David Mckee's Stiffs & Georges - Plaza

Colony Capital comedy

Fri, 21 Aug 2009 13:29:00 -0700

Having borrowed money to buy the Las Vegas Hilton five years ago at a dirt-cheap $200 million, Colony Capital -- those financial wizards -- borrowed $250 million more to retire the first loan. (Does Colony intend to pay off the second loan by taking out a third?)

At some point, Colony may have to start like, you know, paying down these loans ... but not yet. It's extended the maturity on Loan #2 into 2011. The story (second item) is somewhat confusingly worded, but it sounds like Colony is down to its last extension. And the LVH is now losing money. Perhaps Colony should ring up Penn National Gaming and see if CEO Peter Carlino wants to talk "flip." It's still a classy property with a wealth of history and unbeatable proximity to the Las Vegas Convention Center. There are much worse deals to be had out there (*cough* Fontainebleau *cough*).

Also: LVH headliner Barry Manilow is reportedly mulling a leap over to Paris-Las Vegas, another augury of trouble for Colony. Manilow's departure would leave the LVH with some tight trousers to fill.

Another setback for Ed Ad. Its attempt to lease the southeast portion of its ex-New Frontier acreage to a "Dinner in the Sky" outfit (complete with a 160-foot crane) got the back of the hand from the Clark County Commission. Both Boyd Gaming and Wynn Resorts balked at the prospect of diners dangling high above Echelon and Wynn Las Vegas. However, there's some pretty freaky shit on the Strip already and this seems tame by comparison. God knows, it couldn't be worse than the lametastic "Sirens of T&A" or whatever Phil Ruffin's nautical titty show is called.

The dream is dying

Mon, 20 Jul 2009 16:07:00 -0700

Just last week, UNLV's historical sage, Dr. Eugene Moehring, was taking a dim view of the fate of Las Vegas' working class. Now comes the Wall Street Journal to back him up with some sobering reportage.

Even at union salaries, Culinary Union-represented employees are hardly living on Easy Street. According to the WSJ's Tamara Audi, a hotel maid can expect to make slightly under $30K/year. She also finds a fry cook who was pulling in $36K annually, before he was laid off. (He's now making much less at union-free M Resort.) This goes to show not only the importance of union representation but also how close many of these people are to the economic precipice.

Many of the causes of our current plight (like real estate speculation) are outside my remit. However, a great deal of the blame falls upon casino CEOs who -- encouraged by banks that pushed too-easy credit like "happy dust" and by cheerleading Wall Street analysts -- succumbed severally and variously to a collective psychosis.

The Plaza: Rooms available, starting the 12th of Never.

The hyper-optimistic mentality that produced a rapid-fire succession of (in no particular order) CityCenter, Cosmopolitan, Fontainebleau, Echelon, Palazzo, Encore, the Hard Rock Hotel acquisition/expansion, and even will o' the wisps like Crown Las Vegas and Viva, rested upon a bizarre assumption. Namely, that the Las Vegas Strip could not only absord literally thousands upon thousands of new rooms (preponderantly at the high end) but could do in a compressed time frame.

A few companies even thought this could be done even after they'd glutted themselves with LBO debt. (True, Harrah's Entertainment now says it never intended to go the metaresort route but the available evidence testifies otherwise.) As I've written before, a bubble was mistaken for a baseline, thereby magnifying the consequences when the economic fundamentals began to crumple.

Distance evidently lends clarity, at least to Harvey Perkins of East Coast-based Spectrum Gaming Group. He calls for a complete rethinking of the luxury-based Vegas business model, repositioning the Strip's posh palaces slightly downmarket. It'll mean eating a lot of pride but what alternatives are there?

It's a glass half-full perspective, which is preferable to the overdose of gloom quaffed by MGM Mirage CEO Jim Murren. He darkly prophesies, "There won't be another property built in Las Vegas for a decade."

Just wait 'til the next economic upturn and see if Murren is still saying kaddish. There will be new casinos in Las Vegas before 2019, I'm fully confident -- but they'll be ones positioned around affordability and (hopefully) generating double-digit ROI. Because, frankly, Las Vegas isn't the investment it used to be.

The St(ump) Regis, as it was to have been.

