The following is a condensed version of a Dec. 18 interview with Ruffin on KNPR's radio show "State of Nevada" hosted by David Berns.
Berns: Did you see purchasing the Treasure Island as a good deal to be had?
Ruffin: It wasn't that so much. It's that money [image-nocss] is scarce and a lot of the potential buyers can't get loans. And in our situation, we had that cash from the Frontier and we didn't need a loan and we felt that the opportunity would be now to buy a casino. We waited a year, we sat on that money for a year, but MGM indicated interest and I approached them, and we were anxious to get back in the business, so between Jim Murren (MGM Mirage chairman and chief executive), Kirk Kerkorian and myself, we pulled the trigger.
Berns (after telling listeners Ruffin got his start as a service station owner who expanded into convenience stores and then hotels, then noted): You answer your own phone.
Ruffin: That's the way we operate. We still own those convenience stores, by the way. We lease those to a major company, and that's really how we got our start. We have 63 convenience stores and we borrowed against that lease and put $20 million down on the Crystal Palace in the Bahamas. A cruise line owned the hotel and they held $60 million and I sold that for $147 million, bought the (New) Frontier for $165 million and then sold it for $1.2 billion. Our only asset here in Vegas right now is 50% of the Trump Hotel.
Berns (after talking about Ruffin's love of poker): Do you need a poker-playing gene?
Ruffin: No, you go all in. I've gone all in three times. And this is another one of those issues where we take all our cash and put it all there. We don't have any cash now, but operating this casino, Treasure Island, we'll have very little, if any, debt. They pay off the $275 million in debt very quickly, even if the economy grows even worse, which it still could do. We won't have any debt so we'll still be positive on cash flow.
Berns: How many employees are at Treasure Island?
Ruffin: 3,200, I believe.
Berns: Do you plan to hold onto them all?
Ruffin: Oh, yeah. I like the management and so the management is going to stay in place, and I'll be the owner and I'll be there, have an office there, but I plan to keep everything the same.
Berns: In the Forbes Magazine list of the 400 richest Americans, you're listed at 215. You've said recently that you're investing in municipal bonds, stocks, which headed south in the current financial crisis. I can't imagine a guy like you has much interest in municipal bonds, stocks-that sounds too stodgy.
Ruffin: You hit it right on the head. I didn't like that business. It's somebody else's business. We don't know that business. Buying financials and that sort of thing, that's not what we do. Eventually, we're going to get out of all that stuff. Getting back into action is really where we ought to be. We know the business, that's what we do.
Berns: How are you going to work with MGM Mirage? Certainly you're going to have some problems as a stand-alone property driving people to that building.
Ruffin: Yeah, we're under contract for a certain amount of time. We'll stay with the call center and the (player) tracking system, and all that will remain the same for a year or so.
Berns: What happens after that?
Ruffin: We'll have to stand alone for awhile. We still have the tram. We still have the connection into the Mirage, and we still have the connection into the Fashion (Show) Mall, so we get a lot of traffic there. So we'll be able to operate it as a stand-alone. We have a great relationship with Jim Murren, and he's very interested in what happens to the employees because they've been with him awhile. And so he'll do what he can to make this transition go well. We won't be hurt any with that transition.
Berns: (after referring to an interview Ruffin did with Forbes in September, in which he was asked whether the chase or the kill is the biggest turn-on): You told the magazine: The kill, but be careful that you're not the victim.
Ruffin: (Laughing) That's exactly right. You have to be very careful when you go after these deals. Remember, you might look at 100 deals and only pick up two. So you have to be careful of the other 98, which could be toxic.
Berns: How do you know something's toxic and how do you know which of the two are the right ones?
Ruffin: You have to be good at math.
Berns: I take it you're pretty good at it.
Ruffin: I got an A in math.
Berns: That said, still it's one thing to add, subtract, divide and multiply, but it's another to truly understand markets. What are you tapping into when you look at the casino market, the truck-dolly market, the convenience-store market?
Ruffin: We know those businesses. We've been in the hand-truck market for 20-some years and we know that real well, and we know the convenience-store business since I started out there. The convenience store, that was location. I've always thought that was the key to everything. We played that through to the casino side. I loved the location of the New Frontier and now I love the location of Treasure Island. You look at these deals and you've looked at so many. You get an instinct for what is going to do well or what won't.
Berns: Asked by Forbes who you listen to for advice, you said, "Listen to everyone and then do the opposite."
Ruffin: (Laughing) Some of these people have been so wrong about all this stuff. People on TV, they've been wrong, conning you to buy stocks at a time when people have lost a fortune listening to them. You just have to go with your own instincts. Maybe that was a flip comment, but sometimes maybe you are a contrarian.
Berns: You feeling pretty smart about your timing of the sale of the New Frontier?
Ruffin: I couldn't have picked a better time. Maybe two or three months later it wouldn't have worked.
Berns: Did you know something? Did you see something in terms of economic trends?
Ruffin: Not really. I knew things were getting very, very pricey. Homes were getting out of sight, and people were borrowing against that to the hilt. I knew one guy that borrowed $300,000 on a house and he put nothing up and he didn't even have a job. Then a few months later, he put a second mortgage on it for another $40,000. They gave it to him. They were just sloppy. I thought there was going to be a problem, but we're not in that business and that's somebody else's problem.
Berns: When you look at interest rates now, essentially down to zero, the federal government is saying, "Take this money from us, and lend it, please."
Ruffin: It's amazing. The banks are borrowing at zero and lending at 18%, if you can get it. It's just amazing. I've never seen a time like this before. I assume it will free up sometime next year, but when you borrow at zero, I think there will be some profit somewhere.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.