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They burned the Monte Carlo ... and may get away with it
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They burned the Monte Carlo ... and may get away with it
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Tropicana Entertainment Co-President Scott Butera has really been working the phones -- a salutary, welcome change from the truculence and stonewalling reporters came to expect from Columbia Sussex.
(Apparently Las Vegas Tropicana execs were among those left in the dark about the impending bankruptcy, even though the company was clearly ramping up for it well in advance. With a forbearance, a court date and a labor negotiation all impending between May 5-15, the timing of the Chapter 11 announcement looks less and less coincidental by the day.)
Butera tells GlobeSt,com, the company was caught in fiscal triple-pincer movement consisting of an economic downturn that curtail traveling and gambling (i.e., "an unprecedented drop in the debtors' revenue"), a plummeting real estate market (i.e., a dwindling asset base), and "dislocated" credit markets (i.e., nowhere from which to borrow more), all of which effectively increased the company's already high leverage.
But when he says that the higher leverage was responsible for the workforce reductions in Atlantic City (over 900 employees), that's just B.S. -- to put it very kindly. As documented by the New Jersey Casino Control Commission, a central point of CEO William J. Yung III's "road show" presentation to sell bonds that would finance his Aztar Corp. takeover was the elimination of $35 million or more in salaries (a plan carefully concealed from New Jersey regulators). He also didn't waste any time bringing out the chainsaw in Las Vegas, either -- long before any downturn in the leisure sector was evident.
Butera was also wrong when he said Columbia Sussex was forced to sell its Indiana riverboat. It could have fought the (probable) loss of its license. But if that course of action was contemplated, it wasn't for long, as Yung pledged to sell Casino Aztar to pay down debt immediately after his New Jersey license was yanked.
And, if you're a fan of irony, you'd have to enjoy Butera's description of the NJCCC as "arbitrary and capricious" -- the exact same words the NJCCC used to describe the decision-making process at Columbia Sussex. Coincidence? I think not.
According to GlobeSt.com's Brian K. Miller, the Atlantic City Trop sale can't close escrow until Columbia Sussex's appeal runs its course. The latter's case may have merit (especially if employs some of the arguments UNLV's David Schwartz has propounded in the pages of the Las Vegas Business Press and his DieIsCast.com blog -- now sporting a new design).
But if "Attila the Yung" wins, God help the poor Trop employees -- and customers. Yung: The Sequel could give new meaning to "back with a vengeance."
The bottom line of Butera's ongoing saga of spin, spin, spin is that the blame for this debacle never, ever rests with Columbia Sussex or Bill Yung. It's always those Family Circus poltergeists "Ida Know" and "Not Me" who are culpable.
Unimpressed with Butera's analysis is Tom Weston, who argues that the Trop co-president's analysis is pretty much ass-backwards. Money quote: "But the truth is that Columbia-Sussex operating policies, including massive layoffs and declining standards, caused problems throughout the casino empire long before the New Jersey license was revoked."
Boardwalk Bargain: Is the bidding process for the Atlantic City Trop still open? Trustee Gary Stein implies as much -- or that the two or three known bidders are haggling, seeing a chance to snap up a distressed asset from a bankrupt company at a fire-sale price. Stein's remark that he's ready to re-start talks with "interested parties" strongly suggests that he's lost patience with Cordish Cos., the New York mystery bidders and maybe Colony Capital. Anybody want a little (OK, huge) fixer-upper on the Boardwalk?
An anonymous reader of the Las Vegas Sun (who appears to be an employee of either the Tropicana Express or River Palms, in Laughlin, alleges (see "Discussion") that management has raised the possibility of cutting employees back to 32 hour weeks, potentially triggering the loss of health benefits.
Then again, an R-J reader once claimed to have official, inside, black-and-white corporate knowledge that Paris-Las Vegas would be split off from Bally's and one of them would be sold. That'd be a neat trick when you consider that the two casino-hotels share a Siamese-twin sort of physical plant, which was why Hilton Gaming (remember them?) was able to build Paris-Las Vegas for considerably less than a billion dollars.