David Mckee's Stiffs & Georges - Columbia Sussex

MGM: CityCenter worth $4.88 billion

Tue, 20 Oct 2009 15:37:00 -0700

MGM Mirage has announced that it's writing off approximately $1.3 billion (i.e., taking an "impairment charge") against CityCenter, with $348 million of that chalked up to falling real estate values. (Some $174 million of that will apparently be fobbed off on MGM's partners, bringing MGM's writeoff down to $1.1 billion.) The value of MGM's half-share of the project has been restated at $2.44 billion (a 31% decline). No word yet from Dubai World as to what it thinks its half of CityCenter is worth.

Kirk Kerkorian's Tracinda Corp. shook a rhetorical fist at Wall Street, stating in a press release that there is "substantial unrecognized value in MGM and CityCenter that is not reflected in the market value of MGM’s stock." It's nice to know that even mega-corporations can feel underappreciated.

Bottoming out? Air traffic into and out of Las Vegas was almost flat, year over year, -1.2% in September, helped by passenger-load increases -- and I don't mean those hefty people who take up two seats -- on nearly every domestic carrier not named US Airways (-26%). Considering that international traffic was -21%, this is augurs well for a return of domestic consumer confidence in Sin City. And, yes, flat is the new "up."

Pennsylvania: Rendell intervenes. Never accuse the Keystone State Lege of acting in haste. The table games bill is still mired in conference committe, prompting Gov. Ed Rendell (D) to wade into the fray. Rendell's magic number for the amount of revenue table games must yield in fees and taxes is $200 million. To get there, the guv believes the tax rate must be 16%. But he's closer to the GOP position, warning that the higher levies favored by Dems would "kill the golden goose" and deprive Little Johnny's school of needed funding. Meanwhile, Rivers Casino continues to disappoint, with the lowest revenue-per-slot in the state.

Finally, a taker! Out of left field, a contender has emerged for the orphaned casino license in Cherokee and Crawford counties in Kansas. You'll recall that it was awarded to Penn National Gaming, seemingly ages ago, but Penn -- spooked by nearby tribal competition -- all but spat on the license before leaving in a huff.

Enter Ozark Trail Gaming, a consortium of Kansas businessmen, offering to build a $225 million, 900-slot, 30-table casino. After some bad experiences with carpetbagger casino developers trying to dictate terms to the Sunflower State, you have to think the Kansas Lottery Board will look kindly upon this native-son effort.

ColSux loses again. A $41.5 million summary judgment has been slapped on Columbia Sussex for abrogating its purchase of the President riverboat in St. Louis (now the property of ColSux arch-foe Pinnacle Entertainment). Regulators for Missouri didn't like the looks of ColSux and its CEO, William J. Yung III (above). The latter pulled his license application and used that as an excuse to void the President purchase, but a federal district judge wasn't buying it.

The former President owners were also suing ColSux for jacking up parking rates for casino patrons by 560% (no, that is not a typo), a truly Yungian move. If poetic justice were served in this case, the court would award the ship to ColSux. Since the President's days on the water are numbered and Yung will licensed in Missouri only in his wildest dreams, trying to dispose of that near-worthless asset might be the aptest punishment of all.

ColSux gets smacked (again)

Fri, 25 Sep 2009 16:52:00 -0700

In case you've wondered whether Columbia Sussex's endgame in its interminably protracted -- and often preposterous -- negotiations with the Culinary Union was to provoke a strike at the Tropicana Las Vegas, the company's actions elsewhere leave little doubt. (I have it on good authority that ColSux had drawn up plans to drive the Culinary out, in the great Margaret Elardi/Paul Lowden tradition.)

Now those anti-union chickens have come home to roost. The 13,000-member Alaska chapter of the National Education Association has ripped up its contract with ColSux's Anchorage Hilton and calling for boycotts of all 71 ColSux-owned hotels. That'd include ...

... Las Vegas' own Westin Casuarina.

What a stroke of luck. At a time when Strip hotels are mostly just muddling through in terms of occupancy and convention bookings, William J. Yung III goes and pisses off one of the U.S.'s leading unions. Less bidness for him -- and more for everybody else!

Thanks, Bill. Keep up the good work. We could use non-casino hoteliers with your infallible reverse-Midas Touch. Would you alienate a few other major convention-holding bodies (especially ones who might like to convene in Vegas) while you're at it? It would really help your competitors speed up this economic-recovery thing.

Ask Alex!

Tue, 22 Sep 2009 17:31:00 -0700

Tomorrow morning, I have scored some precious face time with Tropicana Las Vegas CEO Alex Yemenidjian. The ostensible topic of the media event is "Special Guest," er, Wayne Newton.

But screw that. Let's find out what else is going on at the Trop, particularly in terms of capital improvements, staffing, Let's Make a Deal tapings and all those deferred-maintenance issues Yemenidjian inherited from his predecessors.

So here's the idea: If you've got questions, submit them in the "Comments" section (or by e-mail at dmckee@huntingtonpress.com) and I'll use the best ones in my interview. I already had plenty of queries of my own but changed my mind and decided to try and get you guys (and gals) in on the fun.

So what's on your mind, Trop-wise?

Worst Trend Yet

Thu, 17 Sep 2009 20:07:00 -0700

This is the sort of bottom-feeding move you'd expect from Columbia Sussex but not from Hyatt. Suffice it to say that if casino-hotels try this cheapjack number in Atlantic City, Detroit or Las Vegas, there will be holy hell to pay, especially the next time the collective-bargaining agreement is up for renewal. As it is, some hotels (*cough*Tropicana Las Vegas*cough*) have tried to operate with skeletal cleaning staffs and one shudders to imagine the consequences.

From the mailbag #3

Fri, 04 Sep 2009 16:04:00 -0700

Reader Kerr_Mudgeon writes, re the case of a Columbia Sussex executive who was the victim of age discrimination:

She was 67 years old, for gosh sake! She should have taken her token (socialist) Social Security checks and gone on (fascist) Medicare, then waited for the inevitable pounding on her door by a (union) thug from (communist) ACORN who insisted on reading her (nonexistent) rights from the Death Book prior to making an appointment for her to stand before the (mandatory) Death Panel which would have assigned her to the most efficient (statist) queue for her to Take The Pill in order to eliminate Obama's $multi-trillion budget deficit - even though he's intentionally destroying the US economy in order to make himself Dictator of the World because he hates everybody and everything that is good = American (of which he is not one). As a matter of fact, if Jesus's will were in effect in this wicked world, she would not have been able to file her vicious law suit, because Tort Reform would have stopped any shady Trial Lawyers from taking her frivolous case!!!

Reader Jinx asks if I really thought X Burlesque was "awful." No, "awful" would be Anthony Cools' Ooh-la-la, thankfully deceased, although Cools threatens periodically to bring it back somewhere else (read: Tropicana). However, the only specifics I can remember of X were that it was hosted by the late Pudgy on the night I saw it and that the dancers were some of the most "augmented" I've seen on the Strip. At least Crazy Girls has two or three memorable numbers and a comfier showroom.

"Tired and boring," though, is the perfect description of Crazy Horse Paris. It's a depersonalization of the female form, like getting trapped in a Helmut Newton photo album. I don't think the astrology segment is in there anymore or, if it is, it's become thoroughly forgettable.

