David Mckee's Stiffs & Georges - Colony Capital

Eight Vegas shows reviewed

Mon, 19 Oct 2009 18:10:00 -0700

As promised, Mike Shackleford's WizardOfVegas.com site has launched. It took a while to get the bugs worked out, hence my review of Scarlett & her Seductive Ladies of Magic didn't appear until after the show had closed. However, to the best of my knowledge, you can not only read about but still see all of the following ...

• Amazed

• Anthony Cools

• Gordie Brown

• Marriage Can Be Murder

• Matsuri

• Sin City Bad Girls

• V - The Ultimate Variety Show

Sample line: "Yes, Marriage can be murder ... and so is the food." Enjoy!

F'bleau: Wait 'til 2012; Satre returns

Fri, 16 Oct 2009 13:33:00 -0700

That's basically the message coming out of bankruptcy court, where Fontainebleau ownership requested permission to scrap all conventions and meetings through October 2011. Among many other disclosures in the fast-moving Chapter 11 was the sacking of seven top executives. (A well-kept secret, seeing as the septet had been let go last May.)

At the top of the list was F'bleau President Audrey Oswell. Since being forced out of Caesars Atlantic City by Park Place Entertainment, Oswell's resumé has taken a pummeling. She left Resorts Atlantic City just as Colony Capital was beginning to mismanage it into insolvency, then leapfrogged to Cosmopolitan (foreclosed) and then from the deck of that sinking ship to F'bleau. If it weren't for bad luck, she'd have no luck at all.

Here's hoping Oswell's next employer has steadier financial underpinnings than her last three. (Question for Resorts A.C. lenders: If you give Colony the boot but leave casino boss Nick Ribis in place, have you really solved the problem?)

Matthews out, Satre in: The much-admired Philip G. Satre has taken over as chairman of IGT, where he will no doubt act as a valued counselor to CEO Patti Hart, vouchsafing an insider's perspective on the casino companies with whom she must deal. Satre's ascent could also make for an interesting turn in the war of words between IGT and Harrah's Entertainment, whose CEO and CFO have made it a pastime to trash-talk the slot giant. Will Gary Loveman be so bold in slamming IGT now that his Harrah's predecessor chairs its board?

Bad timing? Despite the Chinese government's speedy flip-flop on access to Macao, the dynamic duo of MGM Mirage and Pansy Ho are mulling both an IPO on the Hang Seng stock exchange and further expansion in the casino enclave. But is this the moment for such aggressiveness? MGM Grand Macao is only beginning to perform up to expectations and the parent company is having to push a $5.6 billion debt payment into 2015.

Hope for Boardwalk?

Tue, 13 Oct 2009 16:08:00 -0700

As you know, S&G puts more stock in year/year comparisons than sequential ones, but the most recent set from Atlantic City affords a slender reed of hope. With the help of tighter slots, A.C. held its September decline to 6%, the lowest of 2009 and the smallest drop in over a year. Even perpetual dog Resorts International had a good month, up 4% y/y.

Both in dollar volume ($63 million) and growth (6%), the leader was -- no surprise -- Borgata. In fact, the Boyd Gaming property made more than the four lowest-grossing properties (Resorts, Atlantic City Hilton, Trump Plaza, Trump Marina) combined. The two lesser Trump properties slipped below the Colony Capital ones, so one doesn't know whether to feel good for Colony or sorry for Trump Entertainment Resorts. The handover of Resorts Int'l continues to proceed slowly, as regulators enter uncharted waters with understandable caution.

Percentage-wise, Showboat, the Hilton and the Plaza had the worst of it, while gainers included Harrah's Atlantic City (3%) and even the Tropicana (1%). But the bloom is off the Trump Taj Mahal rose; it fell back to the middle of the pack, grossing $36 million.

One unexpected factor in the city's bump was a late-September, gay-themed promotion at the four Harrah's Entertainment properties. For all the lip service paid, year after year, to diversifying Atlantic City's appeal, Don Marrandino and his Harrah's colleagues backed up the talk with meaningful action.

Dead casino walking: Trump Marina

Back at Trump, its CEO, Mark Juliano declares "The real question is how long until we get back to the results we saw in past years, which is the question everyone in every business has." No, the real question is: On what planet is Mr. Juliano living? And: Do they have oxygen up there?

The math is inexorable. Excluding three months of sub-2% growth, Atlantic City's revenues have going one way -- down -- for the last seven quarters, often by double-digit margins. Casinos in Pennsylvania continue to ramp up, Delaware is talking very seriously about casino expansion, slot parlors in Maryland are in train and then there's prospect of additional competition from the greater New York City area.

Instead of asking "Where are the snows of yesteryear," S&G modestly suggests the Boardwalk's casino braintrust ought to be thinking about how to move forward into a future of diminished (i.e., more realistic) expectations.

Up the road, now that the novelty factor has worn off of Sands Bethlehem (above), the $724 million casino remains mired in fifth place. The solution? More and bigger promotions, it would appear. Judging by the lukewarm response to Sands and to Rivers Casino, the Pennsylvania market isn't big enough to support casinos built with Vegas-sized budgets.

From the mailbag #8

Mon, 05 Oct 2009 15:08:00 -0700

"Doesn't the IOC realise it will be winter in Brazil in August, 2016?" -- comment Blackberried in by a reader, regarding the award of the '16 games to Rio de Janeiro. Y'know, I'd been wondering about that myself. The average August temperature in Rio hovers between 66 and 78 degrees. Not frigid but not exactly torrid, either. Meanwhile, the IOC promises to keep an eagle eye on the betting lines for the Vancouver games in 2010.

From Jeff in OKC, regarding the recent National Coming-Out Day promotions on the Strip: "Casino ads need a gambling reference in their marketing, I found it cute. If I want to offend easily, I would say that 'Two queens are more fun than a straight' suggests that straight people are inherently less enjoyable than gay people, and NY-NY doesn't want my money. I think we can always be offended, if we look hard enough."

From kerr_mudgeon, on the growing possibility that Las Vegas Mayor Oscar Goodman will tilt at the 2010 gubernatorial race: "I don't think he'll run because the odds are less than 50% in his favor as a non-partisan + he'd not want to disrupt his family by taking a job in Carson [City] - BUT if he runs and wins, he'll start pushing immediately to move the state capital to Las Vegas (maybe to take over one of the partly-built Strip complexes in/near bankruptcy)."

It's not the worst idea I've heard. Nor is this ...

Singapore is building an expansion of its ocean-liner terminal, enabling it to berth four cruisers at a time. The good news for Las Vegas Sands and Genting Bhd is, obviously, that this means more potential customers for their ultra-megaresorts. The not-so-good news is that the new berths won't be ready until late 2011, by which point both casino-based resort will have been open nearly two years.

Everybody's got a private equity fund these days, like the 21-year-old owner of a Persian resaturant in Maryland. Youthful Artin Afsharjavan claims he's got the scratch to buy Trump Entertainment Resorts, prompting Trump CEO Mark Juliano to reply, "Show me the money."

Hey, if some kid wants to throw as much as $500 million into acquiring five (mostly) bottom-of-the-barrel Atlantic City casinos, including Resorts Atlantic City and the A.C. Hilton, I'd like to see the color of his money, too. If it's for real, TER and the others ought to pluck the guy clean. You don't get a pigeon like this every day.

Gambling scandal ensares eight more

Mon, 21 Sep 2009 18:32:00 -0700

It's not quite on the global scale of the Ultimate Bet brouhaha, but the Tran Organization's conspiracy to fleece dozens of U.S., Canadian and tribal casinos is racking up an amazing head count. To date, federal prosecutors have already nailed 31 scalps to their wall, not counting three other individuals to who pled out to related charges (including one in Canada).

If you thought this was the end of the Tran Organization ... surprise! The feds unsealed another set of indictments this month. Eight more individuals were hit with various counts of "conspiracy to steal money and other property from Indian tribal casinos, and conspiracy to travel in interstate and foreign commerce in aid of racketeering."

At the core of the Tran Organization's scam was the execution of "false shuffles," whereby "slugs" of unshuffled cards were insinuated into blackjack and mini-baccarat decks. This required the cooperation of corrupt casino employees and, from the looks of the Department of Justice's announcement, the core Tran Organization members must be rolling on their casino-employed helpers.

The Tran gang managed to take no fewer than 26 casinos during the life of its scheme, which is a very black mark against the industry's standard of game protection. The dishonor roll is as follows:

1) Beau Rivage Casino, Biloxi, Miss.
2) Casino Rama, Orillia, Ontario, Canada
3) Foxwoods Resort Casino, Ledyard, Conn.
4) Gold Strike Casino, Tunica, Miss.
5) Horseshoe Casino, Bossier City, La.
6) Horseshoe Casino & Hotel, Tunica, Miss.
7) Isle of Capri Casino, Westlake, La.
8) Majestic Star Casino, Gary, Ind.
9) Mohegan Sun Resort Casino, Uncasville, Conn.
10) Palace Station Casino, Las Vegas, Nev.
11) Resorts East Chicago Hotel & Casino, East Chicago, Ind.
12) Sycuan Casino, El Cajon, Calif.
13) Cache Creek Indian Bingo & Casino, Brooks, Calif.
14) Emerald Queen Casino, Tacoma, Wash.
15) Imperial Palace Casino, Biloxi, Miss.
16) Argosy Casino, Baton Rouge, La.
17) Trump 29 Casino, Coachella, Calif.
18) Isle of Capri Casino, Bossier City, La.
19) Agua Caliente Casino, Rancho Mirage, Calif.
20) Spa Resort Casino, Palm Springs, Calif.
21) Pechanga Resort & Casino, Temecula, Calif.
22) L'Auberge du Lac Casino, Lake Charles, La.
23) Nooksack River Casino, Deming, Wash.
24) Barona Valley Ranch Casino & Resort, Lakeside, Calif.
25) Caesars Indiana Hotel & Casino, Elizabeth, Ind.
26) Monte Carlo Resort & Casino, Las Vegas, Nev.

'Phantom' fans hit Vegas

Thu, 17 Sep 2009 14:36:00 -0700

Heaven knows, there are conventions for soap operas, sitcoms and every iteration of science fiction (I've been to more than a few of the latter). But a fan convention for a Broadway show? That's unheard of.

Yesterday, fans of Phantom of the Opera hit town for the first-ever Phantom con, at the Venetian, where they'll score some face time with director Harold Prince and the Venetian's resident Phantom, Anthony Crivello. (You have to give Sheldon Adelson props: If Glenn Schaeffer had been running the Venetian, he'd have turned down Phantom on the grounds it was free publicity for Paris-Las Vegas. But Adelson knew a good thing when he saw it.) The Venetian has even rolled out a package of goodies to keep Phantom fans on-property. Smooth move there, Rob Goldstein.

Having recently passed its third anniversary, the Vegas-ized Phantom looks well on its way to blowing past Mamma Mia!'s six-year milestone. We could easily be celebrating its 10th anniversary come 2016. Yours truly gets name-checked in Steve Friess' interview with Prince. My only quibble with the story -- and it's a very minor one -- is that it doesn't mention Prince's original stagings of Stephen Sondheim's Company and Follies, two of the high-water marks in Broadway history. And if you think Phantom is a "downer," take Follies out for a spin sometime:

As for fan conventions, except for the annual Star Trek hootenanny at the Las Vegas Hilton, Vegas doesn't do such a great job of attracting them. We've got to work on that. And when Stargate SG-1/Stargate Atlantis/Sanctuary star Amanda Tapping graces a Vegas stage, we can say, "Job well done."

Deathtrap. Sometimes there are shows that warrant venturing away from the comfort zone of the Strip. Las Vegas Little Theatre's production of Ira Levin's Broadway hit is not one of them.

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.

Colony Capital strikes (out) again; Big Bleauh

Mon, 17 Aug 2009 17:02:00 -0700

Despite taking a 22% gouge out of expenses, Colony Capital and its Goldman Sachs sidekicks managed to convert a 2Q08 profit to a $10.5 million 2Q09 loss. Revenues were down $30 million (or 40%), half of that from diminished room bookings. Could the service cuts be driving the revenue plunge? It wouldn't be the first time we've seen "death spiral" management be a company's undoing.

It's certainly interesting to see the bracing effect the recession has had on Vegas casino execs. They, who once took convention business for granted and looked upon conventioneers as less desirable than gamblers, have had a salutary wake-up call ... hopefully not too late.

Colony also threw in the towel on Resorts Atlantic City, although it left CEO Nicholas Ribis behind to run the place. That means he will serve two Boardwalk masters: The Resorts mortgage holders and Colony, with whom he co-owns the Atlantic City Hilton and which Ribis has also been running (into the ground, some charge). What happens if it's in Resorts' best interest to steal business from the A.C. Hilton?

It's difficult to decide who was more foolish here: Colony, for borrowing 2.5X the value of a casino whose best days were behind it, or the bankers who secured $360 million in loans with a $140 million casino. Let the floggings commence!

Speaking of death spirals, when you can get an Imperial Palace room for $18 (as an acquaintance recently did), who'd stay in Mesquite? That exurb's travails continue drag Randy Black's oligopoly down with them. Scant competition appears to have bred slackness and complacency in the Mesquite and Primm markets. It may be mere coincidence that the competition-rich Laughlin market has suffered to a much lesser degree ... but I don't think so.

Defaulted interest payments, renegotiated loan covenants, drawn-out cash reserves ... these are some of the unappealing alternatives facing Planet Hollywood. No property's struggle is fun to watch but this one is sadder than most because there's been considerable reinvestment (and some stunning redesign) made to turn the ex-Aladdin into something viable. However, all Robert Earl's horses and all Robert Earl's men have come up a bit short.

Plummeting ADRs have precipitated this crisis and, although losses at Planet Ho have consistently narrowed (and continue to do so), this isn't the first time we've heard that Earl's place was really struggling. And, no matter what Earl does, his casino-hotel has intractable, customer-hostile design flaws that cannot be solved by any means short of implosion.

I've been given reason to believe that whoever ends up owning the physically and fiscally bloated ($4.4 billion, at latest count) Fontainebleau, it won't be Penn National Gaming (at least not unless it's free and clear, and presumably cheap -- a tall order). If Steve Wynn has indeed already spurned F'bleau that'd leave Apollo Management, which never saw a bad casino investment it didn't like, and this one's nearly $1.8 billion underwater.

F'bleau would also give Master of the Universe Leon Black a de facto Harrah's Entertainment property on the north Strip, although Harrah's needs to fill thousands more hotel rooms like it needs a gaping hole in the noggin. Considering that it costs Boyd Gaming $3 million a month to keep Echelon on ice, preserving the F'bleau monstrosity until such time as new rooms can be absorbed seems a better use of capital than trying to finish the accursed thing.

Shakeup at Sands. Geez, you don't think executives on the chopping block could have anything to do with Genting Bhd's rival project getting ahead of slow-moving Marina Bay Sands, do you? Naaaaah! After all, the executive situation at Las Vegas Sands has been so very tranquil this past year. Just ask William Weidner ... or Bradley Stone or ...

I was just saying ...

Wed, 12 Aug 2009 12:55:00 -0700

... to a colleague that, given Atlantic City's dismal July numbers, a plea for governmental assistance had to be just 'round the corner. Well, whaddya know? In at least five instances, Atlantic City's casinos are run by companies that just reported profitable quarters, while four more just changed hands for pennies on the dollar. Not to mention that Colony C(r)apital, owner of the remaining two, supposedly was willing to put some or all of $244 million into bankrupt Station Casinos.

