms at a far faster clip than new casino space--and making it easy for gamblers to rotate among Circus' properties--they figure profits will grow as more gamblers crowd their casinos. "The upside is just amazing," says analyst Dennis I. Forst of Hancock Institutional Equity Services, the brokerage arm of insurer John Hancock Mutual Life Insurance Co.

Still, downside risk looms, too: With extensive construction under way in Vegas--and legalized gambling popping up everywhere from Connecticut to Colorado--more casinos are fighting over a fairly finite number of gamblers. And neophytes lured in by flashy amusements spend less. Already, such problems have dented Circus' recent openings. The $92 million Grand Slam Canyon water park added alongside Circus Circus Las Vegas has been slow to catch on, and the company recently took a $31.5 million writedown for a failed Louisiana riverboat project. Moreover, cost overruns and lower-than-expected wagering have made the $404 million Luxor, Circus' most recent major project, less profitable than anticipated.

"WE'LL PROSPER." In Atlantic City--which until recently was anything but a winning bet for casino operators--the stakes are equally high. Although the city has loosened restrictions on gambling in hopes of sparking a revival, the potential remains unclear. Circus plans to build two adjoining hotel-casinos with partner Mirage. But while the city is hoping that will provide the excitement needed to transform what has been a day-trip market into a resort destination, many in the industry have doubts.

Turner admits that swelling capacity will bring a fight. Together with construction costs, that could hurt profits: After years of double-digit gains, analysts expect annual growth to slow to around 8% (charts). But Turner argues it will be the smaller, less glitzy casinos that fold. "The big will get bigger," he says. "We'll prosper in a shakeout."

With its A-team management back in place, rivals also expect Circus to avoid its recent errors. "Clyde has selflessly created what is obviously a formidable competitor," says Raymond C. Avansino, president of Hilton Hotels Corp. And with low debt and the best cash flow in the industry, Circus has a key ace up its sleeve. "Our cash flow gives us the ability to self-finance a lot of what we want to build," Schaeffer says. If its luck has really turned, Circus holds a strong hand to rake in Vegas' fiercely contested pot.

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