Then there's the schizoid-sounding Sheldon Adelson, who harrumphs, "I don't see any opportunities for any development in Las Vegas." Emphasis added; the Las Vegas Sands CEO seems to swing from bullish to bearish by the day.) It'd be nice for Sands if Adelson had been vouchsafed this insight before he started work on the St(ump) Regis in the midst of a condo-market meltdown. Now it's big bloody nose right betwixt the eyes of the Venetian and Palazzo.

The polar opposite of Adelson is Culinary Union boss D. Taylor who sounds like a flack for the Las Vegas Convention & Visitors Authority, so giddy is his optimism. Hey, D., have you talked to your workforce lately -- you know, the ones who just had to defer a $710/year pay bump?

At least some amusement is to be had from the Strip map prepared for the WSJ by Bill Lerner's new outfit, Union Gaming Research:

I don't think I'd take investment advice from a firm that doesn't know the correct spellings of "Echelon" or "Caesars." City Center seems to fallen off the map entirely. It'd also take issue with the classification of many sites (like the in-foreclosure FX Real Estate plot) as "ceased or delayed" as there was never any work to cease or delay at, say Elad Properties' "Plaza" site or Crown Las Vegas (aka "Archon"). Ditto MGM/Kerzner, Africa Israel, etc. However, the Cosmo, which really is in limbo, doesn't make onto the map.

At any rate, as land prices on the Strip continue to return to earth, there's going to be plenty of prospective acreage for the company that's ready, willing and able to build a mid-market casino on the Strip.

Wynn, unplugged

Thu, 30 Apr 2009 18:27:00 -0700

"Wynncore"'s boss has been all over that series of vacuums and tubes which some call "the Internet" this week. He did Kirk Kerkorian a favor by suggesting that he, Steve Wynn, would be tractable to buying anything the aging aviator had to sell ... even Circus Circus.

While Wynn may have been merely being playful, enjoying how much the worm has turned since then-MGM Grand forced him out of then-Mirage Resorts, his expression of interest helped goose MGM Mirage stock by 5%. Holders of Wynn Resorts shares, however, may have emitted a collective "Eek!" at the thought of Wynn buying yet another clown-themed casino (don't forget that he once owned the Boardwalk). WYNN shares slipped 3%.

If Steve Wynn on 60 Minutes is good, then 69 minutes with Steve Wynn must be better, right? Either way, here he is at the Milken Institute's Global Conference 2009. What's inarguable is that there is no other CEO in the gaming group -- no, not even Sheldon Adelson -- to whom people would listen for anywhere near that amount of time. True, many Americans do watch an hour-long TV show starring ex-casino mogul Donald Trump, playing a parody of CEO (or could it really be a cunningly disguised Alec Baldwin in the role of Old Fish Lips?) ... much as they do When Animals Attack! or World's Scariest Police Chases.

Bloomberg News cornered Wynn for a few minutes and the unscripted result was better than any televised fender-bender. [Warning: The audio is subject to frequent dropouts.] Wynn began by acknowledging that, times being what they are, Americans are scarcely obligated to visit Las Vegas.

One wishes certain umbrageous local figures would get that memo.

He also notes that Wynncore is cheek-by-jowl with "all the convention centers." So I take it that proposed Wynn Las Vegas/Encore convention center is now off the drawing board. Strip land acquisitions are flatly ruled out -- no doubt causing some long faces at Elad Properties, Triple Five and other companies that bought acreage at the top of the market (i.e., $33 million-$36 million/acre) and can't do squat with it now. Uncle Steve is not coming to their rescue, I'm afraid ... and why should he? As Wynn obliquely acknowledges, he's got plenty of land of his own, fully amortized but not developable in these tight-credit days.

But it's when the conversation turns to politics that things get well and truly interesting. Starting with an observation that the government is too fixated on infrastructure improvements, Wynn gradually works himself up into an fine rage. His description of President Obama's policies runs the gamut of "naive ... doesn't have much credibility ... unimpressed ... ridiculous shopping list ... the right ideas at the wrong time ... shotgun approach." He faults the current administration for lacking "experience and priorities" and -- in a somewhat ironic choice of analogy -- says that when a patient is undergoing major surgery, "you don't give 'em advice on a nose job."

You want must-see TV? This is it!

Unfortunately, Wynn is somewhat hamstrung when pressed for constructive alternatives. His one substantive answer is a proposal that Uncle Sam subsidize new hires if the employer provides health benefits. Beyond that, he falls back on a broad-brush invocation of tax policy (which "incentivizes people to do what the government wants them to do"). Wynn thumps the "tax policy" tub so relentlessly that he starts to sound like a personality-implanted version of Rep. John Boehner, pining for the return of the previous administration's economic policies as fiscal Viagra.