I don't mean to sound unsympathetic, but ... considering that Garden State citizens are being asked to tighten their belts, forego tax rebates and the like, if the casino industry needs $20 million to market itself then it can damn well pass the hat and raise the cash in-house. Besides, there's something unseemly about "pull yourself up by your bootstraps" capitalists clamoring for guvmint subsidy, especially in a state filled with people who are in much greater need. (Yes, I know these are interconnected issues but we're talking casinos that gross hundreds of millions of dollars every month. They're not exactly paupers.)

The article's final paragraph (misleadingly) implies that Trump Entertainment's three casinos, the Tropicana Atlantic City and the two Colony properties are all in danger of closing. But might Atlantic City be better off with five -- or six, if Revel can be finished -- strong casinos, whilst the sicklier ones are put out of their misery?

A reader posed that question to me ... and now I pass it along to you.

Neverland Station?

Fri, 07 Aug 2009 10:22:00 -0700

So long Viva, hello Michael Jackson?

According to NBC News, parts of Neverland Ranch are going to be dismantled and moved to -- you guessed it -- Las Vegas. Who owns Neverland Ranch? Colony Capital? Who has amassed enormous tracts of Vegas-area real estate? Station Casinos. And who is the majority owner of Station Casinos? Colony Capital.

NBC reports that New!Neverland would be (re)built "near the Las Vegas Strip." I humbly submit that now we know what "Tropicana Station LLC" is going to be and why it was shielded from the recent bankruptcy filing.

The current home of ramshackle Wild Wild West and proposed future home of $11 billion metaresort Viva, Station's Tropicana Ave. site owns the acreage Colony would need -- and no other Station- or Colony-held asset quite fits the NBC-outlined criteria. Also, if you're feeling peckish, there's an Inn 'n Out Burger across the street. (If the Fertitta clan tried to drive that away, not even their newly acquired Orange County mansions would keep them safe from pitchfork-wielding mobs.)

Get 'em while they're young

Thu, 06 Aug 2009 15:04:00 -0700

One of the Atlantic City Hilton's most valued players was a 19-year-old from Brooklyn. This baby whale was sufficiently lucrative to the Colony C(r)apital property that he received a comped stay and qualified as a "rated player."

Better still, A.C. Hilton execs allowed him to keep playing even after they'd been tipped off to his juniority. Nice work! Step right up, Colony, and collect your reward -- a $115K fine from the New Jersey Casino Control Commission. Apparently the Hilton simply took the youngster's word that he was old enough to gamble before handing him the keys to kingdom.

Colony may be able to buy casinos but it sure as shooting can't run 'em. Frank Fertitta III may not have been the best monarch of Station Casinos but, compared to majority owners Colony, it's another case where the one-eyed man is king in the land of the blind.

One sings, the other doesn't (quite): Not only is Ali Spuck's new Liberace Museum show a real value proposition at $15/ticket but, hot damn, she's Spucktastic. As for Charo in Concert: A Musical Sensation, at the Riviera, it's something for everyone but not that much for anyone. Although Charo "goes to 11" on the Camp-o-Meter, gay audiences (and Baby Boomers, too) seem likelier to flock to Spuck.

Bleary blogger: My apologies for the disappointing blogorrhea of late. I've been immersed in a crash course on the crash-and-burn of Russia's casino industry (R.I.P.). Throw in some computer troubles and I'd conservatively estimate I'm three days behind the rest of the gaming world.

McKee vs. Lerner

Mon, 03 Aug 2009 20:01:00 -0700

Actually, the headline misstates what was a very collegial -- if occasionally dissenting -- exchange of views between Union Gaming Group's Bill Lerner and Yr. Humble Blogger on Jon Ralston's Face to Face show. It was only my second-ever gig as a talking head -- and it shows. (Note to self: Consider Botox injections to paralyze overactive facial muscles.)

The ostensible subject of discussion was newly bankrupt Station Casinos, but it ranged as far afield as Singapore and Macao. Actually, we probably could have taped an entire week's worth of shows without exhausting the topic(s).

Lerner was a perfect gentleman, despite all the snarky things I've written about him in S&G (assuming he even reads it, which I doubt). I could certainly learn a thing or two from his poised on-air demeanor. I also found that, if you're in the middle seat on Face to Face, you need to "cheat" a little to your right and downstage or else you'll be masked in all the wide shots. And, as Ira David Sternberg taught me, don't ever look at the camera.

My ex cathedra pronouncements were, however, overshadowed by my alarmingly jowly appearance. When the video is posted, you will see that I look every one of my 200 lbs. -- and quite a few more! Since the episode isn't available on the Las Vegas Sun Web site yet, here's a preview:

Oh, my brain and mouth parted company on at least one occasion. I thought I said MGM Mirage would probably offload The Mirage for "one and a half billion to two billion dollars." What emerged, though, was "a half-billion to two billion dollars." So Jim Murren, wherever you are, I do not think you'd part with The Mirage for a (comparatively) measly $500 million ... just so we're good on that.

At least the high-angle shot at the end missed my bald spot. Thank God for small favors. The rebroadcast is starting; time to find out if I still know how to operate a VCR.

Case Bets: Hard Rock, Puck, Station, Greek Isles

Wed, 29 Jul 2009 18:55:00 -0700

Morgans Hotel Group has never seemed able to make up its mind about what to do with the Hard Rock Hotel & Casino (one of the stranger acquisitions of recent years). Then-CEO Ed Scheetz came in talking big about classing the place up and raising ADRs. Fast-forward to '09 and the HRH is staking everything on its skanky Rehab parties (does the staff have to don hazmat suits when cleaning up afterwards?) and going for the mid-price market midweek.

One can't fault the latter half of that strategy, especially if you're in an off-Strip location and could use the traffic. However, if Morgans goal was to increase Hard Rock ADRs, perhaps it shouldn't have embarked on a ginormous expansion that practically obliterates Peter Morton's original hotel and dilutes the asking price per room. Also, I don't know whether to praise Morgans for doing the impossible and completing (sort of) its Paradise Tower well ahead of schedule ... or criticize it for being in such a hurry to churn some EBITDA that it's opening it in an unfinished state.

But here's hoping the business model works. The HRH is one of the few places in town that's hiring, not downsizing. At lot of people's jobs are riding on its success.

One less Wolfgang Puck restaurant on the Strip? That's hardly a culinary tragedy, given that he's still got -- what? -- five other places in town and has become the Ronald McDonald of haute cuisine. A laughable poster in McCarran International Airport uses Puck's visage to push the message, "Less celebrity, more chef." Uh, better put that the other way 'round.

The real tragedy here (aside from the loss of jobs) is the temporary demise of Poetry, one of the few venues in town to cater to an upscale African-American clientele. Harrah's Entertainment and the Forum Shops went out of their way to put the dagger in Poetry. Now they congratulate themselves on a job well done. Thanks for nothing, fellas.

Bondholders finally lost patience with Station Casinos, tripping the bankruptcy lever. Interestingly, all Station casinos (small "c") are shielded -- which implies that it's Station's imperial expansion plans which are are shot and that its considerable real estate holdings could be up for grabs. It looks like über-resort Viva, long-suffering Durango Station, Losee Station and umpteen other projects are kaput.

Too bad for Station partner Colony Capital; if the latter goes forward with its Neverland Ranch tourist-trap plans, it may have to disassemble the old Michael Jackson Xanadu and relocate it, lock, stock and menagerie. And what does/did Station have in abundance? Raw land. It was a marriage made in businss heaven but it surely won't reach the altar now.

Speaking of suffering, what's back on the auction block but the Greek Isles, which is $23 million underwater. Even at a revised valuation of $44 million, isn't that far too much to ask for this unremittingly unsuccessful property, the second coming of the Castaways? Perhaps it's time to exorcise this ghost which haunts the dead zone that is Convention Center Drive.

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.

Quote of the Day

Tue, 14 Jul 2009 20:38:00 -0700

“Did these companies come in and make Harrah’s and Station better companies? Not really. In the case of Harrah’s, they have made things worse.” -- T. Rowe Price portfolio manager Joe Fath on the effects of private equity buyouts on the casino industry.

Harrah's goes to the dogs

Tue, 30 Jun 2009 13:49:00 -0700

A future Harrah's employee?

Harrah's Entertainment is poking its snout into the prospect of obtaining a management contract at bankrupt Twin River Casino, a dog track with VLTs in Rhode Island. The paraphrase of the explanation given by Harrah's senior veep Jan Jones seems fairly counterintuitive: "the state might be motivated now to give the company a shot because Massachusetts was on the brink of legalizing casinos."

OK, so Massachusetts is likely to legalize casinos, which makes this the perfect time to expand into ... Rhode Island? With its 60% tax rate? The part of Jones' explanation that makes more sense is that Harrah's would be able to tap into its New England base of Total Rewards players much closer to home (the nearest Harrah's outposts being Chester, Pa., and Atlantic City).

This could all be moot if the R.I. Lege scuppers a gubernatorial compromise that would can the dog racing and keep the casino open 'round the clock. Greyhound racing is a sport that really needs to be put out to pasture. Besides, it's only in place at Twin River because of a Byzantine legislative arrangement that Steve Friess rightly calls "a very weird deal," much of which involves propping up the dog-race union. (I never knew there was such a thing, but there is.)

So it's a win-win, right? A corporate savior for Twin Rivers and no more suffering doggies, yes? Well ... no, not if you're a nearby homeowner like Hal Perry, whose semi-rural lifestyle has been impinged upon by creeping incrementalism at Twin Rivers. Rather than lower the usurious tax rate, the state (which is seriously hooked on VLT revenue) simply keeps moving the goal posts -- longer hours, more machines.

Here comes Harrah's and, if you're a Twin Rivers neighbor worried about your property value, the noises are ominous indeed. As Jones tells Friess, "you couldn’t build a hotel right now ... So all of this is a process. But it's the beginning of the process and the point is that it's an excellent opportunity."

"Right now ... process ... beginning." In other words, Mr. Perry: Sell! Sell now! Get out before Harrah's drives you out.

Harrah's wins one. Sort of by default, but a win is a win. Dissident bondholders S. Blake Murchison and Willis Shaw had a shyster for an attorney. Case dismissed. Clearly, their due diligence with regard to lawyers was even worse than that they displayed as investors.

Gunshot? What gunshot? Although the Las Vegas Hilton was able to keep an on-property suicide out of the local papers, the news eventually surfaced via the Louisville Courier-Journal.

Case Bets: A.C. Trop, 21, Ensign, Boulder City, Jacko, etc.

Mon, 29 Jun 2009 12:45:00 -0700

After conservator Justice Gary Stein turned his trusteeship of the Tropicana Atlantic City into a $7.4 million gravy train, the New Jersey Casino Control Commission is belatedly bolting the barn door. It's going to petition the Lege to limit the ambit of future trustees, none of which would be necessary had the NJCCC not let Stein run amok in the first place.

The failings of his butterfingered stewardship have been rehearsed enough in this space. However, the Press of Atlantic City's story adds yet another incredulity-making touch. Stein, a former member of the New Jersey Supreme Court and with an entire law firm at his command, still had to rely upon legal opinions from the NJCCC's general counsel.

Lower bet limits are no bargain, the Las Vegas Sun finds. The Strip casino that has the stones to go back to 3:2 blackjack will become the hottest spot in town.

Who knew? Seems that Sen. John Ensign's curriculum vitae included a stint at the helm of the Gold Spike, one of downtown Vegas' seamiest casinos. Given the comparable seaminess of Ensign's ongoing scandal, perhaps it was a case of water seeking its own level. Las Vegas Gleaner reader "Goldy" puts the sordid mess in perspective: "... he didn't reveal the affair until the demands from the Hampton's [sic] (including Doug) became 'outragous.' [sic] That implies that prior demands were 'reasonable' and Doug was making them. ... he essentially was selling his willing wife, and Ensign was buying, until the number got too high. So, like most things, this entire deal was really just about the number." [emphasis added]

You can take Ensign out of the casino but you just can't take the casino out of Ensign.

A potential tragedy. Several weeks back, the Better Half and I spent a beautiful Sunday in Boulder City. The highlight of our visit was the Boulder Dam Hotel, where we enjoyed a splendid lunch and an eye-opening tour of a museum devoted to the history of Hoover Dam. (Suffice it to say that the people who built it endured privation that 21st century Americans would find unimaginable.) Sadly, we do not have the $60,000 that it's going to take to keep the Boulder Dam Hotel open. Please, philanthropic Nevadans, do not let this treasure go dark like ...

Nevada itself. Visitors to Gibbons-era Nevada are likely to find it closed. History? Books? Parks? Them's pansy egghead stuff fer Commie states like Kalifornia, doncha know? Gawta get me some more guns afore Harry Reid repeals the Decoration of Independence or whatever.

Speaking of museums ... could the untimely demise of Michael Jackson spell opportunity for mistake-prone Colony Capital? The casino owner has the opportunity to monetize its acquisition of Neverland Ranch as never before. Converting it to a tourist attraction rather than a (misguided?) real estate play seems a no-brainer.

S&M at Station

Thu, 25 Jun 2009 14:35:00 -0700

Bondholders of Station Casinos must have an infinite capacity for suffering. Either that or CEO Frank Fertitta III is such a virtuosic Pied Piper that they'll follow him anywhere. It's difficult to rationally explain why they're letting a superior offer from Boyd Gaming collect dust, opting instead for the umpteenth forbearance in six months.

Among the drawbacks to the "prepackaged bankruptcy" that Station is languidly pursuing are that it would leave current Station leadership in place, to say nothing of its enablers at Colony Capital. Also, once Colony's share of the promised $244 million in new equity is subtracted, what the Fertitta clan kicks in is likely to be chicken feed -- at least when compared to the half-billion clams various and sundry family members took out of the company during its catastrophic LBO.

S&G never, ever advocates violence ... but if Station's debtors are getting antsy, we'd completely understand if they took a cue from the Stewie Griffin collection method:

For "fake moustaches," mentally substitute "dog tracks in Massachusetts."

Not what the doctor ordered

Tue, 23 Jun 2009 12:29:00 -0700

While the Better Half and I managed to quaff at least some of the infamous bacon martini w/o negative ramifications, we were not so fortunate with Sunday night's visit to a certain casino buffet. Suffice it to say that the carnitas cosseted a modest case of Montezuma's Revenge and that blogorrhea was KO'd by otherrhea.

So I'm taking advantage of a 20-minute lull between a doctors' visit and a trip to the dentist to bang this out. The big news in Vegas this morning is the collapse of a rebar column out at the McCarran International Airport expansion, injuring five. So far there have been no fatalities, thank God.

A Bataan Death March of shows continues tonight with Sin City Bad Girls at the Las Vegas Hilton. I wriggled out of seeing Todd Paul at Hooters last night, though I hear he was very funny. (Hooters scares me; is death contagious?) Wednesday brings yet another visit to Phantom of the Opera, followed on Thursday by Peepshow 2.0 and a Friday pair of one-acts featuring members of Insurgo Theater Movement. After which, I will not leave my apartment for a long, long time.

Harrah's Azov?

Thu, 18 Jun 2009 16:23:00 -0700

Bloomberg News reports the following: Harrah's Entertainment, the world's biggest casino company, may build a resort on the Azov Sea, Vedomosti reported Tuesday.

Harrah's may join U.S. construction company Asati in building a complex in Azov-City, one of four gambling zones planned in the country, Vedomosti said, citing Asati founder Alex Kogan.

The resort, which will include a casino, hotels and conference centers, will cost between $50 million and $100 million, Kogan said.