Thanks to reader Jeff in OKC for his shout-out to one of the truly great ladies of the silver screen, Stella Stevens. They don't make dames like her anymore (Christina Hendricks of Mad Men excepted) and, for your pleasure, here's the opening of Las Vegas Lady -- a festival of vintage Glitter Gulch neon.

The Yung & the heartless

Mon, 31 Aug 2009 16:20:00 -0700

Our good buddies at Columbia Sussex, who still maintain toeholds in the Las Vegas and Lake Tahoe markets, continue to make friends in time-honored fashion. For instance, with dicta like:

"Fire the old lady in sales." (A more detailed version of the story is here.)

Yup, sounds like the ColSux we know and love. No matter how outstanding Charlotte Thomas' performance was, she committed the unspeakable crimes of earning a living wage and, worse still, being old. Now, it's a well-established fact that ColSux owner and CEO William J. Yung III is no spring chicken himself. I wonder how he'd feel if the bankers who underwrote his multibillion-dollar buying spree in 2006 said, "Fire the old duffer in the executive suite"?

Companies that fire talented people -- like a woman of a certain age who doubled sales -- just to save a few grand on the bottom line and have some more-nubile faces around the office deserve to fail. And, with that kind of thinking, they inevitably will.

(If nothing else, this saga will give one a renewed appreciation of why Faust, given the choice of sundry temptations, chose to be young again. Bill Yung probably had his name on a "cut sheet.")

Meet the new Trop boss ...

Wed, 26 Aug 2009 16:29:00 -0700

... largely the same as the old boss. Tropicana Entertainment's diligent efforts to get back into the Tropicana Atlantic City have finally paid off. Thus (nearly) ends a prolonged interregnum during which no clearly superior alternativves emerged. Well ... there was an extended flirtation with Cordish Gaming but butterfingered trustee Justice Gary Stein fumbled that away.

Since Carl Icahn's stealthy buy-up of TropEnt stock extinguished Columbia Sussex CEO William J. Yung III's ownership rights, the era of Attila the Yung has finally ended. Also, getting Stein out and private ownership back in is a transition that can't happen soon enough.

On the downside, Trop property prexy Mark Giannantonio (a Yung appointee) remains at the helm. Also, TropEnt CEO Scott Butera and his lieutenants did an undistinguished job of running the Tropicana Las Vegas before selling it to Onex Corp. They still have a lot to prove in Atlantic City.

Quote of the Day

Sat, 22 Aug 2009 16:13:00 -0700

"I have been pleasantly surprised by the tremendous reservoir of good will that exists in our work force ... Considering how previous administrators have neglected the property, neglected the operations and neglected the employees, it was very refreshing to find that despite all that neglect so much pride and passion can be harnessed. And regardless of what happened in the past, I am keenly aware that change can be scary for many of our team members. But change also irrigates the human condition." -- Tropicana Las Vegas CEO Alex Yemenidjian, on the future of the property.

Saving money? Buy the Trop!

Fri, 14 Aug 2009 17:57:00 -0700

If you're looking for a bargain on the Strip, what about buying the Tropicana Las Vegas? The Las Vegas Review-Journal found that Onex Corp. got $440 million worth of equity (or a 61% share) for a Filene's Basement price of $137 million. That would make the "street value" of the whole Trop $228 million, or $6.7 million an acre -- a fifth of what Wall Street valued it at the peak of the Aztar Corp. feeding frenzy. Columbia Sussex won, Pinnacle Entertainment lost ... and Pinnacle wound up being the lucky one, as ColSux toppled under insupportable debt.

The Trop's "paper" value would put it in the Treasure Island class, at $733 million. But you'd need an electron microscope to find the Trop's recent EBITDA, so nobody's going to pay Phil Ruffin-sized dollars for the place now. New owner Onex is a private equity firm that dabbles in real estate and sundry other industries. However, unlike some recent bunglers in the casino industry, Onex had the smarts to hire Alex Yemenidjian to head up its casino efforts, first in Illinois and now on the Strip. Compared to those private equity confreres who bought into the industry at its apogee, Onex's Trop move looks downright brilliant.

Carl Icahn, comedian?

Tue, 11 Aug 2009 16:02:00 -0700

"As a result of [Tropicana Entertainment's] continued use of the Tropicana marks in interstate commerce, the Tropicana marks have achieved fame and notoriety and are associated in the minds of consumers nationwide with a consistent level of high-quality casino, entertainment and hotel and restaurant services." -- from court filings by Tropicana Entertainment, proud owner of the Tropicana Express in Laughlin, proprietor of the Horizon in Lake Tahoe (above) and evicted operator of the Tropicana Atlantic City. Uh, yeah, that "notoriety" part is right on the money. TropEnt is suing the Tropicana Las Vegas to enjoin it from using the "Tropicana" name.

Aztar deal the worst ever: it's quantifiable

Tue, 28 Jul 2009 12:39:00 -0700

When he acquired Aztar Corp., back in 2006, Columbia Sussex CEO William J. Yung III also became one of the company's debtors. So what's his $36 million worth today? According to the Wall Street Journal, 100 grand or less. If that weren't enough to make the ColSux/Aztar deal the all-time biggest casino-sector wipeout of the last 15 years, consider that Carl Icahn's "$200 million" credit bid (i.e., no money down) was placed with debt acquired at 27 cents on the dollar. So Icahn has himself a new casino for a tidy $54 million outlay.

In a less-reported development, Icahn also gained a controlling position in Tropicana Entertainment. Without either its Atlantic City or Las Vegas Trops, it'd be a car without an engine, a gaggle of riverboats and motels. Exactly where this leaves CEO Scott Butera and what role he'll play remains an open question. Hopefully, either his or Icahn's first move in Atlantic City will be to replace floundering Trop General Manager Mark Giannantonio (a Yung crony) with someone more up to the job.

Movement at Cosmo: The GM of Caesars Palace, John Unwin, has resigned. He'll become CEO of the stalled Cosmopolitan in October. While it's still unclear under whose aegis the casino will be run, Unwin's hiring is the first concrete move to get some gaming expertise on board since Deutsche Bank seized the property.

Whining in Macao: Those two "integrated resorts" in Singapore haven't even opened yet and won't for another half a year, but Stanley Ho (whose venerable Hotel Lisboa is seen above) already has his panties in a bunch. According to Bloomberg News, the ancient casino oligarch has been wringing his hands about the burdensome, "serious issue" posed by Macao's 39% tax rate.

Boy, Singapore must be a more serious threat than I'd given it credit, if it's got a Communist Party suck-up like Dr. Ho all a-twitter and taking issue with the government. He's still in better shape than his American rivals; the attempt to graft Vegas-style megaresorts onto Macao has left them badly exposed to anemic market conditions. Ho's gambling-centric strategy gives him less cause for worry.

Today Singapore, tomorrow the U.S.? Even while lender's remorse has paralyzed American banks and stalled any hopes of "unbundling" the U.S. casino industry, diversification may be coming from an unlikely corner. Malaysia's Genting Bhd, riding a sustained runup in its stock, has $2 billion in the kitty, is raising more and could pump $7 billion into casino acquisitions.

That isn't to say there aren't a lot of "ifs" and "buts." Still, Genting's fundamentals appear far more sound than those of say, Las Vegas Sands. It's also in a position to deal a serious blow to Sands in Singapore. Not only will its Sentosa Island casino-resort open before Marina Bay Sands, but customers who "subscribe" to a $1,388/year entrance fee to one casino or another must play exclusively at that casino for the year. Once again, Sheldon Adelson's inability to finish a megaresort on schedule threatens to bite him in the butt.

