David Mckee's Stiffs & Georges - Shuffle Master

The Stepford Casino

Wed, 17 Jun 2009 14:52:00 -0700

Welcome to the casino of the near future. Those robo-dealers are looking more and more lifelike ... and foxier.

(Kudos to Ian Sutton of GamingFloor.com for unearthing this gem.)

Robopoker is on the march, too.

Case Bets: MGM Mirage, Harrah's, Wynn, Shuffle Master, Taxes

Tue, 17 Mar 2009 15:05:00 -0700

As we wait for the MGM Mirage earnings report, signs of desperation mount. If the company is willing to cast away a pearl like new, costly and high-yielding MGM Grand Detroit, what isn't sacred? Not even the corporate jet, provided the buyer doesn't welsh on the deal. (Guess those high rollers won't have to fly commercial for a while yet.) Whoever made that offer for MGM Detroit, though ... (s)he's one smart cookie, methinks.

Dumping regional properties at a time when that's where the strength of the casino industry is just doesn't make sense -- although you could probably make a case for ditching the already written-down Gold Strike in Tunica or the Grand Victoria riverboat in casino-killing Illinois. Actually, getting the hell out of the hellacious Illinois market seems like the best idea since forever.

Congratulations, Gary Loveman! You took home $39.6 million last year, while your company was crashing and burning -- not to mention pink-slipping 8% of your workforce. Don't say Loveman isn't feeling Harrah's pain: He's forfeiting a whole $100K in salary for 2009. There goes the college fund!

The casino giant is one step from the bottom of the Moody's bond-rating ladder. In a memo to the SEC, Harrah's Entertainment announced that managers were taking a 5% pay cut and that "it might have to delay expansion, sell assets or restructure debt." Delay expansion? No! Really? That was off the table the minute the ink was dry on the LBO. Refurbishment is also a low priority, as capex costs will be trimmed by as much as 59%.

Meantime, the guessing game begins over which assets might be on the block. In one of the busier threads over at Hunter Hillegas' Two Way Hard Three, fellow blogger Chuck Monster synopsizes the reshuffling of Harrah's properties between various holding companies, which includes a possible abandonment of the volatile (read: shaky) Lake Tahoe market. Sometimes I think Harrah's does this jiggery-pokery just to amuse itself watching the blogosphere try to determine What It Really Means.

In a regional update, most Lousiana markets were slightly down last month -- except Lake Charles, which Harrah's pulled out of, leaving Pinnacle Entertainment in possession of the field. Oops.

Pssst! Don't tell anyone! It's stashed as the second item of "In Brief" but Wynn Resorts is floating a stock offering to the tune of over nine million shares. (Other sources say seven million.) Wall Street had an understandably adverse reaction -- at first blush -- to this 7% dilution of Wynn stock, which closed up $1.07 today. Given that it's a proactive move to retire debt, it's tough to quarrel with Wynn.

Update: Clarification of the Wynn stock float comes by way of Forbes.

As for the undying speculation that Steve Wynn might want to buy back Bellagio or golden oldie The Mirage, one analyst -- Goldman Sachs' Steven Kent -- says he "would be surprised to see Wynn pursue this," given that Wynn is a builder, not a buyer.

Parenthetically, in the above-mentioned blog thread, Brian Fey makes the following, extremely trenchant observation: "Its pretty bad, that here we are almost 10 years later [following Wynn's ouster from Mirage Resorts], and Steve's biggest competition is still Steve's old properties. Just shows you how far behind everyone else is when it comes to the game."

Shuffle Master wins? Rival company Elixir Gaming settled litigation by selling its Asian shuffler business. The Las Vegas Review-Journal sees it as a win for Shuffle Master, while the Las Vegas Sun takes the opposite take, implying that Shuffle Master got its pockets picked -- which could mean an ignominous curtain for just-departed CEO Mark Yoseloff, if that's indeed the case. They report, you decide.

More of the Same Dept.: Democratic leadership in the Nevada Lege is going to do exactly what (little) is expected of them -- jack up existing taxes to onerous levels as a cop-out solution to our budgetary crisis. Booze and cigarettes are the low-hanging fruit of taxation but Nevada casinos better get ready to bend over and grab their ankles, as they're probably the next target of opportunity. Oh, and brace yourself for a much bigger beer-and-wine tab at the casinos if this goes through ... as though casino booze wasn't costly enough already!

Never let it be said that S&G didn't at least once have a kind word for Columbia Sussex. The former Tropicana owner is reducing its carbon footprint. Amen to that.

The mystery of James Packer

Fri, 13 Mar 2009 11:26:00 -0700

Lawrence Ho and James Packer bet the farm on City of Dreams.