Wow! Try building a U.S. resort -- or even a Macanese one -- for so little money. I've asked Harrah's for confirmation but have yet to hear back. Although several overseas ventures have gone belly-up, the company continues to persist.

However ... despite the Russian government's decree that all casinos be moved to special zones, scattered around the far reaches of the empire, little headway has been made: "One Russian publication sent a reporter to check out progress on one of the zones, who discovered open fields filled with grazing cows." The Azov-City project, for one, has a long way to go.

And how is ~~Harrah's/~~Asati going to build a casino for $100 million or less? One word: tents. "Several foreign investors have begun preparatory work, including the Austrian company Asati. The company plans to build on the 20 hectares of inflatable structures, area of 100 thousand square meters," explains one investment site, "... the inflatable structure can be a casino and a water park and the congress hall. In addition to inflatable structures Asati company intends to build a 17-storey hotel and 34 bungalows."

If there's to be gambling under a big top, I'd suggest they call the place Circus Circus, but Jay Sarno got there first. Potential feeder markets for "Harrahs' Azov" would include Kiev and Odessa, but the closest major city appears to be Stalingrad ... er, Volgograd.

Yung & the restless: Closer to home, in Kentucky, the grand vizier of Columbia Sussex, CEO William J. Yung III, is loaning out the corporate locomotive for charitable causes. Company locomotive? No, we're not making this up.

Restiveness marks the labor situation at one of the distant outposts of Yung's hotel empire. Both in the slow pace of negotiations and the demand for employee give-backs, it's very reminiscent of the scrumdown that was the Culinary Union/ColSux stalemate of two years back. At least Scott Butera intervened to make peace before it reached the point of a Tropicana Las Vegas boycott.

Small beer? Just what Resorts International in Atlantic City needs ... more regulatory problems. C'mon, guys. We hook up beer kegs all the time here at LVA. It's not rocket science. Then again, it's difficult to "misunderestimate" Colony Capital.

Case Bets: Colony Capital, Siegfried & Roy, Obama smacks poker players

Mon, 15 Jun 2009 12:24:00 -0700

"Bats hang over the doorway to the building that housed Mr. Jackson's private arcade; guano stains the threshold." That's how the Wall Street Journal describes Michael Jackson's decaying Neverland Ranch. It gets even freakier from there, with the WSJ receiving a tour of the compound that might be described as Charles Foster Kane meets Pennywise.

Neverland is the latest can't-miss investment play by Colony Capital, whose crackerjack CEO, Tom Barrack, says: "We think we made a very smart real-estate deal ..." Then again, that's probably how Barrack felt about his acquisition of Station Casinos, which just took a bath on some of its land holdings.

Even by Vegas standards, Neverland is way up there on the Bizarre-o-Meter. Too bad Colony can't find a Native American tribe that can claim it as their ancestral land and have it taken into trust. It'd make a casino-based destination resort so demented and perversely infantile, Sin City would be green with envy.

The most blackly funny line in the video comes when the narrator says Colony is taking steps "to remove the taint of scandal." Man, there's no bleach on Earth powerful enough to eradicate that stain. Infamy, like nuclear waste, has a half life of forever.

A Tiger's Tale: Those cats of Siegfried & Roy's were endangering life and limb almost 30 years ago. And gosh, whatever became of the Siegfried & Roy IMAX movie that never screened locally? CineVegas, how can you let this introuvable escape your programming grasp? Maybe Johnny Brenden will let you rent his IMAX screen ... provided you show the movie at 7 a.m. or thereabouts.

So much for the conventional wisdom that Internet poker, at the very least, might find a sympathetic hearing from our poker-loving POTUS. The Justice Department's jihad against online casinos has taken a particularly nasty turn. The DoJ is striking at the soft underbelly of the business, going after players. So if you won $$ fair and square on the 'Net, too bad: Uncle Sam is going to relieve you of your money and if you don't like it, it's not like you can call the cops.

As I. Nelson Rose points out, we're getting into a legal gray area here -- not least because the federal injunction was brought in New York State, where online wagering isn't illegal. Let's give the banks the benefit of the doubt: They probably had little choice to go along with this draconian and unconscionable action, yet another intrusion by Big Brother. Rep. Barney Frank's proposed UIGEA rollback can't happen soon enough.

Adding insult to injury, the Obama administration is going to the mat on behalf of one of Bill Clinton's worst mealy-mouthed compromises -- the Defense of Marriage Act. In doing so, it's resorting to some of the most troglodytic arguments imaginable. Like: Equal rights are bad 'cause they cost the guvmint money 'n stuff.

Heavens, yes, just imagine how expensive it would be if we'd given women and African Americans the vote. What ... we did? I need to read my memos more closely.

So culturally benighted am I that I had to have someone explain to me who this Jon & Kate are and why they are the object of so much fascination. Sometimes ignorance really is bliss. At least they haven't "hosted" at a Vegas nightclub yet ... have they?

ABBA plays Vegas

Sun, 14 Jun 2009 16:40:00 -0700

On Sept. 24, 1979, the Swedish superstars played the Aladdin Performing Arts Theatre (now part of Planet Hollywood, of course). Last weekend, eight songs from that one and only Vegas show belatedly surfaced.

It's an extraordinary document, both historically and musically. There are one or two "in house" recordings of ABBA in concert that are of decent listening quality. Most, however, are sonic abominations that make one of the world's two most popular pop groups resemble a garage bad -- and not a good one.

The Aladdin recording, however, sounds as though it was either made with very high-end equipment or run off of the sound board. It's got a wide stereo spread that allows the listener to hear the "live" arrangements in manifold detail.

Several numbers on the '79-80 tour were played in versions quite different from those enshrined on record, and both "Hole in Your Soul" and "Summer Night Night City" are much to be preferred as expansively heard here. The abbreviated "official" versions that are commercially available aren't a patch on these take-no-prisoners renditions. (A Vegas-area kiddie choir gets into the act on "I Have a Dream.") It's further ammo for those of us in the heretical minority that believes ABBA live ≥ ABBA in studio.

Most important of all, herein lies confirmation of a contention made by ABBA chronicler Carl Magnus Palm in his Bright Lights, Dark Shadows. Palm, whose scholarship is the furthest thing from hagiography, writes that "contrary to most of their attempts in the studio, on stage ABBA really knew how to rock. Their live sound was vividly energetic and rumbling, with many extra, half-improvised piano riffs from Benny[*] and on-the-spot vocal ad-libs courtesy of Frida."

* -- at a Vienna performance, he slipped the theme from The Third Man into the "Money, Money, Money" intro.

Not from the 1979 tour ... but who cares?

You can hear, with remarkable immediacy, the qualities Palm describes. They're captured in these too-few Vegas tracks, culminating with the show's double-barreled finale of "Does Your Mother Know?" and "Hole in Your Soul." One can only hope that the other 15-odd songs on the set list were taken down with similar fidelity and will soon see the light of day.

Serendipitous timing marked the unveiling of the 1979 bootleg, since the Las Vegas Hilton spent this weekend hosting tribute band abbacadabra, comprised mostly of California- and Reno-based musicians. Most of the look of the show, in fact, was derived from the '79 tour that played the Aladdin (though the decision to eschew a lead guitarist in favor of a second trap set was a serious mistake.)

Yes, I was there Saturday night. Bought front-row seats, in fact. And special thanks to the conscientious ticket salesperson who talked me out of springing for (more expensive) stage seats. We saved $10 and enjoyed the show not one whit less. Plus, as my girlfriend pointed out, I can now say that I shook hands with "Frida." Not a bad way to end an evening at the LVH.

Margaritaville wastes away

Tue, 02 Jun 2009 12:20:00 -0700

In an utterly (not) shocking development, the interminably protracted sale of Trump Marina has given up the ghost. This deal was on life support for months, so today's bulletin merely ratifies the inevitable. The would-be reinvention of the Marina as "Margaritaville" has exhausted its last shaker of salt.

While it goes against the grain to give Donald Trump the benefit of the doubt, buyer Richard Fields' accusation of "fraudulent activity" sounds like a big stretch. The supposedly heinous deed was Trump Entertainment Resorts' movement of players from the Marina to Trump Taj Mahal and Trump Plaza.

Big whoop. Not only was this the obvious explanation for Trump Marina's plunge to the bottom of the Atlantic City food chain, it's what casino companies do. You don't sell a casino and leave your hard-earned customer base in place for the next guy's benefit. (Readers with long memories will recall that a deal by Park Place Entertainment to sell the Las Vegas Hilton to Silverton owner Ed Roski fell apart over the exact same issue.)

Had Trump CEO Mark Juliano not moved prime players to his two remaining properties, he'd have been derelict in his duty to the shareholders. Unfortunately, now he may have to build that customer base back up. I don't envy him the task.

It also strikes an odd note that Fields' lawyer accuses Trump of fraud and then Fields' spokesman has the brass to say Coastal Marina still might deign to buy the Marina -- at an additional discount. Juliano had already knocked 15% off the sticker price. Perhaps Fields is feeling emboldened by Carl Icahn's impending $200 million acquisition of the Tropicana Atlantic City and is attempting brinksmanship. Fields is making some big noises about shopping around Atlantic City for a different casino, describing the town as "the perfect market for a Margaritaville project."

Good luck with that, unless he's willing to settle for one of Colony C(r)apital's two near-death properties. Harrah's Entertainment is carrying at least one casino too many on the Boardwalk but there's no way in hell that CEO Gary Loveman parts with Bally's or the Showboat for a measly $270 million or so. Harrah's current reporting method really muddies the waters but the cash-flow numbers still imply an asking price well in excess of what Fields can afford.

Raymond Kot, 1952-2009

The accused killer of Trump Taj shift manager Raymond Kot is one messed-up motherfucker, and that's as gently as I can describe Mark Magee, who appears to have stalked and killed Kot in very cold blood indeed. Taj game-protection veteran Dr. David G. Schwartz offers some expert-witness testimony, if you will. Kot's only crime was to achieve the American Dream ... until his assassin decreed otherwise.

Surrender in Atlantic City?

Wed, 20 May 2009 12:20:00 -0700

Yesterday, I mis-reported New Jersey state Sen. James Whelan's proposal for downsizing the state's regulatory apparatus. He didn't call for elimination of the New Jersey Casino Control Commission in favor of the Division of Gaming Enforcement, merely an unspecified removal of what he perceives as a redundancy.

(Such are the perils of working from memory. Mea culpa, mea culpa, mea maxima culpa.)

Today's paper has a longer clarification of Whelan's position. He'd like to see a DGE/NJCCC merger, although Gov. Jon Corzine sounds strongly resistant to that and other aspects of Whelan's plan. And, after hearing for years that one of Atlantic City's problems is that it has too few hotel rooms to be destination resort, it's quite a turnaround to hear Whelan advocate a 200-room minimum (like Nevada's), a ~~150%~~ 60% reduction from the current mandate.

What's certain to paint a target on Whelan's back is his endorsement of aggressive employment of eminent domain to clear out distressed properties and encourage development. That's a real sore point in Atlantic City, where Donald Trump once tried to use eminent domain to push an elderly woman out of her home. (He lost.) Also, imagine how confrontational matters might have become if Pinnacle Entertainment had eminent domain in its holster when it was trying to expand its 'sphere of influence' around the old Sands site and was trying to berate the local real estate market into acquiesence.

But ... we're talking about a casino market where emergency measures are required. Would the city be using eminent domain to obtain property and then offer it around? Or would the city be taking sides, using eminent domain to pressure Citizen X on behalf of Casino Z? As craptastic an idea as eminent domain is, generally speaking, it's a good thing Whelan's put it into play, because this looks like a debate that has to be conducted as Atlantic City decides what its future is going to resemble.

However, Penn National Gaming COO Timothy Wilmott is welcome to put a sock in it, at least as regards his own aggressive eminent-domain advocacy. Penn has basically given Atlantic City the finger, bypassing several opportunities to get into the market, so who cares what its braintrust thinks? I dare them to operate there. I double dare them!

Aw hell, I dare them to do anything besides sit on their $1.5 billion hoard of gold and bemoan the fact that they can't obtain Tiffany properties at Walmart prices. Wilmott probably didn't mean to come off sounding like, "Kick some old folks and small businesses out and maybe we'll build something," but Penn needs to clearly state its intentions in re Atlantic City and stop playing subtextual footsie. Otherwise, any further discussion is meaningless.

But the Missing the Boat Award goes to Casino Reinvestment Development Authority boss Thomas D. Carver. OK, he's probably right when he says, "I don’t think we’re going to see $2.5 billion casinos anymore." The market's not going to support and, at those prices, you're not building for the ROI but the bragging rights.

But then we get: "We may see $400 million facilities."

No, no, no, no, no! Four hundred million smackeroos is roughly half -- I repeat, half -- the budget for a Pennsylvania slot parlor. It's a locals-casino budget ... and not a top-of-the-line locals place, either. Maybe some of those creaky old monoliths along the Boardwalk need to go away but replacing them with a bunch of Aliante Stations is likely to hasten Atlantic City's decline.

What do the city's three top performers -- Borgata, Harrah's Marina and Trump Taj Mahal -- have in common? Significant capital reinvestment, that's what. The numbers do not lie: Customers are not flocking to the places that are run on the cheap. If Carver's line of thinking gains currency, Atlantic City can forget about competing with Pennsylvania and just run up the white flag. What he advocates is tantamount to unilateral disarmament.

(Slots A) Fun Fact

Fri, 15 May 2009 12:22:00 -0700

I've just read that the 2008 cash flow for Slots A Fun, the crown jewel of what used to be Circus Circus Enterprises, was $2.8 million. Which means that current owner MGM Mirage could justify a sale price of $22.5 million-$28 million. (Penn National CEO Peter Carlino, this is your chance!)

Then again, MGM could sell Slots A Fun four times over and probably still not recoup the cost of its Criss Angel vanity project, Believe.

Atlantic City gets a monorail. And other infrastructural-type stuff. That $3.6 billion would probably be better invested into building two or three new casinos, not to mention getting rid of those Colony C(r)apital grind joints.* New Jersey Gov. Jon Corzine (D) thinks Atlantic City's recovery is on the way. But as long as the market breaks down -- as its revenues do -- into Borgata and Everything Else, "recovery" will just be a euphemism for "much slower rate of decline."

* -- If banks won't underwrite new development there, why -- laws permitting -- shouldn't the state? I'm just askin'. The alternative is pretty bleak.

This just in: Yes, TV ads for impotence drugs (think of "Viva Las Vegas" debased to "Viva Viagra"), with their tacky innuendi, are embarrassing (albeit not as much as those for incontenince drugs). But Congress has slightly better things to do that adopt the proposal of Rep. Jim Moron, er, Moran (D-VA) to force them off the air ... least not untl it's amended to outlaw any TV programming featuring the bloated visage, voice and ego of failed casino boss Donald Trump. (Sorry; can't link to the Yahoo News video. I tried.)

Perp Show

Thu, 14 May 2009 12:38:00 -0700

If you're bald, weight 285 lbs. and have one arm in a cast, you're not exactly inconspicuous. So how was it that that such a hefty man was to infiltrate a VIP area of Planet Hollywood and bust into Peepshow headliner Kelly Monaco's suite? It gets weirder: Merrill Wetter was a long-term denizen of Planet Ho and had been 86'd last month for following a money cart around. And yet his reappearance on the 50th floor didn't raise any alarms, literally or otherwise. This new information suggests a serious lapse of security at Planet Ho, something that the Nevada Gaming Control Board might want to investigate.

