"If I were going to start a brothel today, I wouldn't."
You don't hear that every day.
Susan Austin is the madam who runs Nevada's legendary Mustang Ranch, the state's first legal brothel.
Prostitution is legal in ten of Nevada's 17 counties. Austin worked her way up in the industry, and when businessman Lance Gilman bought the Mustang Ranch in 2003, he hired her to renovate and expand the facility.
"I started this from the concept with a large group of working ladies," Austin said. "We decided how it should look, and then I put on a hard hat and steel toed boots and built it with the help of some construction gentlemen."
"How's business?" I ask. Austin grimaced. "It's been better."
She thought the world's oldest profession would be recession proof. Not so. The brothel is outside Reno, Nevada, in a region hit hard in the downturn.
"When the hotels fired a lot of their low-end workers, and they disappeared, well then a lot of my low-end clients were gone, my hundred dollar parties were gone," she said. "And then when a lot of my high rollers all of a sudden discovered they didn't have as much discretionary income ... that definitely dug into their wallets, which definitely affected us."
She took me on a tour of the place, which includes an on-site doctor's office for daily medical checks. "We are more regulated than the casino industry."
The Mustang Ranch employs more than 40 people, but that does not include the prostitutes. Those women are independent contractors who can negotiate prices directly with customers. They then pay Austin a commission based on set prices. For example, Austin took me into several large suites — which can add $1,000 to a client's bill.
"This gives the ladies a chance to upsell," Ausin noted. The women can negotiate with a client to pay more or less than $1,000, but the commission paid will be based on $1,000. (Read More: Porn Through the Years)
I visited the Mustang Ranch on a Monday before lunch, probably not the busiest time of the week. There were a few customers in the bar chatting up the handful of women already working at that time of the morning. (Read More: The Porn Convention, Complete Coverage)
"I've had to learn to adjust, my ladies have had to learn to adjust," said Austin. "We're definitely tightening our belts." Prices on the brothel's "Pleasure Menu" have come down, though the madam insists, "There's never a 'fire sale' here."
Like other small business owners, Austin is concerned the economy could go over the fiscal cliff and hurt her business before it's even started to recover. "Anything that happens in Washington affects everybody in the United States. It's going to trickle down to me sooner or later." (Read More: Mustang Ranch, Nevada's Brothel Teetering on 'Cliff')
Nevada Senator Harry Reid is a power player in negotiations to avoid the cliff, but when Austin is asked what she would specifically like to see Sen. Reid do, she paused and smiled. "I'm a brothel madam. We never discuss politics and we never discuss religion ... it's such a downer. We only discuss fantasies and fun."
—By CNBC's Jane Wells; Follow her on Twitter: @janewells
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