A Trop by any other name

Mon, 27 Jul 2009 17:05:00 -0700

Icahn Capital, which purchased the Tropicana Atlantic City for $54 million, effectively, is projecting a conservative course for the property. Any sort of expansion is being ruled out for now, due to skepticism about "green shoots" of economic recovery.

Speaking of distrust, the New Jersey Casino Commission still needs to be convinced that Icahn's preferred operator, Tropicana Entertainment, isn't a stalking horse for Columbia Sussex CEO William J. Yung III. (Both companies employ the same corporate mouthpiece, for instance.) Besides, if ties between TropEnt and Icahn are severed, what becomes of the "Tropicana" name?

(Also, calling TropEnt's eight raggle-taggle, non-Vegas/Atlantic City casinos an "empire" is pretty generous. A series of minor duchies and prinicipalities? Yeah, that's more like it.)

It doesn't look like a standalone A.C. Trop would have ownership of its name, as that remains with the "OpCo," that "empire" under which all the miscellaneous former Aztar Corp. and ColSux casinos are bunched. Tropicana Las Vegas boss Alex Yemenidjian apparently didn't read the fine print and may have to shell out $2 million a year to keep the name that is, along with its land, the LV Trop's main equity.

Would a Trop by any other name be just as marketable? One highly doubts it.

The Wild, Wild Midwest. Back in Illinois, the guvmint continues to take a "Ready, Fire, Aim!" approach to its management of the casino business. In his zeal to get slot routes up and running, Gov. Pat Quinn didn't appropriate extra moolah or manpower to ride herd on the influx of new gambling devices.

So, if you're a bar owner in the Land of Lincoln, it's a free for all. The state's casino owners, meanwhile, will probably have to wait until at least early next year before any financial relief makes its way through the Lege. Illinois isn't just killing the golden goose; it's serving it for lunch at the governor's mansion.

Suing the Chairman. One of the many interesting revelations in the Terrance K. Watanabe lawsuit is that Harrah's Entertainment created a special "Chairman" tier of players in his honor. (Take that, you Seven Stars members!) Watanabe's counterfilings against Harrah's also allege confidential agreements between the company and the high roller whereby he had a two-month (or greater) window of time to make good on his markers.

The documents further allege that Harrah's violated the agreement by cashing in the markers early. It sounds more and more like Watanabe has Harrah's CEO Gary Loveman by the short hairs. If the covenants can be substantiated, then Harrah's made a loan -- which is unenforceable -- and may have been in breach of contract. The company better get ready to eat $14.75 million. Compared to the nearly $300 million Loveman just wrote off, that's walking-around money.

Not that Watanabe is a pitiable victim in this drama. Seems he was rather a prima donna, dictating which employees would and would not dance attendance upon him. He was also able to have gambling tables and slot machines moved into special curtained alcoves, the bettter to squander his wealth in seclusion. To paraphrase Fitzgerald and Hemingway, the rich are not like you and I; they have more neuroses.

Double-whammy for Planet Ho

Thu, 23 Jul 2009 18:36:00 -0700

True, Planet Hollywood is feeling some pain in the wallet after the Nevada Gaming Commission approved a $500,000 fine. But it's Clark County Department of Business License which fired the shot across the bow that will really get the casino industry's attention. By scotching the liquor licenses of both Planet Ho's Privé and Living Room clubs, it signed their death warrant. That, more than anything, ought to get scofflaw club owners and laissez-faire casino owners to clean up their act.

It's hardly an excessive move when you consider that the bill of particulars against Planet Ho's clubs included "drug use, prostitution, underage drinking and assault." Besides, if you want those things, perhaps you should patronize one of Las Vegas' many "gentlemen's clubs." Nevada regulators' concern about on-Strip prostitution is laudable, if tardy. When it was rampant at the Tropicana, gaming's policemen snoozed at their posts, otherwise known as "monitoring the situation."

If the message still hasn't sunk in, the Nevada Gaming Control Board's Randall Sayre sent out an "invitation" for casino executives and middle management to discuss a wide range of potential concerns. Gov. Jim Gibbons appointed Sayre to the NGCB with a mandate to beef up its law-enforcement role and Sayre's made good on it. (Even Midnight Jim has his moments of perspicacity.) It's good to see the spirit of Bobby Siller living on in Carson City.

"Damn those customers!" What do you do when business takes a not-unpredictable nosedive during a recession? Blame the customers, of course. At least, if you're Golden Nugget owner Tilman Fertitta, that's what you do. When times were good, Fertitta was bullish on gaming (which was essentially propping up his Landry's Restaurants empire).

Oh, what transformation a few bad quarters brings! Moans the Texas tycoon, “I feel very good about restaurant hospitality, I do not feel very good about gaming.” Hmmm, maybe you should have pondered that change of heart when you were proceeding with a new $150 million hotel tower (opening ~~Aug. 1~~ Nov. 20) in the teeth of an economic tailspin?

As for the patrons, "discounted room rates appear to have attracted a clientele who are spending less on gaming and other amenities," harrumphs a company document. Yes, because in case you haven't noticed, we're on the verge of a depression. People have less money to spend. Period. Like many others like him, Fertitta needs to get hip to the fact that we're entering a period of diminished expectations. Shaking your fist at the rain isn't going to accomplish anything.

Other Fertitta scapegoats include MGM Mirage, for having the audacity to discount its rooms during the downturn. Sounding rather whiny, Fertitta utters, “You ought to go online and look at some of these rates and packages you can get. That is where we are just being murdered, trying to be competitive with the MGM and the Bellagio.”

Welcome to the NFL, man. And if you think -- with all due respect to the downtown Nugget -- that you're in the running against Bellagio or even the Green Monster, well, you're in a world of denial. I've not had time to read the last Landry's quarterly filing but, for once, it sounds like a real page-turner.

Station wins one, albeit on a technicality. All parties involved will be back for a grudge match in local court.

Trop and tribulation

Wed, 08 Jul 2009 07:47:00 -0700

A pair of New Jersey lawmakers are hopping mad about the costly, dubiously competent Tropicana Atlantic City trusteeship of Justice Gary Stein. The solons are particularly het up over the way Stein was feathering his own nest.

"It is unacceptable, but not surprising, that this transaction would drag on for almost two years, yielding a cut-rate price for the sale and ballooning legal fees for the law firm of the state-appointed conservator," fumed Assemblyman Vince Polistina (R). He and colleague John Amodeo (R) will seek to impose new ethics rules and fee ceilings on future casino conservators. Good on them.

Divergent responses from within the New Jersey Casino Control Commission make interesting reading. The NJCCC's spokesman circles the wagons around Stein while Chairwoman Linda Kassekert -- clearly hip to which way the wind is blowing -- lines up with Amodeo and Polistina. She put Stein in the catbird seat but clearly has scant compunction about cutting him loose now that he's a millstone around her neck.

Tropic(ana) of Confusion

Thu, 02 Jul 2009 15:22:00 -0700

News reports are at sixes and sevens of just how much of the Tropicana Las Vegas is now owned by Onex Corp. For instance, Bloomberg states that Onex's stake represents 60% of the $440 million owed on the property (or would that be 60% of a theoretical $733 million/$21.5 million per acre?), while the Calgary Herald confusingly spreads Onex's $440 million -- or would that be $264 million? -- commitment between the Vegas and non-Vegas holdings of Tropicana Entertainment.