April in Atlantic City. The numbers are out and they suck. Again. Unless you're Borgata, which was basically flat with April '08 -- a veritable triumph in this context. The Showboat didn't do too badly (-7%), pushing ahead of the larger Tropicana Atlantic City (-21%). However, another Harrah's Entertainment property, Bally's Atlantic City is way off last year's pace (-19% YTD) and risks joining the Dead Man Walking quartet of Trump Marina, Trump Plaza, the Hilton and Resorts.

The partial reinvention of Trump Taj Mahal continues to pay off, with gaming win down less than 1% through the first four months of the year. Don't you wish we had this kind of reporting transparency in Nevada?

Reid's smooth ride: Would-be GOP challengers to Sen. Harry Reid (D-NV) are not only thin on the ground they're probably hearing casino-industry check books slam shut after the Senate Majority Leader jawboned banks on behalf of CityCenter and Fontainebleau. (It was a futile effort but, at this particular moment, that says more about the lending-averse banking industry than Reid.)

Party leaders say a "highly motivated" "strong GOP challenger" is out there and will emerge ... in five months or so. The only person shaking the money tree so far is former state legislator Sharron Angle. She'd rough Reid up, to be sure, but has an Achilles heel or two. To date she's been a single-plank candidate -- property taxes; not what you'd call a senatorial issue. Also, state GOP chairwoman Sue Lowden doesn't want a divisive primary ... and Angle was very divisive when she ran against Dean Heller (R-NV) three years ago for the congressional seat Heller now holds. She even tried to have the primary results overturned in court. But for now she's the only game in town.

Double duty: For the unforeseen future, I'll be spelling the estimable Dave Surratt as CityLife's theatre critic. First up is a show directed by Zumanity emcee Christopher Kenney. Called The Facts of Life: The Lost Episode it's ... it's ... well, it's different.

Case Bets: Caesars, Criss Angel, Lance Burton, Earl & Lani and Trent

Wed, 13 May 2009 14:44:00 -0700

Seen last night by an S&G source, Pit One at Caesars Palace empty save for one or two baccarat players. It's just a small indicator of a larger disconnect that I hope to address later.

PR flack Robin Leach has been transcribing more of the gospel according to Criss Angel, the latest being that Cirque du Soleil's wunderkind "will juggle his schedule" of Believe dates to make room for filming the next season of Mindfreak. Do you think this might be a face-saving way to cut back on performances of a show that's already having to be deeply and frequently discounted? Naaaaaaaaaaaaah!

And is MGM Mirage really content to let Lance Burton walk, as appears to be the case? With only a month remaining on Burton's contract, no extension has been signed and MGM punted our query to Burton's manager.

Two of the Strip's major showrooms are currently vacant. Burton's act is probably too downmarket for Wynn Resorts' tastes (or pretensions, if you prefer) but Alex Yemenidjian could steal a march on his former employer by bringing Burton back to the Tropicana. Lord knows, the place could use him and Dirk Arthur is working on a short-term contract now -- a stopgap arrangement made when interim Trop management screwed up and came within days of having no shows at their property.

Value for the $$. Last week's adventures included checking out Voices at the Las Vegas Hilton, which gives the LVH a long-needed shot in the arm. Stars Earl Turner and "the beautiful Lani Misalucha" (as she is always introduced) wisely minimized expectations prior to opening. For one thing, their energetic, caution-to-the-winds revue features far more interaction than they led people to expect. Who knew if these two very different singers would "jell" ... but they do.

It's a rouser and -- at an $80 top -- a considerably better value than Elvolution, starring Trent Carlini. Eighty bucks at Voices gets you two headliners and a six-piece band. A $92 top at Elvolution buys you an Elvis Presley impersonator ... singing to backing tracks. That takes some nerve, I tell ya.

Chump change for Trop

Wed, 29 Apr 2009 17:00:00 -0700

While there has been no shortage of bad decisions in the casino industry of late, the Dunce of the Year winner for 2008 and presumptive favorite for 2009 has got to be Tropicana Atlantic City conservator Gary Stein. This former member of the bench managed to turn what was intended to be a brief transitional process into a munificent 16-month sinecure ... which could stretch to 18 months or longer, depending on how soon the bankruptcy court acts. Not only was Stein's interminable tenure an unconscionable waste of money, if he made one good decision during that time, S&G must have nodded off for five seconds and missed it.

You will recall that, last spring, Stein scoffed that an $850 million bid by Colony Capital and an undisclosed one from Cordish Co. were "unreasonably low." What's more, he said the market for a distressed, mismanaged Atlantic City casino could only get better. (One of Stein's several miscalculations was to use the still-in-abeyance Trump Marina sale as an economic barometer.)

Reality was close behind with a swift kick in the ass, as the best Stein could manage was $545 million in cash (plus another $150 million or so in securities) from Cordish. And, as Stein's tortoise-powered negotiations crept onward, Cordish wanted to haggle the price down even further and eventually there was no deal to be had.

Which means that a casino that might have fetched over $800 million 11 months ago will now go on auction for a quarter of that amount, after a process that the Press of Atlantic City eventually characterized as "exceedingly slow." Worse still, since Icahn would gain the Trop via a credit bid, New Jersey won't have any sale proceeds to show for its year and a half of trouble. Since a parallel bankruptcy proceeding hasn't yet expunged Tropicana Entertainment owner William J. Yung III's equity stake, there's no way in hell the NJCCC would hand the Trop's keys to TropEnt CEO Scott Butera, no matter how pure his intentions.

Stein put the best spin he could on this fiasco, stating that "although like the entire industry our revenue and profits have been effected [sic] by the difficult economy, our financial position is solid and the only reason we are filing petition today is to be able to sell the casino assets free and clear of all liens." Somehow NBC40 was able to keep a straight face while reporting that the NJCCC believes "this 'stalking horse bid', will help them achieve the highest price possible in light of the current economic conditions facing the gaming industry."

True, starting the bidding at a rock-bottom $200 million might entice Cordish or someone else to pony up real money. But whatever the Trop eventually fetches is all but certain to be a shadow of what it could once have brought, had Stein performed his duty with alacrity. (And no potential bidder's position is nearly so advantageous as Icahn's.) It took an April 15 public yanking of Stein's leash by his NJCCC overseers just to get this much accomplished, threatening to send the Trop to bankruptcy court with no stalking horse bid.

While Stein strove for a victorious posture, The Associated Press cut through the crap. Its headline? "NJ OKs cut-price auction for Atlantic City casino." Reporter Wayne Parry even got Stein to concede there was no guarantee that $200 million wouldn't be the final price. If that's the ignominous conclusion to this saga, it may someday be known in the industry as "Bill Yung's Revenge."

What a screw-up.

Case Bets: Isle exits U.K.; no room at the Trop; Carlino channels Astaire, etc.

Fri, 24 Apr 2009 17:22:00 -0700

Isle of Capri Casinos is coming up for air, literally extricating itself from underneath Ricoh Stadium in Coventry, U.K. As part of CEO James Perry's attempt to refocus a company that spread itself too thin under his predecessor, he's walking away from an ill-starred British venture. Rank Group not only assumes Isle's lease, it gets the casino itself for pocket change, by industry standards: $940,000.

Perry may also be preparing to unload Isle's Pompano Park racino in the disappointing Florida market. At least one analyst is now picking Isle, so recently stuck in the mud, as one of the better bets to emerge intact from the gaming group's crisis.

A house divided cannot flush. Staggering from miscalculation to mishap, the Tropicana Las Vegas has sustained another self-inflicted wound. But don't blame current steward Tropicana Entertainment, predecessor Columbia Sussex or even Aztar Corp. The non-kosher plumbing that got the Paradise Tower shut down dates back to the 1990s, when the Trop was under divided ownership (one of the many obstacles to its redevelopment). The scary part is that it took at least 10 years for the code violations to be discovered.

The real victims, of course, are the hotel guests who are getting bumped from their Paradise Tower rooms. Since it's far and away the nicest part of the Trop, by definition they'll be moving to less-desirable rooms, some of them in truly decrepit parts of the hotel. Given the condition of the Trop's physical plant when I made a "secret shopper" visit, today's news comes as less than a surprise. The resort's advancing years were bound to catch it out sooner rather than later.

Penn's fancy footwork. While not out-and-out denying an attention-getting New York Post story about a possible 'credit bid' play for The Mirage, executives of Penn National Gaming were at some considerable pains to imply that it was all smoke, no fire. CFO William Clifford put it thusly: "... there were quotes and things said that have been pulled all the back to the last year’s Gaming Conference ... I’m not quite sure that the Post article is a very good reflection of anything we’ve ever said at any point in time."

CEO Peter Carlino followed with, "Some of the most interesting quotes were made at a time when none of the stuff that you are all currently thinking about was out there so it’s unfortunate. It’s just a hodgepodge of things pulled together to make a story. We would have preferred not to have seen it that way. Look, common sense says if there’s an opportunity we’re going to follow it but it’s no more exciting than that; enough said." [Emphasis added]

A Bloomberg News report that Penn was pursuing Greektown Casino went unaddressed in yesterday's earnings call. To the extent that Carlino was willing to commit himself on Las Vegas, he said Penn wanted no more than a single property "if we can find one." The consensus of Penn execs was that Vegas would be a "viable" market for the company ... in five years. (The company's strategy is partially predicated on an exodus of Californians relocating to Vegas and jump-starting the local economy.)

Sadly, Atlantic City seems to have slipped off Penn's radar screen altogether. On a happier note, the company promises a new and "exciting" replacement for the Empress Joliet pavilion that was destroyed by fire -- which makes it sound like the previous Ye Olde Egypt theme is now history, so to speak.

Schreckliche Idee! At a time when institutions like Goldman Sachs and Deutsche Bank control ever-larger chunks of the Strip, the Nevada Gaming Commission is seriously considering lowering the threshold of scrutiny even further. (Because if there are any two words that instill confidence nowadays, those words are "Wall Street.")

The man fronting this idea, veteran gaming attorney Frank Schreck, argues that his proposed rule change wouldn't result in casinos ceding managerial or operational control. However, that's already happened at the Las Vegas Hilton, where a Goldman-owned stalking horse holds a sizeable minority interest. What he's proposing would take a bad precedent and codify it.

By linguistic coincidence, schreck is the German word for "fright" and the root of schrecklich or "horrible." Which is what this idea is. But Nevada regulators are already overburdened and about to become more so, once the next budget is enacted. Given that grim future, Schreck's proposed lightening of their workload will be probably be embraced.

Garber to Harrah's? Apparently not

Thu, 16 Apr 2009 11:35:00 -0700

So is former PartyGaming PLC supremo Mitch Garber going to Harrah's Entertainment or isn't he? As of yesterday, it appears that the company is denying [registration req'd.] a London Times report that it had signed Garber to head up a conglomeration of its online and World Series of Poker operations.

Or not. Asked for clarification, a Harrah's flack replied, "There is not a statement and we do not comment on mktplace rumor/speculation."

Since Garber joined PartyGaming in April 2006, several months prior to the odious UIGEA, a Garber-to-Harrah's move would raise some thorny questions for regulators. Following UIGEA's dead-of-night enactment, PartyGaming exited the U.S. market. However, up until that point it had been engaged in some slippery dealings to which it recently 'fessed up.

PartyGaming has put a brave face on its accord with the U.S. Department of Justice, saying it "had no intention of breaking any laws" but its allocution shows that it went to considerable lengths to circumvent American banking rules. The seven-month overlap between Garber's hiring and PartyGaming's cutoff of U.S. play would be certain to put the executive under a regulatory microscope and, at minimum, require some dextrous explanation by Garber.

The company's profession of quasi-innocence is further undercut by the fact that company co-founder Anurag Dikshit has copped a plea that included paying a $300 million fine. Garber's former employer holds that its own deal with the feds was "amicable" and who are we to argue? If somebody was willing to hand me $105 million in return for causing them no further grief, I'd be quite amicably disposed, too.

PartyGaming can't be feeling too much pain in the wallet, as it's talking about making acquisitions. Nor will Garber be on his uppers if a reported Harrah's job offer were withdrawn, considering the generosity of his pay package as an Internet gambling CEO.

S&G will try and stay abreast of this story as it continues to develop ... or unravel.

We can rule out the "Warren Buffet of the Gulf" as a possible rescuer for CityCenter, from the looks of it. Prince Alwaleed of Saudi Arabia is selling much of his hotel portfolio to shore up his sagging fortune, including several of the Fairmont Raffles Hotels he co-owns with Colony Capital. It was an acquisition so expensive that Colony and its princely partner had to turn right around and sell much of it in return for management contracts. Colony's luck in the resort sphere seems to come in two flavors, bad and worse.

Case Bets: Seminoles, Iverson, Harrah's, PartyGaming, Station's luck, etc.

Wed, 15 Apr 2009 16:01:00 -0700

Down in Florida, the tide may be turning in favor of the Seminole Tribe. Both the Florida Retail Federation and Restaurant Lodging Association have thrown their support behind the status quo, as represented by Gov. Charlie Crist's Class III casino compact. Crist's unilateral gambling expansion has the not-so-small problem of being unconstitutional but this latest turn of events ratchets up the pressure on solons to pass a version of the compact that meets judicial muster.

That'll be no problem with the state Senate but the uptight House would like to roll back the Seminoles to slots-only status (and would get rid of the casinos altogether, if only they could in their benighted heart of hearts). The table-game genie isn't going back into the bottle -- at least not until the federal courts have their say -- so the Solomonic question at hand is how to level the playing field for private-sector racinos without sacrificing the Seminole tax revenue that Crist secured. Easier said than done, obviously.

"Is too!" "Is not!" Both MGM Grand Detroit and Greektown are refuting a report in the Detroit News (with which MGM has taken issue before) that they'd 86'd former Philadelphia 76er Allen Iverson from their casinos. Let's face it, the man is a boor but he's a wealthy boor, so neither casino is likely to turn him away as long as he only bounces basketballs, not checks.

Headless casino. Not only did Harrah's Entertainment sack the GM and five other execs at Harrah's Reno, it won't be replacing them. At almost any other company, running a casino by remote control would come as a surprise but Harrah's has the reputation of employing a ruthlessly standardized business model. Besides, the company has to free up some dough to pay its new Internet/World Series of Poker guru Mitch Garber, whose former employer, PartyGaming.com, just cut a deal with the feds.

The luck of the Fertittas. Dodging yet another bullet, Station Casinos extended negotiations with its debtors by another month. While some form of bankruptcy at Station is inevitable, the company continues to fend off a takeover attempt by Boyd Gaming. However, Station says that when it comes to the terms offered to unsecured creditors, it's hanging tough. If that's the case, what's to discuss? (Or is Station being more flexible than it's letting on publicly?) My money, so to speak, is still on Station brass and co-owners Colony Capital retaining possession of Station and at a substantial discount to its market value, too.

An obscure racino company is cleaning house and relocating from Las Vegas (where it had no logical business being headquartered) and back East, where all its business is. The board of Empire Resorts really wasn't minding the store, was it?

The company might at least saved a bundle on long-distance charges if it had condescended to have its corporate offices in New York State, where its physical operations were, and not in tax haven Green Valley. But don't cry for outsted CEO David Hanlon, who parachutes out with 100 grand and plus another hundred large for nine months of "consulting services." These days, nothing succeeds like failure -- provided it's done on a grand scale.

Update: These are the same clowns whose Maryland slot application got tossed because they didn't bother to include the mandatory application fee when they filed.