If you can endure the small print, The Australian Business takes an in-depth look at the simultaneously waxing and waning fortunes of James Packer. Compared to what's portrayed as savvy handling of his media and livestock portfolios (he's selling the latter for 17X [!] EBITDA), it's a through-the-looking-glass story with regard to Packer's casino investments. There, his business acumen appears to have deserted him altogether.

A Packer associate's statement, "He's a tremendously disciplined person ... I think he's a bit of a deal perfectionist," doesn't square with the series of dead-end casino investments Packer's made in the North America, coupled with his impulse to buy in at the top of the bubble.

There may be a couple of drafts of wind beneath the wings of Crown Ltd. A slowdown in Macao means that Melco Crown Entertainment's City of Dreams will be 2009's sole megaresort opening in that market. Australian punters, meanwhile, can look forward to $590 stimulus checks from their guvmint, much of which is expected to flow into Crown's casinos -- and coffers. But across the Pacific, Packer's Canadian casinos are ailing and ...

Stop the presses! Packer is slamming the brakes on the Cannery Casino Resorts deal, paying $370 million for the privilege of punting the acquisition two years down the road and maybe clear out to sea. If it's the latter, he could wind up paying $660 million with only a 4% stake to show for it, once breakup fees are factored into the equation.

In the near term, there are several upsides. Cannery bosses William Paulos and William Wortman get to hang onto Pennsylvania's #1 revenue-per-slot racino, which is on the brink of expansion. Indeed, they could but scarce contain their glee. Crown shares leapt upward and Packer now has the option of rolling his downpayment into a minority (25%) share of Cannery.

Paulos and Wortman don't have to sue Crown and stick in the mud Gretel Packer for scuppering the deal -- and the unnamed trustees who constituted three big spanners in the works turn out to be Ms. Packer's three little kids. This revelation should go a long way toward satisfying Pennsylvania regulatory concerns. On that front, the clock continues to run, as the new Packer/Paulos-Wortman accord gives Crown 90 days to complete the regulatory-approval process.

The funniest line in the news coverage has to be "a complete collapse of the deal would have tarnished [Crown's] reputation in the tight knit US casino industry." Because it's not like Crown's escutcheon is all shiny-like, what with $455 million worth of anvils tied around its neck in the form of written-off grubstakes in Harrah's Entertainment, Station Casinos, Crown Las Vegas, not to mention an ongoing commitment to mastodonic Fontainebleau.

No what to with all that money from Packer's Down Under real estate play? It's said young Packer "didn’t have to sell, but he could see better places for his interest, to put his money." There sure are ... like Trump Entertainment Resorts or the Cosmopolitan and maybe the former Herbst Gaming empire, or perhaps bits and pieces of that disintegrating edifice known as Las Vegas Sands.

Meanwhile it's a happy day indeed at Cannery HQ, what with $50 million of Crown's money in the kitty, free and clear, plus hundreds of millions more sitting in escrow, plus a blue-sky future in Pennsylvania. Break out the bubbly, Bill and Bill!

Another downbeat quarter for struggling Shuffle Master. Considering the uninspiring succession plan for the post-Yoseloff era, is it too soon to say "takeover target"?

What's the future of Las Vegas Sands now that CEO Sheldon Adelson has dissident executives on the run and is exuding optimism that even Dr. Pangloss might deem over the top? (To say nothing of the revelation that many key shots are being called by Mrs. Adelson.) I consulted the utterances of the prophet Stewie Griffin, as found in Family Guy I:2, and beheld these words: " ... partly cloudy with a chance of doom!"

Case Bets: Seminoles, Tropicana, Shuffle Master, Stanley Ho

Tue, 03 Feb 2009 14:12:00 -0700

Seminoles offer to lay $288 million and 12,000 new jobs on the table, for starters. Sunshine State Republicans blow them a raspberry. Constitutional or not, Gov. Charlie Crist's compact put a good deal in place for both sides. (It wasn't so good if you were a non-tribal casinos, but they'd been underperforming even before Crist gave the Seminoles table games.) Unfortunately, Florida solons seem bent on pissing it away for a variety of reasons, spite -- mainly toward Crist -- not least among them.

Good news at Trop(s). It's a rare and welcome day for Tropicana Entertainment when it can announce not one but two pieces of good news in the same day. At the Tropicana Las Vegas, a marketing firm has been retained to try and reposition the LV Trop as a service-and-value-oriented property. TropEnt promises "to elevate its service and value standards,” in a slap at Columbia Sussex, its nominal parent company.