The Herald, in an obvious boo-boo, mis-reports that TropEnt was split into Atlantic City and non-A.C. halves. Seriously, once the new LV Trop administration starts taking reporters' calls, could somebody straighten out if Onex's commitment is $440 million, six-tenths of that or some more-confusing permutation altogether? The dueling numbers are starting to make my head spin.

The Calgary paper, though, discover the interesting wrinkle that TropEnt CEO Scott Butera is trying to make off with the Vegas Trop name and lease it back to Onex at $10 million a year. Clever, yes. And, if the courts allow it, Butera's got Onex over a barrel because relaunching old properties with new names has been a losing proposition in Las Vegas. Bereft of its name, the Trop could easily become a big-ass Hooters Hotel.

Amidst this turmoil, Alex Yemenidjian has taken the reins at the Trop with an emphasis on customer service. (Interestingly, if you read the non-R-J coverage, Onex has partly reneged on its capex commitments, rolling back a $100 million reinvestment to $75 million.) The proposed South Beach retheming will have to be done in stages but, hey, that's the way they used to do it.

One need only look at the corpse of the Lady Luck or the gravesite of the Stardust to see the perils of a do-it-all-at-once makeover. And it beats the heck out of Butera's 2014-2016 timeline for even beginning work. While Butera may have been an improvement on Columbia Sussex CEO William J. Yung III, his diffident attitude toward the LV Trop will probably leave few regretting his departure.

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.

Case Bets: California, Packer pickle, Macao pix, Holy Cow!, Singapore, RoboPoker, etc.

Thu, 25 Jun 2009 16:24:00 -0700

Editor's note: An item involving Crown Ltd. contained factual errors, which have been corrected (as you'll see). I apologize for the misinformation. My thanks to the reader who pulled my head out of my @$$.

California gamblers stay and play ... at home. While the recession has made some inroads on tribal-casino revenue in the Golden State, it's losing less ground than Las Vegas. Some of those Vegas losses will eventually be recouped, but this day of reckoning was bound to come.

Unlike Las Vegas, which is arguably suffering from having too many competing profit centers within each resort, California casino bosses interviewed still view entertainment as either a loss leader or a one-off. I never thought I'd say this but Las Vegas could use a little more "old school" thinking right now.

James Packer, the guy who can't catch a break, is finds his casino company in even more hot water, in a case of the sins of the father being visited upon the son. The plot surrounding Crown Ltd.'s courtship of a self-banned high roller (and convicted felon) is thickening considerably. Seems paterfamilias Kerry Packer may have been pressuring crony John Williams to get pathological gambler Harry Kakavas back to the tables.

Williams, for his part, rolled on the late Mr. Packer, ~~who's now got some 'splainin' to do~~. ~~No wonder the young Packer's pursuit of Cannery Casino Resorts collapsed like a pup tent.~~ The money quote, if you will, is: "[Williams] said it was common for patrons to rip up [self-exclusion] cards and that, in his view, Mr Kakavas's loss of $2.3 million in 28 minutes was recreational gambling."

If you lose $82,000 per minute, it's not recreation. It's degenerate gambling.

Globe-trotting Ian Sutton is back from Macao and G2E Asia. The sights! The sounds! The smog!

(Update: Ian says it's not smog but mist, as forthcoming videos will show.)

Holy Cow II: GlobeSt.com, normally a continent source of business news, is shocked -- shocked! -- that Steve Johnson's proposed casino on the former Holy Cow site will include a Walgreens. Smelling salts, stat!

But there are some interesting revelations, For one, the reason that Palazzo's flagship retailer is also a Walgreens is that it was a compromise Sheldon Adelson effected with the landowner ... Steve Johnson. (The mere fact of Adelson compromising is newsworthy enough.)

Turns out, that purchase may set the record for an on-Strip acquisition, at an alleged $50 million per acre -- Phil Ruffin, eat your heart out! Johnson also paid through the nose for the Holy Cow site. The price? $23.5 million/acre for land north of Sahara Avenue. Egad!

Columbia Sussex's casino portfolio continues to crumble. Tropicana Entertainment parent Tropicana Casinos & Resorts is selling its Amelia Belle riverboat (thereby forfeiting the New Orleans market) barely two years after the ship was acquired. Amelia Belle is former Harrah's Entertainment vessel, having been Bally's Belle of Orleans.

It's a canny strategic move for new owner Peninsula Gaming, which now has a Louisiana riverboat as well as a racino and four OTBs, not to mention a small flotilla of Midwest riverboats. TropEnt CEO Scott Butera, meanwhile, has less and less over which to preside. At the moment, his ambit consists of four riverboats, mostly in tertiary markets, two casinos in Laughlin and one on Lake Tahoe. Is this TropEnt's future: A succession of piecemeal asset sales? Sure looks that way.

Bad news for Sheldon Adelson. Over in Singapore, rival Genting's mega-budget Resorts World at Sentosa is letting news outlets like Bloomberg know that 60% of the project will ready for a soft opening in early 2010 (i.e., February-March). Projected attendance figures have been revised 20% downward.

In a rapier thrust at Marina Bay Sands, a Genting exec said the company was having regular meetings to make sure it came in on its $4.5 billion budget. Full completion of Sentosa is projected for 2012. Sands is going to have a sufficiently tough time making its nut without Genting crashing the party so soon ... to say nothing of the fact that Genting enjoys much higher brand equity in that corner of the world.

RoboPoker has risen from the grave. Electronic table games have been OK'd for eight New York State racinos. Though the Lege hasn't signed off, the Empire State's lottery board is confident it has the authority to make this move unilaterally. Poor Atlantic City is dying the death of a thousand cuts.

Congratulations to Penn National. It's scheduled to inaugurate a new pavilion for Empress Joliet today. A March 20 fire resulted in a three-month closure of the boat and substantial fiscal hardship for Penn National. In a noble gesture, CEO Peter Carlino kept employees on the payroll even though his ship was hors de combat. Capt. Carlino, S&G salutes you.

A-Yem to the rescue

Fri, 19 Jun 2009 15:14:00 -0700

"No corporate liposuction." With those words, new Tropicana Las Vegas CEO Alex Yemenidjian not only coined the catchphrase of the year, he implicitly repudiated the policies of forerunner William J. Yung III, whose Columbia Sussex modus operandi was to solve all problems by sacking large numbers of employees, stripping out amenities, raising prices, slashing marketing and decimating advertising budgets. (A super-stupid policy, it turns out, as revenues and cash flow at at least three of four former Aztar Corp. casinos plummeted under Yung's reign of error.)

A-Yem's approval hearing with the Nevada Gaming Commisson was marred only by a senior moment from Commissioner John Moran Jr. According to the Las Vegas Sun, Moran "applauded Yemenidjian’s efforts and recalled playing golf at a course near the Tropicana, adding that he hopes new management will be able to return the property to its glory days."

WTF? Is Moran flashing back to the Tropicana golf course that used to be in back of the old Marina Hotel and was cannibalized by MGM Grand? Or maybe the Dunes Golf Course across the street? That was more than 10 years ago, dude, and what's it got to do with the price of tea in the Trop? Is he suggesting A-Yem put in some links? The only ones you could fit into the current Trop site are the putt-putt kind -- not that there's anything wrong with that.