Pennsylvania's biggest gaming screwup is history ... sort of. Former Mount Airy casino owner Louis DeNaples is guilty as hell of hanging out with the wrong crowd but innocent of perjury and will maintain one degree of separation from the casino, which remains in the DeNaples family. The Pennsylvania Gaming Control Board can claim a semblance of victory but the four-and-a-half-year imbroglio is a lingering embarrassment to a body whose vetting process has been inarguably the sloppiest in the U.S.

The PGCB needs to pay more attention to background checks and less to "juice" (see Barden, Don) -- and also to develop questionnaires that aren't so "imprecise and potentially confusing" they could open applicants to charges of perjury. It would also behoove Pennsylvania to quit "stovepiping" PGCB and state police investigations. Were it not for a lack of information-sharing (prohibiting by Keystone Kop, er, State law), this whole mess would probably have been avoided.

A delicate balance

Tue, 07 Apr 2009 17:51:00 -0700

Another day, a little more movement in the CityCenter situation. Well, it's that or talk about tourism and gaming revenue numbers that are too depressing to contemplate for long.

Time was that the American banking industry was practically giving away money, not requiring MGM Mirage to pledge assets for collateral. Lucky for MGM, lucky for us, not so lucky for the banks. That's going to change and Liz Benston delineates the tightrope that MGM will have to navigate to keep both banks and bondholders happy -- a delicate balancing act indeed. The one casino MGM can neither unload nor borrow against is New York-New York, presently encumbered with three-quarters of a billion dollars' worth of junk bonds.

Meanwhile, James Packer continues his CityCenter softshoe routine. According to Bloomberg (see sidebar), while Crown Ltd. may not be talking to MGM or Dubai World directly, it's reported to be exchanging notes in study hall with Colony Capital ... hence the carefully couched denials Crown issued last weekend. Since Colony will be merely lending to MGM, not investing (assuming negotiations bear fruit), that'll spare the fund from having any uncomfortable chats with Station Casinos, which has near-Strip aspirations of its own. Besides, if MGM defaults, God forbid, Colony might find itself with a gem like Slots A Fun or maybe even Circus Circus, and could whistle Station in to run it.

The terms of the alleged deal -- $750 million toward debt structuring -- more than suggest that MGM has given up on any getting any more dinero out of Dubai World. If it can "clear waivers" with its lenders, it looks as though MGM's preparing to shoulder the next $800 million worth of CityCenter costs by its lonesome. Another bit of good news for Kirk Kerkorian's company is that Deutsche Bank analyst Bill Lerner has revised the EBITDA estimates of Beau Rivage and MGM Grand Detroit up a bit. Lerner's new numbers would bring the theoretical asking prices (using 7X cash flow as a baseline) to $715 million and $940 million, respectively. The question of how anybody not named Penn National is going to persuade lenders to underwrite such a deal is still begged, though.

I wonder if Barbara Cappaert of KDP Investments ever tires of having to be the one to point out the elephant in the middle of the room, namely that MGM is pawning tomorrow to pay for today. That $235 million-plus in annual Biloxi/Detroit cash flow is going to be sorely missed.

If anybody ever writes the history of the casino-hotel currently known as the Greek Isles, it'll only have one chapter ... Chapter 11. The Isles has known many incarnations but it always seems to find its way back to bankruptcy court sooner or later (usually sooner). It's eked out a marginal existence for such a long time that perhaps the casino evolutionary process needs to "select out" the Greek Isles, which occupies a forlorn backwater between the Convention Center and the Strip.

Anyway, if you enjoy bankruptcy filings, this one should keep you busy. Since the Isles is more of a slot-route outpost than a casino, the alphabet soup of ownership groups is of debatable relevance to its gambling operations, though. Will the last person to leave the Greek Isles please turn out the lights.

For Rent: One blimp, slightly used. Gets 2.1 MPG. Annual operating cost $1.1 million. Your logo here.

MGM Mirage sells family jewels

Mon, 06 Apr 2009 17:39:00 -0700

Desperation has well and truly hit the fan at MGM Mirage. The company's Strip casinos may not be priced to move ... but it's said to be quite a different story where MGM Grand Detroit and Beau Rivage are concerned. (A Bloomberg report implies that Gold Strike in Tunica may be on the table, too.)

How desperate? We're talking about sacrificing $231 million in cash flow (in a down year) to keep CityCenter alive. Outside of Vegas, all the company would retain would be "halfsies" of Borgata, MGM Grand Macau and the Grand Victoria riverboat in Elgin, Il. We'd by definition be talking about considerably increasing MGM's Vegas exposure, especially since CityCenter would -- one hopes -- be mostly open for business by the time these potential sales cleared the regulatory process.

Strategically, it stinks. MGM would be putting nearly every chip it has on the Strip. At a time when regional markets are outperforming Las Vegas, MGM would be removing two of the most vital bet-hedges it has and doubling down on the Strip. With a $7 billion debt payment hitting shore in 2011 and MGM about to go into competition with its existing Strip properties on an undreamt-of scale, if CityCenter doesn't lift all MGM boats, it'll be curtains for the company.

True, that $7 billion balloon payment could be -- has to be -- restructured. That may have been MGM's thinking all along: Confronted with reality, lenders would become more flexible with the deadline. Or perhaps the company expected CityCenter to throw off sick amounts of cash flow, solving the problem at one fell swoop.

Time is of the essence. MGM still has three financing hurdles, at least, to surmount. A) It has to dig under the sofa cushions for as much as $800 million [assuming Dubai World continues to sulk and welsh on its financial commitments] to keep the project going; and to get to B) $1.8 billion in additional debt financing; which still leaves it short of C) $1.2 billion in completion money ... the capital that not even the combined efforts of Sens. Harry Reid and John Ensign could jawbone loose from a suddenly risk-averse banking industry.

By selling Treasure Island to Phil Ruffin for 7.75X cash flow -- and if we discount the theoretical premium that comes with being on the Strip -- MGM has put itself in a spot where the logical price for MGM Grand Detroit is $917 million and Beau Rivage fetches $700 million. If it could realize that $1.6 billion (or more), MGM would have its back-end costs on CityCenter covered. But that still leaves a short-term need for $800 million, which is where ...

Colony Capital comes in. Seems that the private-equity firm is thinking in terms of a secured loan rather than a piece of the action. Worst-case scenario, Colony walks away with one of MGM's better Strip casinos in lieu of repayment (or more than one). It makes a helluva lot more sense than the prospect being floated last week whereby Colony would take Dubai World out of the project -- an expensive proposition that would get MGM no closer to having the money it needs to finish what will be either its crown or its masoleum.

Stranger still was the here-today, gone-tomorrow story that James Packer would be teaming up with Colony to help rescue CityCenter. This popped up online in the wee hours of Saturday and was kiboshed on Sunday evening. Crown Ltd., for its part, helped keep the story alive through some semantic footsie. It said it wasn't in talks with MGM or Dubai World -- which left open the possibility it was dickering with Colony instead. A less-equivocal denial was several more hours in coming.

Having a flutter on CityCenter would provide a convenient explanation for Crown's drawdown of its acquisition of Cannery Casino Resorts. However, one can but imagine the displeasure that would have erupted up the street at Fontainebleau if it emerged that a key investor (Packer) was flirting with an archrival project. Besides, it's not as though Packer doesn't have other problems with which to deal.

MGM could really use some good news but it's not going to come from Macao. Shun Tak Holdings, steered by MGM Grand Macau partner Pansy Ho, saw its profits wither by 90%. With Pansy and father Stanley Ho going through hard times, if MGM entertains any hope of flipping its Macanese subconcession back to them, it'll surely be a good ways off.

Bridge of Sighs. It was across aforesaid Venice landmark that the condemned passed on their way to execution. Outsted Venetian Macao executives don't have to traipse over a replica Bridge of Sighs but there's been quite a doleful procession of late.

Last week, President Mark Brown made the trek, according to the Macau Daily Times. It also reports that casino boss Vince Mascio and international marketing director Ming Lien were close on Brown's heels. Thanks to his recent stock purchase, Las Vegas Sands CEO Sheldon Adelson is more in control than ever. Is this Macanese purge a sample of Adelson Unleashed?

Leper Colony

Fri, 03 Apr 2009 17:05:00 -0700

Or, in lieu of "Atlantic City Death Watch VII," maybe "Colony Death Watch." Scarcely had S&G dubbed Colony Capital's East Coast casino portfolio "Colony Crapital" than came affirmation in the form of the latest set of numbers from the Boardwalk.

First, the good news. Everyone in Atlantic City reported a profitable operating margin last year as well as a gross operating profit. As the Press of Atlantic City explains, "Net income, however, is not considered as important as gross operating profit, which is seen as the best way to measure a casino’s financial strength."

For instance, Harrah's Entertainment had the two best operating margins in the city (at Caesars A.C. and Harrah's Marina) and four of the top five. In gross operating profit, the Harrah's-owned quartet held the #2-3 and #6 spots, bested only by Borgata (#1, of course) and Trump Taj Mahal. However, thanks to some accounting jiggery-pokery back at corporate HQ, all four posted year-end losses -- some of them gargantuan, like the -$355 million charged against Caesars. Only Boyd Gaming's Borgata reported a profitable 2008. In terms of revenue, it was so far ahead of everybody else -- by $280 million -- it's not even funny.

For Harrah's Marina, the good news was triplefold. Not only did it have the smallest diminution of gross operating profit (-1%), it was also the sole casino to record an increase -- 8.5% -- in revenue.

Harrah's operational skill aside, UNLV's David Schwartz found another silver lining. To wit, "I’m surprised that gross gaming revenues fell by only 7.1%. For all of the belly-aching about the partial smoking ban and competition from Pennsylvania, Atlantic City’s gaming win actually declined less than Nevada’s, which shrank by about 10%. People are still willing to come to Atlantic City; they are just gambling less." [Emphasis added.]

Now for the bad news. The two lepers in the A.C. colony are -- you guessed it -- Resorts Atlantic City and the Hilton. Those two Colony Capital casinos posted extraordinarily dismal numbers, even by last year's low standards. Their operating profit margins were less than 2%, against a market average of 21%, and their gross operating profit was $6.3 million ... combined. In a year when the average Atlantic City casino saw a gross operating profits fall 25%, Colony's duo crash-dove -88% and -89%, respectively.

Compare this to Trump Marina. Even in a semi-orphaned state, as its sale dragged on (and on), the future Margaritaville garnered superior operating profit margin -- 7.5% -- and a far bigger operating profit on the smallest revenue base in the market. It reported gross operating profit of $15 million on revenues of $195 million. Somebody's doing something right and it's not Colony's Atlantic City braintrust.

Does Colony know how to pick 'em or what? And is MGM Mirage sure it wants to get into bed with these guys? They're starting to make James Packer look like a sagacious casino mogul. As for the Hilton, which used to be Steve Wynn's Atlantic City Golden Nugget, suffice to say it's seen better days.

Case Bets: Station Casinos, CityCenter, Pittsburgh, James Packer

Fri, 03 Apr 2009 11:22:00 -0700

Credit-default swaps, some of those financial instruments that have played hob with the U.S. economy, are making a cameo appearance in the tortured saga of Station Casinos. ~~If you insured Station's debt, that insurance is worth more than the paper your CDS is printed upon --~~ ~~but not by much~~.

Congratulations, MGM Mirage. Your probable rescuer is a bottom-feeder who's preparing to root around amidst the dregs of the banking industry. However, with CityCenter as much as $3.8 billion shy of the finish line, MGM isn't in a position be picky about going into business with the K-Mart of casino owners.

Rivers Casino, the former Majestic Star, has some CityCenter-style construction problems. This project has been so vexed and hexed that nothing comes as a surprise anymore.

Interesting business model. Halfway around the globe, Melco Crown Entertainment's got a lot riding on its City of Dreams megaresort. To bring back the whales, it's essentially promising that they can welsh on their markers with impunity. Or, as the company puts it, "Aggressive enforcement actions against a customer [may] unduly alienate the customer and cause the customer to cease playing at our casinos." And, gosh knows, nobody wants to alienate a deadbeat debtor.

The end of Viva

Thu, 02 Apr 2009 18:02:00 -0700

That's one of the implications of Colony Capital's potential cash infusion into CityCenter. Since Colony owns 3/4 of Station Casinos and might find itself with a big piece of CityCenter, it's an utter certainty that it wouldn't go along with the notion of Station building a fugly CityCenter knockoff on the other side of I-15. Of course, the Fertitta Bros. still control the Station board, so they could try and drag Colony down the Viva highway to hell if they want to force the issue.

But what does it say about CityCenter if Colony wants to buy in? The fund's track record in casino investing has been predominantly dreadful of late. A philosophy of acquiring "non-performing loans, distressed assets ... out-of-favor sectors," hasn't worked out so well. For instance, the REIT got a fire-sale price ($140 million) on Resorts Atlantic City, then saddled the dowager with a mortgage 160% excess of her market value.

When Resorts' sclerotic revenues caught up with Colony, it simply opted out of its "house payments." This nearly brought us the edifying spectacle of seeing a casino get repossessed by the bank. Between the venerable Resorts and the comparably ancient and non-performing Atlantic City Hilton, the fund's Boardwalk portfolio risks being dubbed "Colony Crapital."

Not only did Colony overpay (or, more accurately, over-borrow) for Station Casinos, it got further hornswoggled in the deal. Despite holding 76% of the equity, it only controls 40% of the board. Similarly, it let Goldman Sachs buy into the Las Vegas Hilton by dint of surrendering ultimate authority over capex decisions to Goldman.

It seems baffling from a common-sense standpoint that Colony could purchase a big stake in City Center, offer $850 million for the Tropicana Atlantic City (as it did last spring) or start a new fund to buy more yet distressed assets (as it's doing) when most of its casino properties are sucking wind. Shouldn't it be salvaging what it's already got?

Ethically, yes; realistically, no. For a fund like Colony, that'd be throwing good money after bad. ("Wanna buy a piece of this fund to bail out Resorts A.C.? No? How about putting some more into Station? Why not?!?") The way it's compartmentalized, Colony can keep buying shiny new silos, no matter how many of its existing silos are crumbling into barkdust, so long as there are takers for its fund offerings. Leave the bad investments to their fate and better luck next time.

One might be pardoned for thinking Colony couldn't run a lemonade stand profitably, as the company's gaming-sector strategy seems to consist of throwing money against a wall over and over again until some of it comes back. One of the questions raised by the CityCenter discussions is: How much control would Colony get in return for its money? Given that MGM Mirage is setting aside shutdown capital for the project, Colony appears to hold the leverage. It'd be smart to leave MGM in the driver's seat -- and besides, Colony is no stranger to dealing itself into a position of weakness.

Then again, Colony may well be a stalking horse for Saudi mogul Prince Alwaleed Bin Talal, one of its business partners. He's got deep pockets and grandiose plans ... just the sort of fellow who might fancy being the monarch of CityCenter.

Speaking of the Fertitta Bros. ... the president of their pride and joy, the UFC, a charming fellow by the name of Dana White is making headlines and not in a particularly good way.

Those [expletive] UFC [expletive] board meetings [expletive] must be [expletive] really something [expletive] else, [expletive]. Wouldn't you [expletive] want to [expletive] be a [expletive] fly on the [expletive] [expletive] [expletive] wall, mother[expletive]?

Should Colony take a stake in CityCenter -- thereby dooming Viva -- perhaps the Fertittas can send Mr. White to Colony HQ as their good-will ambassador.