Give the man credit. He's got strong opinions and no fear about voicing them. He's a cheerfully impolitic figure in word-parsing times and the casino industry might be unbearably dull without him.

Case Bets: Chicago, Wyndham, Harrah's

Fri, 16 Jan 2009 12:37:00 -0700

Anybody who still frets about "criminal elements" in Las Vegas casinos ought to turn their gaze toward Chicago instead, where such issues continue to dog the state's 10th casino license. The citizens of Waukegan lost their shot at a casino because the would-be owners had juiced an indicted businessman into the deal, despite representations to the contrary.

And the winner is ... Des Plaines.

Also, the amounts of the various bids have been revised. Favorite son Neil Bluhm's winning offer was $272 million (quite a bit more than previously reported), while Waukegan Gaming brought up the rear with $216 million. Alex Yemenidjian's bid has been revised slightly downward, to a still eye-popping $406 million. Maybe Yemenidjian, who made one previous run at Tropicana Entertainment, ought to take that $406 million check to Scott Butera's office and ask for the Tropicana Las Vegas in return. And if were Butera, I'd have that check to the bank as fast as my legs could carry me.

Wyndham's latest Las Vegas project, just up the block from LVA HQ, has ground to either a halt or an extremely slow crawl. But Wyndham is going great guns in the Bahamas, where its Wyndham Nassau Resort & Crystal Palace Casino opened yesterday. Assuming Harrah's Entertainment can ever pull the trigger on a sale of The Rio, the latter has quite a bit of acreage (36.73 acres, to be pedantically precise) out back that's being underutilized as surface parking. Any prospective owner ought to consider cannibalizing that for additional casino/restaurant offerings, piggybacked onto the rear end of the existing Rio. It could synergize quite nicely with the Wyndham's timeshares, once they're eventually up and running just across the street, and capitalize on a steady stream of Twain Avenue traffic.

(Just for perspective, El Ad Properties only has clear title to 18.4 acres for its Plaza metaresort, although it may hold options on adjacent land; there's still $615 million in that acquisition that hasn't yet changed hands, judging from property records.)

Speaking of Harrah's, whether due to its new bean-counting ownership or a surfeit of other pressures, its media site has fallen into a state of semi-neglect. For instance, Harrah's southern Indiana casino hasn't been Caesars Indiana for some time now. The newly Caesar-ized Casino Windsor doesn't even merit a Web page of its own, nor do the oft-disrespected Imperial Palace and Bill's Gamblin' Hall on the Strip. The former Barbary Coast would have been a prime spot for reintroducing the Horseshoe brand to Las Vegas, but exploiting the power of the Horseshoe name is one of many ideas that have fallen victim to Harrah's ADD-afflicted corporate style in the post-Phil Satre era.

Plaza officially in trouble (or not)

Tue, 06 Jan 2009 12:18:00 -0700

It wasn't good news when El Ad Properties asked its bankers for a second extension on a $625 million purchase loan for what used to be the New Frontier. Now (by way of TheMarker, Reuters and Howard Stutz) comes a report* El Ad is seeking money from Sheldon Adelson. If you really are rattling your tin cup in Adelson's direction -- he who just diluted his ownership stake in Las Vegas Sands and stopped its leaks with $1 billion of his own capital -- then you are desperate indeed. For the record, El Ad's partner, IDB Development, says talks with Adelson are neither being considered nor on the agenda.

*Update: Reuters has all parties involved denying everything, so this is looking like one of those news reports that's more entertaining than true. At the very least, it provides clarity as to how this rumor got started.

It's not clear what to make of the appointment of Ron Thacker as president of the Las Vegas Tropicana. The reconstituted Tropicana Entertainment is starting to looking like a reunion of the old Cosmopolitan gang, as CEO Scott Butera leapt from that sinking ship, as did TropEnt CFO Robert Kocienski. On the other hand, Thacker made the trip from the Cosmo to the Trop via an interval spent as VP of casino operations for Fontainebleau Resorts "where he was responsible for casino design, development, systems implementation and general casino operations" for a casino that hasn't been finished, let alone opened. So is Thacker going through a rough patch in his career or is his departure an ominous portent for the Vegas Fontainebleau?