Yemenidjian's $440 million debt-for-equity swap effectively reprices the Trop at $12.9 million/acre ... possibly even less depending on how great of a discount Onex Corp. obtained on that debt.

Kudos to NGC Chairman Peter Bernhard (pictured) for crafting a sensible solution to the problem of licensing Las Vegas Gaming CEO Jon Berkley. Both the new CEO and his company have been stumble-prone, so Bernhard's provisional one-year license is a prudent compromise, giving Berkley just enough rope to either hang himself or prove that he's the Mr. Fixit his lawyer says he is. As for Las Vegas Gaming, it's where your phone call rolls over when you dial up ...

... the Ensign scandal's casino connection. Over at the Las Vegas Gleaner, Hugh Jackson has unearthed "the forgotten Ensign," brother Bill, onetime COO of Nugget Gaming, a company with a remarkable development slate. When S&G rang up Nugget's executive offices on Ali Baba Lane, we got Las Vegas Gaming instead. Neither Bill Ensign nor Nugget CEO Stephen Crystal were to be found on the voice-mail directory either.

Crystal was the chief huckster for Barrick Gaming, an underfunded company that fronted Lichtenstein-based Tamares Group's stealthy acquisition of six downtown Las Vegas casinos, before vanishing in a cloud of insolvency. During my early months at the Las Vegas Business Press, I quickly learnt to take Crystal's public pronouncements cum grano salis. (Well, he was an ex-politician, after all.)

Helpfully, the Nugget Gaming site actually provides old news clippings that show just how hilariously full of it Crystal and front man D.W. Barrick were. A former colleague who had a ringside seat for Barrick Gaming's licensing told me that Nevada regulators were desperate and convinced themselves the (wholly unrelated) Barrick Gold Corp. fortune stood at Mr. Barrick's back. As the Barrick/Crystal house of cards was collapsing, I called Toronto-based Barrick Gold spokesman Vince Borg for comment. He'd never heard of Barrick Gaming. So much for that.

DINO? Not as in "Martin," sadly. Reporter Dennis Myers breaks down why casino executives and other bidness bigwigs are lining up behind Sen. Harry Reid (D-NV). Yes, this is the same Reid the Las Vegas Review-Journal routinely and hysterically calls "socialist." Then again, the R-J thinks anybody to the left of Grover Norquist is a pinko.

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.

Pansy passes the buck

Wed, 03 Jun 2009 12:52:00 -0700

An understandably sheepish-looking J. Terrence Lanni toasts the opening of MGM Grand Macau alongside business partner Pansy Ho and, front and center, project co-financier Stanley Ho.

MGM Grand Macau co-owner Pansy Ho says it's entirely up to MGM Mirage to defend her honor before the New Jersey Casino Control Commission. The gaming company says it isn't going to take the "unsuitable" finding of the Division of Gaming Enforcement lying down, setting the stage for the most riveting regulatory confrontation since the NJCCC decked Columbia Sussex.

Meanwhile back in Macao, papa Stanley Ho says that because his company is publicly traded that means everything is ipso facto on the up-and-up. Gosh, what a relief. How could we have ever doubted the man?

Oscar Goodman, Voice of Reason

Thu, 21 May 2009 18:15:00 -0700

Even as MGM Mirage CEO Jim Murren and Treasure Island owner Phil Ruffin are preparing to stomp out any incipient recovery in Las Vegas by jacking up room rates, words of restraint are coming from the unlikeliest of sources: Mayor Oscar Goodman. Quoth Hizzoner: "There are a lot of people [here] now; I understand they may not be spending as much as they have in the past."

(And if Ruffin really doesn't want $50/night customers, as he's said, I can inform him that Harrah's Las Vegas would be very happy to take them off his hands this very evening. As for Columbia Sussex's Westin Casuarina, those guys are living in a f***ing dream world, demanding $109 for a room on a night when I can get one at Caesars Palace for but a dollar more. Hmmmm ... Westin Casuarina, Caesars Palace ... Casuarina, Caesars ... such a tough choice.)

Goodman was counseling moderation in the context of praising what he called "very conservative" projections by the Las Vegas Convention & Visitors Authority. The recent double-whammy of low occupancies and ADRs obviously sucks, but if occupancy truly is beginning to ramp back up, there'd be no better way to nip that in the bud than by repricing as though a full-blown recovery were underway.

As for the LVCVA, it sure didn't waste any time ditching the "bargain destination" message in favor of the same old "Party like it's 2006" crap. Do you get the feeling that selling a message of affordability really chaps the LVCVA's ass? (That band of brothers and sisters from Cranfils Gap, Tex., seems to have done a quick disappearing act. Anybody seen them lately?)

The indiscreet charm of the douchebagerie appears more to the LVCVA's liking. According the authority's guru-on-retainer, Billy Vassiliadias, customers seek "some comfort that this is the Vegas they've always known and loved." You mean that high-end-centric, $500-for-a-bottle-of-Absolut-and-some-cranberry-juice Vegas? Yeah, that's the ticket.

Goodman gets it. Too bad Vassiliadias apparently doesn't.

Solving the Pansy Problem

Wed, 20 May 2009 01:34:00 -0700

Amidst today's crush of news, I forgot at least one other potential solution to l'affaire Pansy. Perhaps MGM Mirage can have its cake and eat it as well, by taking a page from Sheldon Adelson's playbook. It'd be a transparent move, a change more cosmetic than substantive. But it also might be procedurally deft enough to sidestep a potential head-on collision with the New Jersey Casino Control Commission.

Were either the company's Macao or Atlantic City assets walled off from everything else stamped "MGM Mirage," it just might do the trick. It's at least worth trying and I'll bet the MGM legal team is burning the midnight oil right this very minute, working on some smooth move of that ilk.

Incidentally, former Atlantic City mayor -- and current state senator -- James Whelan has proposed removing one step from the Garden State regulatory process. Deeming the Division of Gaming Enforcement and the NJCCC to be redundant, he proposes eliminating the latter. Imagine the alternate reality in which Whelan's proposal had already become policy: Columbia Sussex would still be ensconced at the Tropicana Atlantic City but MGM would be metaphorically packing its bags. That just doesn't sound right.

The MGM/Pansy Ho verdict: It's in and it's bad

Tue, 19 May 2009 11:15:00 -0700

After nearly four years of investigation, the New Jersey Division of Gaming Enforcement has released its long-awaited "suitability" findings on MGM Mirage joint-venture partner Pansy Ho. As MGM itself reported to the SEC yesterday, "While the report itself is confidential, at the conclusion of the report, the DGE recommended, among other things, that: (i) the Company’s Macau joint venture partner be found to be unsuitable; (ii) the Company be directed to disengage itself from any business association with its Macau joint venture partner; (iii) the Company’s due diligence/compliance efforts be found to be deficient; and (iv) the New Jersey Commission hold a hearing to address the report."

The grinning ghost of MGM Grand Macau

While the reason for the DGE's disapproval isn't given, it's also not difficult to guess. When someone with the sleazy reputation of Stanley Ho has an interest in your casino -- by dint of loans to two of his daughters -- a jurisdiction that takes probity as seriously as New Jersey is unlikely to give its benediction.