The Company That Ate Itself

Wed, 01 Apr 2009 17:29:00 -0700

Perhaps it was with dry irony that the Las Vegas Review-Journal's latest Station Casinos story's subhead read, "Company blames economy, poached customers." And by whom might those customers have been poached? By Station Casinos itself! The company's imperial overreach has reduced it to gnawing on its own femur, as each new Station property cannibalizes business from somewhere else in the Fertitta empire.

Bad as the 2008 financials were, 2009 is going to be that much worse once the encroachment of M Resort begins to be felt. Last year, Station's casino revenues fell by 11% and ADRs were down comparably. A 14% slippage in cash flow from 2007 meant that a deal valued at a rose-colored 9.7X EBIDTA is now effectively over 11X cash flow. Even had the Fertitta Brothers not insisted upon carting home a half-billion dollars as part of the buyout, its valuation would still have been quite over-optimistic.

(Even in a boom year, Station's proposal to dilute Aliante Station's revenues with a nearby "Losee Station" would be inexplicable. Given the company's current financial performance, it's an idea quite a few fries short of a Happy Meal.)

Elsewhere in the casinosphere, the closest thing to good news was Planet Hollywood's disclosure that it shaved 40% off of last year's losses, thanks to a nearly 8% revenue increase. More alarmingly, the Las Vegas Hilton -- seemingly the one casino-hotel Colony Capital couldn't ruin -- has swung from a profit to a loss.

It's a business miracle! Losses at soon-to-be-cleft Herbst Gaming widened by 60%. Most of that was driven by a -33% downward spiral in slot-route revenues. By contrast, the ouster of sundry Herbsts in favor of CEO Ferenc Szony appears to have given the company's 15 casinos a boost because, as dowdy as some of those places are, their revenue actually grew 1% last year.

For most companies that might be unremarkable; for Herbst it's a miracle. It also puts paid to the Herbsts' face-saving insinuation that, by keeping the slot routes and parting with the casinos, the family was hanging onto the real goodies. I can't even remember the last time I went into a Terrible's convenience store and saw somebody playing the slots.

Humpty Dumpty had a great fall. The Nevada state budget is a two-legged stool, balanced upon gaming and sales taxes. That stool is getting wobblier by the day. Unfortunately, if the Lege has any solutions, it's keeping them to itself.

Casino apocalypse

Thu, 19 Mar 2009 13:08:00 -0700

I'm deeply imbedded in other projects today. In the meantime, by way of In Business Las Vegas and GamingFloor.com (source of yesterday's Harrah's Entertainment time warp, too) here's the answer to the question, "How many casino failures can you pack into nine minutes?" Watch it and weep.

Case Bets: Bank shot, Sin City Express

Wed, 04 Mar 2009 15:37:00 -0700

In today's Movable Buffet, Richard Abowitz speculates on the possible evolution (devolution?) of Las Vegas from a boomtown built on junk bonds to critical-care patient who's a ward of the banks. To Abowitz's mention of the bank-owned Cosmopolitan, I would add the Hard Rock Hotel, Stratosphere, two Arizona Charlie's and the Las Vegas Hilton. The first is owned by DLJ Merchant Partners, most of the others by Goldman Sachs.

Goldman has but a minority stake in Colony Capital's LVH. However, it enjoys veto power over any capital expenditures. Which is as good an excuse as any (or none) to mention that on my last visit to the Hilton the volume on the slot machines had "gone to 11." If it was a clever ploy to create the subliminal impression that the casino was busier than it actually was, it worked.

"Sin City Express": That mag-lev train that's causing Gov. Bobby Jindal (R-LA) and others of his ilk to lose sleep is a real juggernaut, consisting of one unpaid retiree living on the west side of Vegas. (For the record, LV lifeline I-15 has undergone regular midweek closings this winter, to facilitate blasting, as well as one snow-induced shutdown.) At least Jindal's a smart guy just pretending to be dumb, not an out-and-moron like Rep. Trent Franks (R-AZ), who fantasizes high-speed rail from Disneyland to a Carson City brothel. Whatever turns you on, Congressman.

Station vs. Boyd III: This time it's personal

Tue, 03 Mar 2009 21:46:00 -0700

You really have to hand it to Station Casinos CEO Frank Fertitta III. This dude has more lives than a cat. Every time you think his luck has run out, he slips the noose yet again.

So it was Tuesday. FF3 proved that his time at the gym hasn't been wasted, as he applied a one-two punch to Boyd Gaming. While studiously ignoring Boyd's $950 million offer for most of Station, FF3 was persuading his creditors to give him a forbearance that will extend until Tax Day. When it comes to sweet-talking bondholders, this guy is sheer Sheherazade ... especially when you consider that Boyd's offer made the Fertitta family's proposed $244 million cash infusion look like chump change.

Forbearance in hand, FF3 then unveiled a "Don't call us, we'll call you" letter to Boyd. Ker-POW! Fertitta must have been feeling his oats, as he dissed Boyd's offer on the grounds it was "non-specific" and "highly conditional." This was just a tad disingenuous when you consider that Boyd didn't have information that would enable it to make a more specific offer -- because Station wouldn't provide it.

Unsheathing his claws, FF3 then took a swipe at Boyd's soft underbelly (i.e., Echelon), cattily making note of "Boyd’s potential inability to perform due to its own financial position." Meow! Considering that Fertitta's own company is justthisclose to filing bankruptcy itself -- far, far closer than Boyd -- you have seen an instance of the pot calling the kettle black that's so brazen it may never be surpassed.

In fairness to FF3, it's not like he wasn't provoked. Boyd proclaimed its offer far and wide, doing everything short of hiring a plane to sky-write it over Station HQ. Boyd was talking past FF3 and straight to the bondholders, in effect saying, "You're a nice lad, Frank, but you're irrelevant now." So Tuesday was Payback Day.

Fertitta is like the Teflon CEO. No matter how many EBITDA projections Station misses or how outrageous its executive compensation packages are, nothing sticks to him. Not only that, he and brother Lorenzo were able to structure a deal whereby Station insiders only controlled 24% of the equity -- but 60% of the board. Then again, from a strategic and operational standpoint, would you rather put Station in the driver's seat -- or Colony Capital? It's Hobson's Choice but Station wins, hands down.

There's been one immutable bottom line to all Fertitta clan responses to Station's liquidity crisis. As Liz Benston described it:

"The plan would improve Station’s financial outlook and keep the Fertittas at the helm.

"But critics question whether Chief Executive Frank Fertitta III and his brother, co-owner Lorenzo Fertitta, are worth the debts they want bondholders to forgive."

You might call that the $5 Billion Question.

Boyd's suffered a major setback in today's developments. If $950 million isn't enough to persuade bondholders not to heed FF3's siren song and lend an ear to Boyd, what is? Their response to the Fertitta's take-it-or-leave-it March 2 deadline was obviously "leave it" ... but they willing to keep the line open for another six weeks. Boyd's made what looked for all the world like a game-changing gambit and yet the chess pieces have scarcely moved.

While there's just about everything to like about Boyd as a company there's almost nothing to like about its attempted hostile takeover. Try and try, I can't make sense of it. For starters, it would cannibalize at least half of the $2 billion earmarked for Echelon, which raises questions about Boyd's commitment to the project -- or how it would flip the site with a half-built megaresort sitting atop it.

Then there's the problem (if you're Boyd) that your offer doesn't take the Fertittas out of the picture, it simply whittles them down a bit. They'd still have Red Rock Resort and Stations Palace, Boulder and Sunset. That is, unless Boyd is willing to shoulder the elephant-on-its-back burden of the $2.5 billion note with which that casino quartet is encumbered. Could Boyd withstand such an added debt load?

And when you've already put almost half your $2 billion on the table, just for openers, why even talk about buying out the Greenspun family's stake in Green Valley Ranch and Aliante Station, plus a gaggle of grind joints? Why not just stick to Plan A, which from all appearances was to make a wide, quiet detour around the Greenspun Problem and revisit it somewhere down the road? (Unless the 'Spuns are willing to sell out for cheap, in which case Station wakes up to find itself in bed with its archrival. Oh, the awkwardness!)

Which brings us to the even bigger problem that is the Las Vegas locals market. Yes, it may recover sooner than the Strip. But for now it's inelastic, cannibalized and overbuilt. One of the hidden benefits of the Boyd proposal is that would (presumably) alleviate the company of the need to build a North Las Vegas casino.

Trouble is, do you need Aliante Station and Santa Fe Station and Texas Station and the original Fiesta up there? And if you don't, who'll alleviate you of that kind of surplus? By absording even part of Station's portfolio, not only would Boyd be competing with itself sometimes within eyeshot but even right across the street. Also negated is one of Boyd's strengths: the regional balance that has, unlike Vegas-centric Station, shielded it from the recent vagaries of the Sin City marketplace.

Conversely, if you're not going to take the Fertittas off the board altogether, why settle for a half measure? Why leave them with four major casinos and a passel of developable real estate, including the prospective site of long-in-abeyance Durango Station? You'd have a bloodied adversary on the field, still upright, well armed and spoiling for revenge.

$950 million isn't going to buy even partial satisfaction for Boyd unless Station can still be forced into bankruptcy court. That much is now clear. Nor is $2 billion enough to purchase a definitive solution to the problem. For the sake of its shareholders, Boyd needs to rethink its pursuit of Station before it finds itself playing Capt. Ahab to FF3's Moby Dick. Boyd pulled back from the verge once, with Echelon. It can do it again.

This is your industry on crack

Tue, 03 Mar 2009 18:06:00 -0700

Finally, someone (in this case, Liz Benston) has written the definitive user-friendly analysis of how the casino industry crashed and burned. To try and quote the salient points would require little short of reprinting the entire article (to say nothing of its copious charts).

In essence -- as run through the S&G juicer -- we're dealing with an industry that could be said to have lost its marbles four to five years ago. As I've contended on the Vegas Gang podcasts, captains of the casino industry, borne aloft on a bubble of illusory "wealth," mistook a bubble for a baseline. Instead of paying down debt on acquisitions, they doubled down on extra-super-megaresorts and wholly unncessary LBOs.

And now that the party's ended, the resultant hangover is shaking out the business like a case of the DTs. The irony is that Strip revenues have reverted to 2005 levels ... back when business was pretty darn 'phat,' and MGM Mirage and Harrah's Entertainment were so flush they were able to devour Mandalay Resort Group and Park Place Entertainment, respectively, with scarcely a burp.

One of the few things now standing between insolvent casino companies -- a group that may soon include both Harrah's and MGM -- and outright disaster is that gaming has become "too big to fail." In an otherwise normal economy, collapsing companies like Herbst Gaming, Black Gaming, Colony Capital and even big shots like Station Casinos would probably be staring receivership in the face. But extraordinary forbearance -- in more than one sense of the term -- by lenders is keeping the lights on and the doors open. The bankers and bond markets have obviously decided it's better to keep their wobbly dance partners upright than let gravity take its course. Lord knows, the seismic impact of a cascading series of casino bankruptcies beggars the imagination and not in a good way.

Into this maelstrom, is flung the news that two companies are going to miss their scheduled 10-K filings. In the case of Pinnacle Entertainment, they need some extra time to perform mark-to-market ledger-demain, writing down $275 million-$330 million. J.P. Morgan analysts are sanguine, though, partly because of an 18% increase in fourth-quarter revenue. Also, although Pinnacle's net loss may be as high as $308 million, other results "should be above expectations, reflective of PNK’s strong Louisiana performance at Lake Charles, stable New Orleans trends, and a ramp at Lumiere [Place] in St. Louis. Trends that, generally, should continue."

Also playing for time is MGM Mirage. According to the Sun, last week's draw-down of credit has tapped out the company's liquidity, a statement confirmed in a J.P. Morgan note. Contrarily, the Review-Journal implies there's plenty left.

(Update: MGM tells me, no, there isn't and I was wrong to have concluded otherwise last week. Error duly noted. Self-flagellation in progress.)

Whatever the case, Wall Street is sounding like it's accepted that Chapter 11 is all but inevitable. Slightly less apocalyptic scenarios still include potential defaults, debt-for-equity swaps that would surely cost Kirk Kerkorian his majority ownership, asset sales, a restructured balance sheet and a $7 billion note that's less of a balloon payment than an incoming Hindenberg.

Or, as Morgan analysts write, per their wait-and-see strategy: "We expect to hear from MGM over the next few weeks, and suspect it is or shortly will be working with its banks on amending its bank covenants (leverage covenants now likely tripped after drawing down debt last week and hoarding cash) and looking to restructure its bank debt, among the other options MGM is considering (asset sales, amending CityCenter, etc.)."

Emendations to CityCenter? That would be an extremely bitter pill for MGM to swallow. First the Harmon truncation, now this prospect. In a totally unscientific measurement, page views of our online image gallery of Aria and Vdara were barely a ripple compared to the levels of interest manifested in Encore, M Resort and, good golly, even the Cabana Suites at the El Cortez -- all of which have vastly outpaced Aria/Vdara in viewership. Like I said, unscientific but who'da thunk we'd see an El Cortez ≥ CityCenter equation?

And we still haven't touched upon today's earnings report from Isle of Capri (half good, half bad) or the latest round in the Station-vs.-Boyd catfight, chock full of hissing and spitting. We live in interesting times, to be sure, regardless of whether that's a blessing or a curse.

Harrah's enjoys bailout

Tue, 03 Mar 2009 13:27:00 -0700

"Critics argue that the tax-law change rewards companies that took on too much leverage during the credit bubble, such as those that were bought by private-equity firms."

Sound like anybody we know? How about Harrah's Entertainment, which played Russian roulette with the bond market and got its brains spattered all over the wall. Lucky for them, Senate Majority Leader Harry Reid (D-NV) was there with a "Get Out of Jail Free" card -- or at least a tax break that, in effect, rewards morally hazardous borrowing. Thanks to Harry's largesse, it'll be a full decade before Harrah's pays off the gains it's about to realize from buying back part of its $23 billion (!) debt at a discount.

That is, assuming that the crafty Reid hasn't carved out yet another tax exemption for improvident borrowers like Harrah's, Station Casinos and Colony Capital by 2019. And between that gift-wrapped tax deferment and last week's endorsement by Nevada GOP kingmaker Sig Rogich, Reid is as good as re-elected through 2016. (Which must come as a terrible disappointment to Las Vegas Review-Journal Publisher Sherman Frederick, who has been conducting a blushing-maiden campaign for the GOP nod via his blog and Sunday column, trying to draft himself as Nevada's Only Hope of Salvation.) One prospective Reid rival has seen the handwriting on the wall and given up.

As the Wall Street Journal story points out, there are far worse outcomes for Harrah's management, its employees -- innocent bystanders to this debacle -- and its debtors, who'll realize some tax forgiveness themselves. Besides, it's clearly preferable that super-leveraged companies pay back some of their debt rather than walk away from the whole kit 'n kaboodle. That goes without saying.

But what lesson is likeliest to be drawn in the boardroom? Will it be, "Damn, but we dodged a bullet there! Let's not pull an LBO stunt like that again"? Or will executives reach the conclusion, "Hey, that was easy! As soon as we're clear of this mess, let's run up another whopping tab. We won't have to pay off the whole thing and we'll probably get another big-ass tax break from Harry in the bargain. Party on, dudes"?

Recent history does inspire confidence that the former option will hold sway over the latter.

Small victory for Sands: There's a silver lining in the (relatively) dismal February revenue numbers from Macao, which are down 16% from last year, to $1 billion. "Dismal," that is, by Macao standards, which are higher than anybody else's.