Out East, you can stick a fork in the Cordish Co. purchase of the Tropicana Atlantic City, now that the former has missed the deadline for reaching an agreement. What's the response from hapless Trop trustee Gary Stein? Why, to extend the sale another three months, of course. His Plan B would involve dropping any minimum-bid requirement from the bankruptcy auction.

Sending the Trop to Chapter 11 auction without a stalking-horse bidder hardly looks like a strategy that will drive the price up. ColSux was a lousy owner but neither it nor its creditors deserve to be ripped off like this.

As for Cordish, Stein is playing the role of battered spouse in a co-dependent/abusive relationship. Cordish, he coos, is still "actively engaged ... They have certainly not withdrawn." Why anybody would still listen to Stein, whose credibility is somewhere south of zero by now, is a mystery for the ages. Enough! It's well past time that the New Jersey Casino Control Commission sacked this sorry excuse for a trustee. These monkeyshines aren't remotely funny anymore and the vaudeville hook is way overdue.

Unless the NJCCC knows something the rest of us don't, there's no longer any viable excuse for not giving TropEnt at least a probationary interval as owner/operator. Its creditors have every incentive to make revenue grow there if they're to see their money again -- unlike ColSux which was acted as though it was perfectly happy to drive financial performance straight into the ground so long as the Trop was run on the cheap.

At least one Wall Street analyst likes Shuffle Master's choice of CEO better than I do. Timothy Parrott is a great guy for all I know, but there's little in his recent background to suggest that he's the turnaround specialist Shuffle Master needs.

Stanley Ho, sugar daddy. The godfather of Macanese gambling has shown a sudden upsurge of interest in the fortunes of Australia's Labor Party, funneling $587,000-plus into its coffers. As though to prove it isn't completely Dr. Ho's bitch, the ALP returned $326,000 from Angela Leong (aka Mrs. Stanley Ho). Because, you know, they've got standards. Yeah, that's it. (It's not unlike the Obama administration's exception-proves-the-rule attitude toward appointing lobbyists to critical guvmint jobs. Plus ça change and all that.)

Seems the ALP has been talking a good game about cleaning up campaign finance -- and the conservatives who've been resistant -- while raking in beaucoup HoBucks, even if they say they returned two-thirds of the money. Because $195K is totally cool but $587K would be de trop, I guess.

Or was the total extent of ALP-accepted Ho largesse even larger still ... like $912,000 maybe? The numbers are all over the one place but one thing is for sure: In the words of Opposition parliamentarian Michael Ronaldson, "The whole deal simply doesn't pass the sniff test."

Case Bets: Ho Tram, Shuffle(d) Master, Ameristar

Tue, 18 Nov 2008 12:17:00 -0700

Tout le monde may be at G2E (albeit 10% less le monde than last year, I'm told) but the big news is happening elsewhere.

MGM Mirage has emerged as the "angel" for the Ho Tram Strip in Vietnam. It's a sweet deal for MGM, as Mike Aymong's Asian Coastal Development Ltd. ponies up the $4.2 billion construction cost, while MGM lends its brand name and operational expertise (in return for a fee) to an 1,100-room hotel but is spared any exposure. ACDL will also receive the benefit of MGM's marketing abilities. An empty stretch of Vietnamese beachfront suddenly looks a great deal more like a viable resort project.

Per Joel Bergman's remarks, given on Monday, about MGM putting property on the block, Marketwatch confirms it. MGM President Jim Murren says "non-core assets" are for sale, including undeveloped land on the Strip. So maybe City Center II, including "Atlantis Vegas" isn't happening after all.

Shuffle Master gets shuffled. The deck of executive cards at Shuffle Master just got run through the shoe. Senior VP Brooke Dunn is being placed on leave, at least for now. The SEC is recommending civil litigation against him pursuant to alleged insider trading. Dunn's accused of tipping an unidentified third party to Shuffle Master inside dope.

Splitting kings. The chairman and CEO roles at Shuffle Master are being cleaved apart, with board member (and former Greenspun Corp. exec) Phil Peckman assuming the chairman's gavel. Outgoing CEO Mark Yoseloff stays in that role, as the company's search for a replacement continues ... and continues. Presumably to further ensure stability, three veteran Shuffle Master execs -- Perry Lopez, General Counsel Jerry Smith, and Roger Snow -- have all been named executive veeps.

Ameristar Casinos continues to run up the white flag, laying off over 5% of its Missouri workforce. This is ironic, considering that Ameristar was the author and prime backer of the constitutional amendment that will remove the state's "loss limit" -- a change that will redound to Ameristar's financial benefit. Although the amendment's passage is expected to widen the gap between the "haves" (Ameristar, Pinnacle Entertainment, Harrah's Entertainment) and the "have-nots" (Isle of Capri and several independent operators), Ameristar is acting like it came out on the losing side.