Slightly further down in its SEC bulletin, MGM offers one of the most Pollyanna-ish statements of recent memory: "The Company does not believe that the report will have a material adverse effect on it."

Let's back up a second. The matter of Ms. Ho now goes to the New Jersey Casino Control Commission for adjudication. The NJCCC is not obligated to act on the DGE's findings. However, the last time it exercised such discretion, it was to override the DGE's recommended probation for Columbia Sussex in favor of kicking ColSux out of the Garden State forthwith.

So the likelihood is that MGM will be faced with a choice between liquidating its New Jersey holdings or its Macao ones. The latter include a 50% stake in Borgata (and Boyd Gaming can afford to buy its partner out), plus some undeveloped land, which will be a much tougher sell.

As for MGM Grand Macau, it would revert to the Ho family. MGM could still, in all probability, count on an ongoing stream of revenue by leasing out the brand name or even by negotiating a management contract for itself (although management is rumored to have been the casino's Achilles heel).

Unless the NJCCC grants clemency (in which case, MGM loses face but nothing more, as one analyst puts it), "material adverse effect" is inevitable. But there may be a silver lining for CEO Jim Murren. He was able to get debt-covenant violations waived in return for an accelerated repayment of the company's whopping debt load. The diñero from a Borgata or MGM Grand Macau sale would come in mighty handy as the company tries to de-leverage itself.

Walking (out) in Memphis. A 21-year veteran of the Harrah's Entertainment hierarchy resigned last week, another casualty of the company's downsizing.

And then there were 135. It used to be the execs jumping from the sinking Cosmopolitan ship reached for a lifeline from Fontainebleau. Now they'll be looking for another rescue vessel. (Hey, the Tropicana may be hiring soon.) A F'bleau spokesman says negotiations with Deutsche Bank are continuing, in a notable ratcheting-down of the bellicose rhetoric that's been lobbed to and from F'bleau of late.

Heard last night as part of an act at Sin City Comedy, re the Vegas Trop: "A $20 bill and all my teeth -- I'm a whale!" Conclusion: Alex Yemenidjian cannot arrive soon enough.

ColSux makes peace

Mon, 18 May 2009 16:19:00 -0700

After sporadically butting heads, Columbia Sussex CEO William J. Yung III and Kentucky preservationists have reached agreement on the immediate future of the old Bavarian Brewery. Yung had bought it and an assortment of nearby properties on the rash presumption that the Bluegrass State would vote in casino gambling and he'd be one of the lucky licensees. He went 0-for-2.

Today's compromise preserves the most historically significant buildings while giving Yung the green light to demolish everything else. The accord may make it easier to flip the site. It also removes one very contentious issue from the table, should the CEO make another casino push. So it's a rare win-win for ColSux.

You know it's a bad day ...

Mon, 11 May 2009 11:53:00 -0700

... when the company riding to your rescue is Columbia Sussex. Had Tropicana Entertainment not farmed out operation of the Horizon in Lake Tahoe to its William J. Yung III's company, it might have been closed outright. As matters stand, Horizon owner Edgewood Cos. is mulling tearing the place down and redeveloping the site. The Trop Ent-out/Col Sux-in arrangement appears to have been a compromise brokered to keep the Horizon open for at least another three years in return for an extension of TropEnt's MontBleu lease (due to expire in 2018).

But make no mistake: The Horizon is now entering the casino version of hospice care. TropEnt's swift decimation of the Horizon, to render it as noncompetitive with MontBleu as possible, has already cost it one unlikely set of customers -- the South Tahoe High School prom, slated for D-Day.

A prom in a casino? If you need a ballroom, it makes a world of sense, even if it does sound like the setup for a creakier-than-usual Facts of Life episode in which everybody learns A Valuable Lesson about the perils of gambling, or something comparably homiletic.

Trouble waiting to happen?

Fri, 08 May 2009 17:51:00 -0700

Not to belittle acts of violence that occur in or near casinos, but we don't make a practice of reporting them in LVA. That's partly because people seem to need little excuse to kill one another and would just as soon bust a cap in your ass at Camp Snoopy as in a casino.

However, a deadly early-morning stabbing on the grounds of the Tropicana Las Vegas may warrant closer scrutiny, due to that hotel-casino's recent history. During a contretemps with then-owner Columbia Sussex, the Culinary Union drew attention to an influx of unsavory characters during the pre-dawn hours. (An extensive printed report accompanied and considerably enlarged upon the video evidence.)

At the time, the Nevada Gaming Control Board was probing allegations of security understaffing. With interim owner Tropicana Entertainment still trimming expenses and new manager Onex Corp. not yet in place, has the ball been dropped again? Perhaps the NGCB should take another look, just to be safe.

Bleak Horizon

Tue, 05 May 2009 16:48:00 -0700

Anybody who thought Columbia Sussex CEO William J. Yung III was exiting the casino industry, let alone going quietly, got a bracing dose of reality today. The older of Tropicana Entertainment's two leases in Lake Tahoe, the Horizon, is in wind-down mode. It has two years to go on its lease (although it could theoretically operate into 2014) but TropEnt CEO Scott Butera is wasting no time rolling up the sidewalks.

Rather than be bothered with the continued management of the Horizon, Butera is fobbing it off on Lake Tahoe Realty I, a creature of Columbia Sussex. The transfer kicks off in true Yungian fashion with the elimination of 75 jobs. As bad or worse from the customer's standpoint, the table games operation at the Horizon is being axed altogether and the 719-slot inventory will be decimated by two-thirds or more. While all of this is straight from the Bill Yung playbook, there's no indication so far that it's anyone's fault but that of Butera. As he prepares to consolidate Tahoe operations around MontBleu (the former Caesars Tahoe), he'd clearly like to see as little as competition from the Horizon as possible. Hence its demotion to grind-joint status.

How this ledger-demain plays with landlord Park Cattle (aka Edgewood Cos.) will be interesting to see. Yung's stewardship of the Horizon (which, according to recent litigation, could be characterized as malign neglect) was a source of great vexation to Park Cattle. One can only wonder how Edgewood execs feel about being back in business with Bill Yung. If the Horizon's recent history -- not to mention its savage downsizing to 200 gaming positions -- is any guide, Park Cattle's stated goal of converting it into a non-casino hotel is going to happen sooner rather than later, options notwithstanding.

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.

Pinnacle: the untold story

Tue, 21 Apr 2009 11:51:00 -0700

Is waxing and buffing the Pinnacle Entertainment limo a prerequisite for scoring an interview with its CEO? This small masterpiece of selective omission is more interesting for what it elides than what it says. The article parrots Dan Lee as saying Pinnacle believes "not to start building something without the money to finish."

That's an excellent precept but it would resound with greater authority had Pinnacle not gotten bogged down in Atlantic City by failing to practice what it preaches. It bought Carl Icahn's old Sands, razed it, cleared the land ... then found it couldn't raise the capital to build the megaresort Lee had envisioned. By that point, Pinnacle had exercised such a heavy hand in its attempts to acquire more acreage -- at prices it intended to dictate to the market -- that the project's subsequent collapse didn't even inspire much regret along the Boardwalk. Now Pinnacle's got money tied up in Atlantic City it could be using to go trophy hunting along the Strip.