While Stanley Ho continues to command the plurality of the market (29%), Las Vegas Sands has clawed back. Its January market share (22%) has risen to nearly 26%. These gains came mainly at the expense of Melco Crown Entertainment (down to 9%) and MGM Mirage/Pansy Ho (bringing up the rear with 6%).

Given the worrisome financial straits MGM finds itself in elsewhere, it's time to think the once-unthinkable: That CEO Jim Murren could decide that $30 million/month in revenue isn't worth maintaining a Macanese beachhead and sells the company's subconcession back to Stanley Ho. Then the elder Ho's tactless references to MGM Grand Macau as "my casino" would achieve the status of prophecy.

Comp cutbacks in Atlantic City

Tue, 03 Mar 2009 12:52:00 -0700

Last week, the Press of Atlantic City reported a 5% drop in comping along the Boardwalk and Marina District. However, the story played it as merely a reflection of decreased business in Atlantic City. Yesterday, however, The Associated Press weighed in with a completely different take.

According to Spectrum Gaming Group's senior veep, Joe Weinert, the fanny-packers are getting left out of the comp action. "It's a conscious decision to cut back. They have to target their cash very carefully and cut out the low-end customers. They're being very careful about how they're throwing those free dollars around," he told reporter Wayne Parry.

Displaying the can't-do spirit that has made Colony Capital the scorn of the Boardwalk, Resorts Atlantic City CEO Nicholas Ribis told regulators the casino had given away "too much food, too much drink, too much everything." (Maybe if Colony would stop borrowing money it can't repay it wouldn't have to sweat the comps so much.)

Selected reductions in comping, as reported by the AP, are as follows (Jan. '08 vs. Jan. '09), rounded to the nearest full point:

Resorts: $7.8 million/$6.3 million (-19%)

Bally's: $15 million/$11.3 million (-25%)

Caesars: $12.4 million/$11.1 million (-10%)

Showboat: $9 million/$8 million (-11%)

Trump Marina: $6.5 million/$5.6 million (-14%)

Trump Plaza: $7 million/$6.1 million (-13%)

Most of those cuts roughly parallel the overall decline in the market. As for the "outlier," Bally's, a whopping comp cutback is certainly in keeping with the general decimation of that sprawling complex. I guess we know now which of its four Atlantic City casinos Harrah's Entertainment would put "in the sell block," if push came to shove.

"Off the box" redux: Since Donald Trump wants his name taken off bankrupt (again) Trump Entertainment Resorts, one reader has submitted a possible replacement moniker -- "Blowhard Entertainment Resorts."

Earth to Colony Capital

Mon, 23 Feb 2009 18:38:00 -0700

"If I had a crystal ball two years ago, I would never have taken on that debt. Never, ever. But looking back, we saw growth. That's why we put up that beautiful new tower, with a plan to do extensive renovations [on the older hotel tower] next door. We're not able to do that now." -- Resorts Atlantic City CEO Nicholas Ribis

Growth? Two years ago? Would somebody please buy Nick Ribis that crystal ball? By early '07, casinos in Pennsylvania were a done deal. How could anyone have foreseen growth for Atlantic City in that scenario?

Just asking ...

Gibbons retreats, sorta

Mon, 23 Feb 2009 12:33:00 -0700

Gov. Jim Gibbons has scuttled away from one of his several proposals to jack up taxes on the only segment of Nevada that's carrying its own weight -- the casino bidness. He's retreating from a demand that casinos pay taxes on uncollected markers (which, in turn, would be certain to cause a tightening of casino credit). Midnight Jim continues, though, to support raising hotel-room taxes in Clark and Washoe counties, and taxing comped meals. The casino industry's love affair with Gibbons -- which helped get him into office -- has so far proven a one-way romance.

Worries about Boyd. Here's why I resist the occasional invitation to give stock picks: No sooner have I sung the praises of Boyd Gaming's sound fundamentals, its diversified casino portfolio and its (Echelon excepted) aversion to risk, comes news that analysts have the heebie-jeebies in re Boyd. A slow-ramp-up at Water Club in Atlantic City and weakness in the Las Vegas locals market are the primary worries.

Advertising during the Oscars: Casinos that ran ads during last night's interminable Academy Awards snoozer included M Resort (twice), Encore, the CasaBlanca in Mesquite and Green Valley Ranch, which has suddenly discovered a great lurve for the local clientele. The latter is quite a turnaround for a property that used to tout its high-end cachet. Oh, and Mickey Rourke got totally, utterly and criminally screwed. Which ruined the evening right then and there.

Atlantic City Death Watch, cont. After taking a long gander at the market, Macquarie Securities analyst Joel Simkins had this to say: “In our view, there is a distinct possibility that one to three casinos could be permanently closed in the next few years, particularly when many older locations are barely breaking even and, we believe, cannot be rehabbed to be economically viable.” [emphasis added]

Anybody care to speculate which casinos Simkins has on the "do not resuscitate" list? Resorts Atlantic City is a no-brainer for the "one." As for the "to three," we could toss in the Atlantic City Hilton and Trump Marina, where the news comes in two flavors -- Bad and Worse.

The Tropicana might also be on the bubble, partly because it's not performing up to its preponderant size and also on account of interim management's inability to restore the business that was lost during the Columbia Sussex reign of error. A veteran Trump-watcher has another suggestion, writing that"his decision to abandon and bad-mouth the company suggests that this may not be the routine Chapter 11 bankruptcy from which the company eventually emerges. Indeed, I wouldn't be surprised if this is the last gasp for Trump's three Atlantic City casinos."

How desperate is Scott Butera?

Thu, 19 Feb 2009 18:08:00 -0700

Perhaps sensing that the Tropicana Atlantic City is slipping irretrievably from his grasp, Tropicana Entertainment CEO Scott Butera has taken his case to the media -- seeking an audience with the editorial board of The Press of Atlantic City, no less. Butera has a persuasive manner, as you'll hear in the attached audio excerpts. Repositioning the Trop as a smoke-free property seems a bit out there but it has the virtue of novelty, so let's give it the benefit of the doubt. (There is a serious disconnect, though, between what Butera thinks the Trop to be worth and what the market is telling him.)

Butera's real sales job is going to be with the hard-to-convince New Jersey Casino Control Commission, of course ... a task not made any easier when TropEnt sole shareholder William J. Yung III popped up at a New Jersey Supreme Court hearing on the Trop's fate, about as welcome a sight as Banquo's Ghost. Short of drawing and quartering Yung in front of the assembled NJCCC, I'm not sure what Butera can do that will guarantee him a fair hearing.

He might have one ace left to play by throwing his support to Carl Icahn's mooted stalking-horse bid. Even if Icahn doesn't really want the Trop, the mere possibility that he could throw all or most of $1.4 billion in secured debt onto the table should force rival bidder Cordish Co. to either pony up some real money (instead of incessantly haggling) or drop out. Of course, Butera needs Icahn more than Icahn needs him; the old corporate raider could always rustle up Richard Brown and the rest of the old ACEP band and run the Trop himself.

Still no word on whether Colony Capital will be run out of Resorts Atlantic City or not. The NJCCC is playing this close to the vest. From a logical standpoint, Colony's argument that Column Financial can't be allowed to take over because the latter doesn't have a gaming license (and never mind that Colony is three months in arrears on its mortgage) is silly. It's like saying your banker can't repossess your car because he doesn't have a driver's license.

However, the law is something else again and Colony appears to be on firm ground there unless Column can make the case for a state-run trusteeship. Not that such an arrangement worked out entirely well in the case of the Trop.

Boardwalk bummer

Tue, 10 Feb 2009 15:42:00 -0700

In short, January's Atlantic City revenue numbers are -9% at the tables and -10% in slots. The glass-half-empty spin is that this is the third straight year of decline. The glass-half-full perspective would be, yes, but it's -9% the fifth-highest January in Atlantic City history (with '06 being the high-water mark). And if you were at Trump Taj Mahal, you had no complaints whatsoever.

In sheer dollar volume, Bally's Atlantic City got hammered, down from $45 million to $37.6 million. Only the newly revamped Taj posted an increase in revenue, going from $38 million a year ago to $42 million this year. The in-flux Trump Marina (-8%) has at least temporarily bottomed out -- at last place in dollar volume, behind even insolvent Resorts Atlantic City. (Because of disparities of scale, this can be a deceptive metric, though.)

Aside from the Taj's non-aberrant 10% gain, the closest thing to victory could be declared by Harrah's Marina, only -2%. Both properties cleaned up at the tables (+22% and +19%, respectively), while Borgata did so at the slots (+16%) -- a good thing in the latter case, because the Boyd Gaming property got slaughtered in table play, -26%. However, it could take cold comfort in the fact that Trump Plaza (-29%), the Atlantic City Hilton (-32%) and Resorts (-36%) all fared worse. Luck just isn't with Resorts/Hilton owner Colony Capital these days.

The second-best showing in slot win was the Taj (+2%), with the Tropicana Atlantic City in third place with -6%. The worst clobberings were absorbed by Resorts again (-22%), Bally's (-23%) and Showboat (-24%). Overall, the Taj edged Caesars Atlantic City (-8%) out of the top tier, back toward the Trop (ditto). Thanks to the Taj makeover, Atlantic City has four "haves," four "have-nots" and a couple of Harrah's Entertainment properties that could go either way. Plus the ever-mystifying Trop, of course.

Mixed message from Penn

Fri, 06 Feb 2009 12:10:00 -0700

Having pulled the plug on his latest Atlantic City venture, Penn National CEO Peter Carlino served the city a heaping plate of gloom with a side dish of pessimism. In fact, he pretty much slammed the door on the besieged metropolis, although his spokesman reopened it a wee bit.

Quoth Carlino: "I think as we've watched New Jersey, sadly, that's a market at the moment that is significantly less appealing to us, and that shouldn't be a surprise. There is much more bad news coming ... [Pennsylvania slot parlors are] nothing but bad, bad, bad news for Atlantic City. It's going to be a while, and maybe a long while, before the picture changes in Atlantic City. It's not a pretty picture."

In other words, he didn't just plunge a dagger into the heart of Atlantic City, he twisted it around a bit for good measure. Also, Penn's legal representative on the Boardwalk is a co-owner of A.C. nemesis Harrah's Chester. Coincidence perhaps, but the symbolism is painful.

Then again ... a Penn representative says the company will "evaluate the opportunity" as Bader Field continues to be shopped around. So Penn isn't really giving up on Atlantic City after all and Carlino's verbal barrage begins to sound like a "softening up" bombardment, preperatory to pushing for a better deal on Bader Field.

Carlino is right to wary of the potential threat from Philadelphia but anybody contemplating an Atlantic City investment is going to find themselves between that rock and the hard place that is the realization that new (or significantly refreshed) product and nothing else will suffice in A.C. Unfortunately opportunity -- the gnarled casino-development process in Philly -- and crisis, in the form of an economic deep-freeze -- have coincided, leaving the status quo drifting along.

There's a variety of low-hanging fruit in Atlantic City: the 14 acres MGM Mirage is peddling; Pinnacle Entertainment's stalled Sands site; the Tropicana; perhaps even Bally's Atlantic City or a management contract at Resorts Atlantic City, if the foreclosure goes through. Not to mention the Trump Marina sale, which seems to have devolved into slow-fizzle mode. But if Penn is sending a signal, it's translating as "Bader or Bust!"

Black Tuesday: Station Casinos

Wed, 04 Feb 2009 18:30:00 -0700

Yesterday's Chapter 11 proposal by Station Casinos was paradoxically both inevitable and premature. From the day Station drew on its revolving line of credit to fund operational expenses, the handwriting was on the wall. However, Station chose to precipitate a crisis by opting not to make an interest payment ... even with $350 million in the bank.

Already one is hearing grumbles that Station ownership is trying to bust the balls of its bondholders, who balked at the last refinancing plan, to put it kindly. In return for an accelerated redemption date, senior debtors are being asked to take 50 cents on the dollar (mostly in the form of more paper), while junior debtors will have to settle for 10 cents on the buck -- a considerable premium to the current value, one must in fairness note. Or they could call Station's bluff and send the whole kit 'n kaboodle into bankruptcy court.

Aliante: A Station too many?

The Fertitta clan, Colony Capital (co-owners of Station) and the secured lenders have all signed off on this ... of course. They're the ones with the least to lose, should it go through. Colony and the Fertittae are sweetening their previous offer with a promised $244 million cash infusion. It would be cricket if Frank III and Lorenzo Fertitta ponied up $60 million -- if said contribution is proportional to ownership stake -- considering that they've taken considerably more than that out of the company in recent years. Together with their sister and brother-in-law, the boys toted home nearly $495 million from the buyout alone.

What's not on the table are asset sales, even though Station has more undeveloped real estate in the Vegas Valley -- plus the Reno area -- than you can shake a stickman at. (Not to mention that expansion is currently pointless in a market that has lost its elasticity for the time being and is, in fact, constricting). Evidently call-center employees and 401(k) contributions are expendable but pipe dreams like Viva are sacrosanct.

Investment service Moody's estimates that as many as 17 casino companies are at risk of default right now. (Scary!) Should Harrah's Entertainment fall, the enormity of ensuing "SPLASH!" will drown out the Station fiasco -- but it shouldn't. In effect, if not in intention, private equity buyouts of casino companies have become a sham whereby management gets its company back for pennies while leaving bondholders holding the bag, too. That's disgraceful.

Speaking of Moody's, the Las Vegas Review Journal's "Inside Business" blog has an amusing Wall Street-into-English translation of a Moody's investor note on Landry's (owner of the Golden Nuggets) that's a dense thicket of cover-your-ass verbiage. I was going to say Moody's "waffled all over the place," but I don't care to insult waffles.

As for Landry's CEO Tilman Fertitta, he has more reason than most to delve into today's coverage of the calamity at Station. After all, the Fertitta brothers helped Tim Poster and Tom Breitling "play" him during his bid for the Nuggets. So, no love lost there. In fact, I'm sure that Tilman is sitting down for an extra-large schadenfreude supper tonight.

Atlantic City Death Watch V

Mon, 26 Jan 2009 18:08:00 -0700

Joys, Shakespeare famously wrote, come as solitary spies while griefs arrive by the battalion. So it is with Atlantic City, where the bad news washes up along the Boardwalk in bunches. If you picked Resorts Atlantic City as the Casino Likeliest to Be Seized, you've just won the office pool.

In what would be an historic first, Resorts' mortgage holder wants Colony Capital -- which has missed three straight payments -- to surrender title to the property. Failing that, the New Jersey Casino Control Commission has been asked to sanction the seizure of the casino. And if Plan B doesn't work, Column Financial threatens to dispatch its agents on "cash sweeps" across the property. That's right, money could be commandeered straight from the casino floor in a forcible attempt to hold Colony to account.

If that seems harsh, imagine what might happen to you or I if we skipped 90 days' worth of house or car payments. Having snagged Resorts for a bargain-basement $140 million, Colony Capital proceeded to lumber it with 2.6X debt. It's the classic American story of our decade: mortgaged to the hilt, maxed out on the credit card and with no way to pay.

Should Column be successful in either of its first two proposed scenarios, it won't mean the end of Atlantic City's oldest casino. Colony's loss would become a nice little management contract for somebody else. (Maybe thrift-consicous soon-to-be-ex-Cannery Casino Resorts owners William Paulos and William Wortman should volunteer for the gig.)

