Circus Circus' Ringmaster The One And Only

In the neon and green-felt world of Las Vegas, few have accomplished as much--or done it as quietly--as William G. Bennett, chairman of Circus Circus Enterprises Inc. Over the past two decades, he has transformed Circus Circus from a dilapidated, money-losing casino into an $843-million-a-year gaming giant with seven properties and a golden profit margin. In a business filled with outsize egos, Bennett shuns publicity. But in Vegas, it's common knowledge that nobody runs a tighter ship.

Maybe too tight. Since mid-February, the taciturn, 68-year-old executive has found himself deflecting charges that he is scaring off key executives because he won't relinquish control of his company. The effect has been a purge of what was long considered the gaming industry's strongest management team. Last November, he eliminated the position of top marketing executive Melvin L. Larson. And on Feb. 18, President Glenn W. Schaeffer resigned after a clash with Bennett--the second heir apparent to leave in as many years. In late March, Chief Operating Officer James W. Muir stepped down as well.

At a time when Circus is expanding ambitiously, the upheaval has sent a chill through the investment community. Long a Wall Street darling, Circus stock has been pummeled since Schaeffer resigned (chart). It didn't help that Bennett charged Schaeffer with plotting a palace coup, only to retract the charge days later. "You have to wonder why that much management leaves at the same time," frets Dennis Forst, an analyst with Hancock Institutional Equity Services. Says a rival casino executive: "It looks for all the world like a founder who doesn't know when it's time to quit."

CAMELOT. Bennett insists he has been itching to step down for a long time. His chosen heirs, unfortunately, just keep disappointing him. Bennett says he had spent years training Schaeffer and his predecessor, Richard P. Banis, to take over. "I thought they were capable of running the company the way I wanted it run," he says. Instead, Bennett claims, neither watched costs as closely as he does--a key element of the "value" strategy Circus uses to draw moderate-income customers. Moreover, Bennett claims Banis tried to push him out of the decision-making process. And Schaeffer, he charges, demanded a big increase in stock options this year, only to stalk out when the board refused.

"That's news to me," says Muir, who was on the board when Schaeffer resigned. Both Schaeffer and Banis declined to comment. Banis says he just wants to put the past behind him. Schaeffer is restricted by a confidentiality agreement he signed in order to keep some of his stock options.

TRAPEZE ACTS. In any event, it's clear Bennett can do what he wants. "This is very definitely Bill Bennett's company," says Muir. "He built it, and he intends to keep running it." Although Bennett's stake has declined to 7% from the 39% he owned when Circus Circus went public in 1983, he still is very much in control. Three of eight board members are insiders, and the rest are close Bennett associates. Moreover, the company has indulged Bennett's interests before. For three years, Circus ran a money-losing division that made radio-controlled model airplanes, a favorite hobby of the chairman. In 1989, Bennett bought the unit for $11.5 million of his Circus stock.

For all the uproar, Circus Circus' outlook is rosy. It rolled up a record $117 million in net income for the year ended Jan. 31, on revenues of $843 million, making it the nation's most profitable gaming company. Management has done a fine job of keeping 11,000 rooms in Las Vegas, Reno, and Laughlin occupied. And the new Excalibur casino, a castlelike building with a King Arthur theme, has been going strong since opening in 1990.

What worries investors is that Circus Circus plans to open its most expensive project to date in October: a $360 million hotel-casino called the Luxor, which will pack 2,521 rooms into a black-glass pyramid hovering above the Las Vegas strip. Already, a ventilation-system overhaul helped push the project about 10% over its original budget. And two rival megacasinos are coming on stream about the same time. With thousands of new rooms vying for customers, Las Vegas will be even more competitive. Can Bennett's thinned-out management team compete?

Bennett--one of the industry's visionaries--has rarely stumbled. A Phoenix native who ran a chain of Arizona furniture stores in the 1950s, Bennett and his partner William N. Pennington bought into a dingy, 365-room hotel casino called Circus Circus in 1974. Bennett was the first to recognize that the gaming market consisted of more than high rollers. With good, clean entertainment and cheap rooms, he figured, families and moderate-income gamblers would come in droves. Circus had the entertainment, including trapeze acts and a baby elephant trained to pull the handle on slot machines. But to cut costs, the duo had to add management controls to clean up operations.

ON CALL. As the company expanded, Bennett became known as the toughest operator in the business. He's notoriously tightfisted--his bare-bones offices always have lacked the glitz of other casino companies'--and he is obsessed with detail. Each day, Bennett reviews a computer printout that tallies costs down to how much is spent to stock the newsstand. He regularly walks the floor of his casinos and even eats at the cafeteria so he can time the service. He gives his managers space to operate but demands that they work extra-long hours.

Until recently, Bennett had been making noises about retiring with the $500 million he has amassed through his Circus Circus holdings. With his wife, Sam, he paid $11 million in 1989 for a seven-acre estate in La Jolla, Calif., where he keeps two huge speedboats. The former Navy pilot also has three aircraft, including a biplane, which he has been known to fly in acrobatic loops.

LIKE A SON. But Bennett was never quite able to let go. Two years ago, he announced plans to retire by 1992 and anointed Banis as his successor. Five months later, Banis resigned after personality conflicts with Bennett. "He was going around hiding things from me, talking behind my back," Bennett says now. "Maybe he thought he knew how to run a casino better than me."

Glenn Schaeffer's departure was more high-pitched. Bennett had hired Schaeffer, a onetime public-relations executive and former stockbroker, in 1984. While Banis was a strong operator, Schaeffer's forte was finance. Outgoing where Bennett was press-shy, Schaeffer became an articulate Circus spokesman on Wall Street. When Banis left, few doubted Schaeffer would eventually take over. "He was like Bennett's son," says hotel consultant Saul F. Leonard.

But the two men began bickering last year, after Circus joined with Hilton Hotels Corp. and Caesars World Inc. to propose a $2 billion Chicago casino complex. Bennett wanted Schaeffer to spend his time learning casino operations, not dealmaking in the Windy City. As the project bogged down--and Circus' costs neared $2 million--Bennett lost patience. He says Schaeffer, who was renegotiating his $800,000-a-year contract, demanded more stock options than the 700,000 he already had. Sources close to Schaeffer say all he wanted was to be named successor. Bennett refused.

To replace Schaeffer, Bennett tapped Clyde Turner, 55, a financial veteran of Mirage Resorts Inc. "I've wanted that rascal for years," says Bennett. "I can see him running this company for me." When? Bennett isn't saying, exactly: "I don't imagine I'll be here in seven or eight years. I'd rather be on my boat." Turner isn't holding his breath. "I'm sure he will leave sometime in the future," Turner says. "But he's running the company now just like he's always run it." All the same, Wall Street would prefer that Bennett spend more time training successors than shooing them away.

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