Also, it's not a good sign that Pinnacle's half-billion-dollar Lumiere Place is finishing a very distant second in the company's portfolio, doing only 57% the revenue of L'Auberge du Lac, down in Lake Charles, La. True, L'Auberge owns a near-stranglehold on its market, while Lumiere Place has several competitors. But the latter has scarcely made a dent in rival operations by Harrah's Entertainment and Ameristar Casinos. Nor, despite being smack-dab in the middle of the St. Louis waterfront, has it pulled significant amounts of business away from Casino Queen, across the river in Illinois.

Pinnacle has overspent and overcommitted itself -- and don't forget it nearly followed Columbia Sussex over the precipice in the feverish bidding for Aztar Corp. To Lee's considerable credit (no pun intended): A) corporate debt is below $1 billion; B) Pinnacle completely outfoxed Harrah's in their Lake Charles-for-Biloxi property swap; C) that Houston-fed market is rich enough to carry Pinnacle for the time being, and D) a clever if anti-competitive ballot initiative (for which Ameristar's Troy Stremming gets most of the credit) will entrench Pinnacle's Missouri position.

As 2009's gaming group goes, Pinnacle is faring better than all but a few. But it's made its share of MGM Mirage-like mistakes, just on a smaller, more-affordable scale. Pinnacle wasn't the only irrationally exuberant casino company during the 2005-07 boom but let's not go paint it as a paragon of restraint, either.

Deep within the septic tank that is the Las Vegas Review-Journal's online-comments section one finds the (very) occasional fact. In the case of the gaping void left at the Tropicana Las Vegas by the peremptory closure of Folies Bergere, longtime Vegas observer Phil Hevener had the following scoop: "One of the issues at the Trop was that the owners decided to leave the matter of a show for the new operator (Alex Yemenidjian) since show creators and hotel builders alike are having trouble finding money these days."

Not only does that have the ring of plausibility but when Hevener's got a tip, chances are you can take it to the bank. As for CEO Scott Butera and his underwhelming LV Trop administration, do you ever get the feeling they're just making it up as they go along?

Adelson in the details

Fri, 03 Apr 2009 12:39:00 -0700

Nearly lost amidst a flurry of news stories about Las Vegas Sands hoping to jump-start construction on its stalled Cotai Strip™ (with the help of new equity partners) was this snippet from Sands' president of Asian affairs, Stephen Weaver. Rents at the Marina Bay Sands shopping mall, still under construction in Singapore, are being “pulled down to adjust to the market.”

Lower projected rents? Just one more reason to curb the irrational exuberance with which some Wall Street analysts view this $5.4 billion project.

Under the radar: Remember how Columbia Sussex told the New Jersey Casino Control Commission, in effect, "put it on our tab," when hit with a $750,000 fine? ColSux's original plan was to just have the NJCCC skim the 750 large off the top of whatever it got from selling the Tropicana Atlantic City.

However, the NJCCC informs me that ColSux affiliate Adamar settled up with the state a ways back. Bravo to them. Besides, if Carl Icahn wins the Trop with a credit bid, the casino will change hands but no money will. So much for the windfall everyone was anticipating a year ago.

Trop snoozes, loses

Thu, 26 Mar 2009 15:23:00 -0700

Like a hot potato, the Tropicana Las Vegas continues to bounce from Columbia Sussex to Tropicana Entertainment and now maybe into the hands of Alex Yemenidjian. (This management-contract arrangement looks more like laying the groundwork for a sale ... if so, thanks for taking S&G's advice, guys. It's worth what you pay for it.)

A top price of $380 million can be viewed either as a bargain -- $11 million an acre, a long way down from the berzerk price paid by ColSux two-plus years ago -- or a boondoggle, seeing as even $380 mil represents an 84X cash-flow multiple. Somebody's got a job ahead of them.

Unfortunately, TropEnt CEO Scott Butera hasn't had his eye on the ball. Now, there wasn't anything he could do to keep the Titanic and Bodies exhibits from jumping ship to Luxor. But he pulled the plug on Folies Bergere and the Comedy Stop. Then, having given magician Dirk Arthur the boot, Butera's minions had to reverse field and grant the illusionist a reprieve through September. (So if you go to the Trop in April, the only entertainment offering will be an afternoon magic show. That's it.)

Just another day at the Trop.

As of Sunday, the Trop will have no (as in "zero") marquee attractions to tout. So it's an understatement to say that an agreement "in principle" with comedian Bobby Slayton doesn't come a day too soon and a formal contract needs to be inked yesterday.

When Nero played an as-yet-uninvented instrument, Rome burned. Whilst Butera fiddles, the Trop merely continues fade. Unless TropEnt's song and dance about repositioning the Trop is just a softshoe act, playing for time until the whole problem can be deposited in Yemenidjian's lap.

Ever since he took the reins at TropEnt, Butera has been fixated upon getting the Tropicana Atlantic City back (which he should) and, secondarily, with regaining Casino Aztar in Indiana (which he did). But the LV Trop has clearly been a low priorty and now he's washing his hands of it. Which means the real problem won't be Yemenidjian's but that of Trop employees and their equally neglected customers.

Patience, thy name is a Harrah's Entertainment bondholder. A surprisingly large number of these long-suffering souls are willing to wait just shy of a decade to redeem their distressed Harrah's debt. They're better men than I.

This book looks like a must-have. And, no, Huntington Press didn't publish it. But we do have a nifty new edition of Whale Hunt in the Desert, thank you for asking.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Casino commercial of the year

Wed, 04 Mar 2009 17:43:00 -0700

Although Sheldon Adelson's taunting of the president may have seemed very clever at the time, the joke might be on the mogul. Check out this inspired TV spot, dreamt up for the grand opening of the permanent racino at Indiana Downs:

A tip of the sombrero to the reader who clued me into this brilliant ad, which has supposedly stirred a ruckus in the Hoosier State. It's the brainchild of Cordish Gaming CEO Dennis Gomes (the once and would-be future boss of the Tropicana Atlantic City), who is also credited with instituting the greatest casino promotion of all time, the Trop's tic tac toe-playing chicken.

I hear the chicken had been given its walking papers long before Columbia Sussex got ahold of the Trop. A good thing, too. Knowing ColSux, CEO William J. Yung III probably would have had the chicken killed, fried and served for lunch.

Strike at the Trop

Mon, 02 Mar 2009 14:50:00 -0700

No date certain has been set for Tropicana Atlantic City dealers to hit the bricks but their patience has run out. This sorry state of affairs has been brought to pass by New Jersey Casino Control Commission-appointed trustee Gary Stein. Under the once-admirable principle of not wanting to lock new ownership into a union contract negotiated by receivers, Stein has justified punting this football further and further down the field.

Stein's position has been rendered untenable by his own feckless tenure, as he frittered away several pricey bids for the Trop last spring and now looks like he's let a downsized Cordish Co. offer slip through his butterfingers, too. This guy couldn't sell lemonade in Death Valley on the hottest day in August ... and to think that, if he got his way, the 15-month sale process would be further extended into May!

Blame also accrues to ~~Stein's handpicked interim~~ Trop administration, ~~headed by Pam Popielarski,~~ which has decided to charge dealers more money for fewer benefits. Belt-tightening may be the order of the day on the Boardwalk but to do this in the teeth of a contract negotiation is tantamount to an outright provocation.