With insolvency literally at Resorts' doorstep, the Tropicana in Chapter 11 and three Trump Entertainment Resorts casinos headed that way, Atlantic City faces a depressing prospect: Five of its 11 casinos could easily be in either bankruptcy or foreclosure by the end of next month. The market has boiled down to the Haves (Boyd Gaming, Harrah's Entertainment) and the Have-Nots (everybody else). As David Schwartz points out, while Pinnacle Entertainment may not have done itself a favor by tearing down the Sands, it probably kept the other small fry afloat that much longer.

Penn Nat'l: Smoke everywhere, fire less evident

Wed, 14 Jan 2009 13:30:00 -0700

Despite story upon story, Penn National Gaming refuses to oblige the Las Vegas Review-Journal and purchase The Mirage. (This was the paper that pooh-poohed the Phil Ruffin/El Ad deal when it began to break.)

While -- for all we know -- intense negotiations may be going back and forth right now between Penn and MGM over the titular property and a deal could be thisclose, the story has never amounted to much more than feverish speculation that The Mirage simply must be for sale. It would also run a cart and horses through the equally prevalent conventional wisdom that MGM is simply 'renting' Ruffin Treasure Island and will buy it back for $1.2 billion somewhere down the road. After all, if the pirate place doesn't make sense without The Mirage, the reverse equation makes even less.

About the only thing we know for certain is that Ruffin ran the Mirage numbers and found it too rich for his blood, opting for Treasure Island as a Christmas present to himself. And that Steve Wynn didn't make an offer for it. Or so he keeps saying (and I don't for a moment believe that he did or would). Is there a story here or are we all on a fishing expedition?

My best guess -- and it's nothing better than that -- is that MGM is trying to interest Penn in one or more of at least four other properties but Penn wants something mid-Strip, for obvious reasons, and doesn't want to pay the going rate. (Naturally, given God's rich sense of irony, a Mirage sale will be announced today or tomorrow and I will be proven spectacularly wrong. If so, much crow will be eaten.)

What's new and interesting is the revelation in today's paper that, unlike your average sleeping-dog corporate board, Penn's board of directors actually paid more than lip service to its fiduciary duty by restraining CEO Peter Carlino from making a bid on a Las Vegas Strip property until prices fall further. "Penn National's management is committed to acquiring a Strip resort, potentially in 2009," reads the article, in which case Carlino has put himself on the hook and probably shouldn't hope for any discounts. In other words, he's become the equivalent of the pig in the old ham-and-egg-breakfast analogy, with MGM Mirage, Harrah's Entertainment, etc., enjoying the role of the chicken.

Update: Hunter Hillegas has a slightly different take on l'affaire Mirage and his readership appears to be growing skeptical of the rumored sale, for myriad reasons. There's also a valuable link to MGM Mirage property-by-property financials (a nicety the company has discontinued) toward the bottom of the thread.

Update 2: Read this next Mirage dispatch only if you have a strong stomach. I guess bloggers aren't being comped at Encore after all.

Hot flash: Menopause closes April 5.

Is Colony Capital's malaise reaching its sclerotic, baneful arm out for the Las Vegas Hilton? Parts are starting to fall off the LVH vehicle at an increasing rate. First, Star Trek: The Experience was shuttered and still no replacement has been found. Now Norm! ("The Scene and Heard") informs us that the end is drawing nigh for Laugh Out Loud, featuring The Scintas, and the LVH's cabaret mainstay, Menopause: The Musical.

According to man-about-town Clarke, "a sexy show is under consideration" in their place. Whew! I'm so glad to see the LVH doing something original. 'Cause if there's one thing you can't find in Vegas, it's a "sexy show." Nope, nothing like that in these here parts. Way to go, Colony Capital, the company that brought you a celebration-less New Year's Eve at the Atlantic City Hilton. And excuse me but when did Chrissy Scinta cease to be sexy?

21

Wed, 31 Dec 2008 11:39:00 -0700

That's the number of predictions for 2009 issued by Spectrum Gaming Group, an Atlantic City-based outfit. They are, in no particular order:

• Advancements in technology that impact revenues and cut costs will continue to be attractive to operators even in an economic downturn.

Continued ...

• ... conversion of racetracks to racinos, as well as non-gaming expansions to existing racinos.

• ... elimination of jobs, both through cuts and attrition.

• ... moratorium on development of big-box gaming resorts due to economic downturn.

• Convenience-based gaming continues to achieve better year-over-year results than destination-based gaming.

• Corporate and property debt restructuring in wake of declining revenues.

• Eastern European countries will increase their efforts to meet EU regulations, including smoking bans.

• Gaming companies increase efforts to export their brands globally.

• Gaming equipment manufacturers continue to invest in games that appeal to a younger demographic, including lotteries, bingo and server-based technology.

• Increased legislative acceptance of allowing the deduction of issued electronic promotional gaming credits from the gross revenue tax/fee calculation.

• Increased use of electronic games, including the emergence of scalable electronic table games in which players at different locations on the floor wager on a single outcome.

• Increasing alliances between commercial gaming operators and outside investors, as well as between commercial and tribal operators.

• Internet gambling in U.S. will be a hot federal issue for the new administration and Congress; gaming companies will fund lobbying efforts on both sides.

• Major gaming operators commence deleveraging by selling off properties to emerging operators.

• More pronounced shift in market share among suppliers as operators attempt to shift away from IGT participation games.

• Native American tribal gaming revenue estimates remain on track to surpass U.S. commercial gaming totals.

• Prices for hotel rooms, shows and food and beverage will return to lower levels at large gaming resorts as operators need to fill their properties.

• Slow but continual advancement toward server-based gaming, as operators remain skeptical as to the potential financial returns on investment.

• States consider expanding or legalizing casino-style gaming to help fill state budget gaps.

• Support from China to ease visa restrictions, increasing flow of visitors into Macau.

• Uncertainty in various European countries concerning regulation, thus increasing cases being referred to the European Court of Justice.

We'll have to check back in a year, God willing, and see how clear Spectrum's crystal ball proved to be. There's nothing on that list that strikes me as off the beam and much of its seems dead on target. The only "WTF?" comes courtesy of a Spectrum exec who told a reporter, "In times like this, it's not like these are company-specific problems that can be attributed to some glaringly bad decision by the company."

I respectfully beg to differ. Choosing unreliable and/or overcommitted business partners (Boyd Gaming) was a decision. Opening in far-flung markets while your core properties were losing market share (Isle of Capri) was a decision. Taking on preposterous amounts of debt (Harrah's Entertainment) or simply assuming more debt than your cash flow and lavish spending tendencies can support (Station Casinos) were decisions. Trying to build metaresorts all at once (Boyd, MGM Mirage) was a decision. Rashly demolishing the Atlantic City Sands and thereby leaving yourself with empty, non-revenue-producing land (Pinnacle Entertainment), that's a decision.

Launching major projects that aren't fully capitalized (Las Vegas Sands, Cosmopolitan, Majestic Star) is a decision. Stubbdornly jeopardizing the license of the property that generates 40% of your cash flow (Columbia Sussex) is a decision. Making not one, but two major acquisitions at a time when your cash cow -- slot routes -- is giving less milk and then overpaying for some of the new assets (Herbst Gaming) is a decision.

Opening a $2.3 billion, years-in-the-making megaresort at the nadir-to-date of the economy (Wynn Las Vegas)? Now that, that was not a decision. That's playing the hand you were dealt.

Atlantic City Death Watch III

Tue, 30 Dec 2008 15:22:00 -0700

It's business as usual at the Atlantic City Hilton tomorrow night. Only "private parties" to mark the New Year. "It's indicative of a very dire situation," says one industry veteran.

Case Bets: Stanley Ho in Vegas?, HRH grows but Morgans shrinks

Thu, 11 Dec 2008 13:47:00 -0700

A local columnist raises the spectre of Stanley Ho getting back-door access into Las Vegas via James Packer's acquisition of Cannery Resorts. This isn't the first time I've heard this question raised and, call me complacent, but I believe it stems from confusion. Namely, a conflation of Crown Ltd., the umbrella under which Packer's U.S. casino investments are huddled, and Melco Crown Entertainment, his joint venture with Lawrence Ho, son of dear old Stan.

While the Packer and Ho heirs do business together in Macao (and belatedly tried to get into Singapore), there hasn't been a whiff of Lawrence Ho being involved in Packer's U.S. ventures. (Obviously, because we're talking about discrete companies here.) Concern about Stanley Ho getting his mitts into Cannery are not only a stretch, but far more of one than the worries that were aired when MGM Mirage built a casino in Macao that was half-financed with money borrowed -- by Pansy Ho -- from the ancient casino vizier.

Doom, gloom in context. While the headlines are full of apocalyptic pronouncements on the subject of October's Nevada casino revenue decline, note where it says these numbers are the lowest "since April 2005." That was when the Las Vegas economy was on an upward trend that would make "bargain" and "Strip" virtually oxymoronic. So 2005's good numbers become 2008's panic-inducers ... of course, Las Vegas' ability to sustain its ensuing merge-n-splurge spree (and the ensuing Excedrin headache of ebt) on 2005-level revenues is a whole 'nother story.

April '05 would postdate the point in our economy where Americans started saving money at a negative rate and living off credit. At the time (i.e., March of that year), then-Council of Economic Advisers Chairman Ben Bernanke said, as recounted in the Dec. 1, 2008 issue of The New Yorker, "the main source of imbalance in the global economy was not excess spending at home but, rather, excess saving in China ... "

Darn those party-pooping Chinese! Everything would be just ducky if it weren't for them! But seriously, folks ...

Hindsight being 20/20, this was probably the point where the casino industry ought to have recognized that the U.S. economy (goaded by three-plus years of easy-money policies at the Federal Reserve) was on an unsustainable course and started curbing its growth projections -- and development plans. Instead, it stomped on the gas pedal and we got (in no particular order) leveraged buyouts of Station Casinos and Harrah's Entertainment, crazy land inflation on the Strip -- peaking at over $40 million/acre, CityCenter, Echelon, Palazzo, Viva, umpteen failed or undersold condo projects, bankruptcy at Tropicana Entertainment and the Cosmopolitan, potential bankruptcy at Herbst Gaming and Isle of Capri, and now a loud screeching sound as the brakes are belatedly applied.

Morgans' Faustian pact. What doth it profit Morgans Hotel Group to acquire the Hard Rock Hotel & Casino only to sell it back to the bank in little bits and pieces? Morgans' stake in the exponentially expanding HRH barely exceeds 14% and is on track to get smaller still. Some of us thought from the start that Morgans had bitten more than it could chew. Or, to look at it another way, what a long, strange trip Morgans has taken to wind up with a glorified management contract.

Chrysler cars getting worse? Yup, it looks like another triumph for private equity buyouts.

Quote of the Day

Wed, 10 Dec 2008 17:53:00 -0700

"They’re taking a real gamble. It’s like playing poker with the capital markets." -- KDP Investment Advisors bond analyst Barbara Cappaert, regarding a rejected Station Casinos debt swap that would have covered the butts of Station insiders and Colony Capital at the risk of leaving senior debtors exposed.

Poker? Try "playing chicken." Or maybe Russian roulette.

Atlantic City Death Watch II; Banquo's Ghost

Sat, 22 Nov 2008 16:25:00 -0700

Wow, I never thought we'd have our second installment so hard upon the first. But no sooner had S&G ticketed Resorts Atlantic City for a visit to Intensive Care comes word that it's going to miss a $10 million loan for which the casino-hotel itself is collateral. Could we actually see a casino shutdown before year's end?

Don't ask Colony Capital spokesman [sic] Owen Blicksilver, possessor of the World's Cushiest Job. Contacted by a reporter, Blicksilver did what he always does: "declined comment." Colony could conserve some much-needed capital if it'd replace Blicksilver with a tape loop that just utters, "No comment ... No comment ... No comment" anytime the phone rings.

The long-suffering Tropicana has had to make layoffs, its first of the year. And while its license denial was being litigated before the New Jersey Supreme Court, who should turn up like Banquo's Ghost (and every bit as welcome, I suspect) but Columbia Sussex CEO William J. Yung III. Irrevocable proxy or no, Yung still hovers far too close to Tropicana Entertainment for comfort. And TropEnt's recent spate of public statements have not come from CEO Scott Butera but from a PR agency on Yung's payroll. So much for the 'new, independent' TropEnt.

Butera's big goof. Meanwhile, the long-postponed Casino Aztar sale has definitively gone down the toilet. Butera had a deal in place but elected to renege, on the assumption he could get a better offer elsewhere. He received, in fact, zero offers. While he vacillated, credit markets went south and Eldorado Resorts' purchase loan rocketed from an 8% interest rate to a 19% one. Ouch!

So it's entirely possible that, even though it just received its Indiana gaming license, Eldorado would have found Casino Aztar too rich for its blood and bailed anyway. But had Butera and TropEnt's creditors stayed on the sidelines instead of booting the ball around, Eldorado would have had to face the state's wrath alone. Now it looks very much like TropEnt's grass-is-greener mentality helped scotch the deal, meaning Butera can queue up for a share of the blame, too. Evansville, Ind.'s mayor, Jonathan Weinzapfel didn't miss the opportunity to remind people that the casino has been doing better since TropEnt management was evicted last spring.

Our long Vegas nightmare is (temporarily) over. Tonight marks the last performance at The Mirage given by Danny F. Gans, whose giant, grinning visage (and even larger pair of biceps) dominates the Strip. Gans will return, sometime in the new year, in what used to be the Spamalot/Avenue Q theater at Wynn Las Vegas/Encore.

We hope he's able to use the slacktime to get some much-needed rest and recuperation from his grueling four-show-a-week regimen, which would have been the death of many a lesser performer. But not the redoubtable Gans. Nothing short of a five-day work week can stop him. Maybe he can even employ his sabbatical to conjure up impersonations of celebrities who postdate George Burns and H. Ross Perot.

Atlantic City Death Watch

Fri, 21 Nov 2008 17:38:00 -0700

New Jersey's Casino Control Commission has come out with a grim set of numbers regarding gross operating profitability in Atlantic City's casinos during 3Q08. And, as bad as these numbers sound, once the cost of operation is subtracted, a $121 million collective net profit in 3Q07 dissolves into a an aggregate loss of $78.5 million (a -$199 million swing, year/year).

If, to borrow a phrase from Chuck Monster, "flat" is the new "up," there's one clear winner in this bunch, a clutch of casinos that are doing about as well as could be hoped, a few that are cause for concern, and two that need to be rushed to Intensive Care. Without further ado ...

1. Harrah's Resort Atlantic City: -2% ($52M profit)

2. Trump Taj Mahal Casino Resort: -13.6% ($35M)

3. Trump Plaza Hotel Casino: -15% ($17M)

4. Borgata Hotel Casino & Spa: -17% ($61M)

5. Bally's Atlantic City: -19% ($43.5M)

6. Caesars Atlantic City: -22% ($49M)

7. Showboat Hotel Casino: -35% ($24M)

8. Tropicana Casino & Resort: -43% ($22M)

9. Trump Marina Hotel Casino: -36% ($7.6M)

10. Resorts Atlantic City: -62% ($3M)

11. Atlantic City Hilton Casino Resort: -73% ($3M)

The argument could be made that Trump Plaza and the Taj were low on the food chain already and had less room to fall. But that could also be said of Trump Marina and Colony Capital's two bottom-tier properties, not to mention the ailing Trop. The fact that Trump is maintaining its margins relatively well (except at the discarded Marina) also supports CEO Mark Juliano's contention that he's operating as thriftily as possible already.

With Station Casinos losing money, Colony can't look elsewhere in its casino portfolio for cash with which to prop up the Hilton and Resorts. Will they still be around when Revel opens? For the sake of their employees, I hope so. But it's not looking good.