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Posted At : November 24, 2008 03:20 PM | Posted By : D McKee
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Station Casinos
In the course of catching up on a week's worth of newspapers, I came upon this gem: "Despite the fact that several plans for new megaresorts and expansion at other Strip properties have been put on hold, Station Casinos went boldly ahead and opened its newest resort, the $662-million Aliante Station ..."
"[W]ent boldly ahead"?!? The darn thing was finished. What were the Fertittas gonna do, mothball it in pristine condition until economic conditions improved? Spend $662 million and then just walk away? Have Christo wrap the place? (Though, come to think of it, that might improve its external appearance ... )
It doesn't require any audacity to open a completed casino that is generating 0% return on investment until you unlock the doors. Just plain old common sense and maybe not even that. Instead of lauding Station Casinos for executing a no-brainer, maybe somebody should be asking why it built a property so lavish it will require $85 million-$100 million in annual cash flow to generate an ROI equal to or better than the disappointing results Red Rock Resort was posting before Station went private.
Once you account for the differential in land prices between the Beltway and the Strip, Station is essentially building locals casinos at Strip budgets. If they can make that pencil out, more power to them, but it's a heckuva gamble.
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