This latest incident removes any doubt that the NJCCC should either put Tropicana Entertainment CEO Scott Butera behind the wheel (with the NJCCC acting as faculty monitor, if need be) or broker a deal with lead creditor Carl Icahn to appoint TropEnt as casino manager if Icahn prevails at the bankruptcy auction. When a strike looked inevitable at the Tropicana Las Vegas, Butera was quick to make peace. Let's hope he can do the same in Atlantic City.

Lobster heist. Down the street at Bally's Atlantic City, security nabbed a crustaceon thief, in an incident straight out of Paul Blart, Mall Cop.

Quote of the Day

Tue, 24 Feb 2009 11:36:00 -0700

"[Columbia Sussex CEO William J.] Yung showed a callous disregard both for New Jersey casino auditing regulations and for the requirement that any Atlantic City casino be a 'first-class facility of exceptional quality.'

"But if the restructured Tropicana Entertainment can prove it is indeed a new company that meets the state's licensing requirements, that would be the quickest way to get the Trop out of limbo and into the hands of new owners." -- from an editorial in The Press of Atlantic City, endorsing TropEnt CEO Scott Butera's push to have the Atlantic City Trop restored to the fold.

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."

Trop's agony soon to end?

Wed, 18 Feb 2009 15:59:00 -0700

The bad news is that the New Jersey Casino Control Commission has voted to grant yet another extension on the interminable sale of the Tropicana Atlantic City. The good news that it's merely been pushed out another month, not the three that butterfingered trustee Justice Gary Stein wanted. The NJCCC finally seems to have run out of patience with this comedy of errors and past time, too.

Then again, the prospect of a Carl Icahn purchase concentrates the mind wonderfully. Since it's a credit bid, neither the State of New Jersey or former owner Columbia Sussex will see the payday they've been envisioning. But if Icahn can get his affiliated creditors to put their whole $1.4 billion in secured debt on the table, it'd crush anything Cordish Co. has offered or is likely to. The mere specter of Icahn has to be very bad news for Tropicana Entertainment CEO Scott Butera. Since the Trop is the engine that drives (or drove, before ColSux CEO William J. Yung III crashed it) his company's bottom line, Butera has been tireless in his quest to re-obtain the property. If he succeeded, it would also allow him to return victoriously to the market where he made his name as Trump Entertainment Resorts' boss. But, through no fault of his, TropEnt is in far worse standing in the Garden State than is Icahn.

If Icahn is primed to re-enter the casino industry that he left not so long ago, it's a positive augury both for Atlantic City and the business as a whole. It would also enable him to cock a snook at Pinnacle Entertainment, which purchased the old A.C. Sands from Icahn, quickly demolished it, then has been high and dry ever since. Under Icahn's ownership, the Stratosphere went from being a joke to a successful casino property. His taste in casinos isn't always pretty (Arizona Charlie's, anyone?) but it's proven smart and successful.

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

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

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

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

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

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

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

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

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

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

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

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

Who are they kidding?

Mon, 02 Feb 2009 12:35:00 -0700

Mesquite casino oligopolist Randy Black bought himself some TV ad time during the Super Bowl to tout his latest value proposition (starring one Randy Black). His opening gambit: "Everybody's cutting back." Uh no, not if you're Randy Black and just served yourself a nice pay increase while skipping loan payments and sacking the help. But we digress ...

What's Randy's big value message? A midweek rate of $99/night, which gets you either a free spa treatment or a round of golf. The prospect of a $99 golf game or spa visit had better be pretty strong, because there's certainly no point in hauling ass out to Mesquite for a $99 hotel room, not when you can stay at Planet Hollywood this week for that little -- or for even less at The Rio or the Flamingo, to name two of the nicer propositions. (If your standards are more flexible, you can stay on or very, very near the Strip for $20.)

Columbia Sussex continues to live in a dream world, demanding $249/night midweek for the Westin Casuarina. Heck, you could stay at Trump International for less than half that amount. Donald Trump and Phil Ruffin really let both the condo market and the budget get away from them on the latter, whose budget quadrupled to a final $1.2 billion. But it's not one of those properties (I'm looking at you, Aladdin) where you walk around and wonder, "Where did the money go?"

The recent discounting binge on the Strip may have done its job. J.P. Morgan reports "we are finding that casino operators are reducing the number of promotions that are available by and large" and theorizes, "operators have built up a book of occupancy that enables them to not have to rely on a promotional environment." If that's the case and promotional-rate offers continue to dwindle, it's a classic case of gather ye rosebuds while ye may.

Atlantic City: Two strikes, no balls

Thu, 29 Jan 2009 18:05:00 -0700

This was originally going to be "Death Watch VI" but three of those in a week is positively ghoulish. So, on to the latest disheartening developments from Atlantic City, the casino market that just can't catch a break.

Cease the revels! Taking a page from the Harrah's Entertainment playbook, Revel is calling a halt to interior work and will concentrate on finishing the exterior of the $2 billion resort. It had weathered the loss of several key executives in a plane crash and an attempted shakedown by Unite-HERE, but now it's basically running out of money. The possibility of a joint venture has now been floated. (Hey, Penn National, here's your chance to get onto the Boardwalk without having to buy the land or even put up most of the construction cost.) Starting a multi-billion-dollar resort project without all of one's financing in place may be standard practice, but it's caused project after project to go begging as Wall Street's purses snap shut.

It seems disingenuous, though, for Pinnacle Entertainment to cite Pennsylvania casinos as a potential reason not to move forward in Atlantic City. True, Columbia Sussex CEO William J. Yung III completely "misunderestimated" the Pennsylvania threat, but he wasn't the sharpest knife in the drawer when it came to running casinos and evidently never familiarized himself with the A.C. market. Pinnacle, they're supposed to be the smart guys, so they had to know full well what they'd be up against when they took a wrecking ball to the Sands back in '07. One would expect no less of them.

The cruel irony to all of this is that, during a time when casino development in Philadelphia has been deadlocked and ineffectual, buying precious time for Atlantic City, the economic crunch has sent project after project either into paralysis or onto the slag heap.

The New Jersey Casino Control Commission in executive session.

Trop the madness! If such a thing were possible, the Tropicana Atlantic City has even fewer slot technicians now than during the slash-and-burn ColSux days. And the techs have voted to strike, which may trip a rolling series of walkouts. Table game dealers would be the next ones out the door.

There's a mixed message coming from Trop HQ. President Mark Giannantonio insists he's been bargaining in good faith. But his hands may be tied by slowpoke trustee Justice Gary Stein, whose public posture has been that it would be unfair to the next owner of the Trop to be saddled with a labor contract negotiated by state-appointed interim management.

I agree, in principle. But in practice that admirable restraint has resulted in Trop employees being strung along while Stein takes his own sweet time getting a sale into place. A picket line would be yet another unfunny act in the farce caused by the New Jersey Casino Control Commission's lack of testicular fortitude when dealing with its dawdling surrogate. It should have told Stein to get the most viable deal and get the hell on with it 10 months ago.

Which is one more argument for taking a chance on Tropicana Entertainment CEO Scott Butera (a dice-throw that seems like less and less of a gamble by the day). When ColSux brinksmanship seemed to have the Tropicana Las Vegas headed for a strike, Butera brought the crisis to a swift and statesmanlike conclusion. He'd probably do the same thing in Atlantic City. It's a situation that calls for decisiveness, a quality not greatly in evidence right now.

Bargain$ tonight in Vega$

Tue, 27 Jan 2009 11:37:00 -0700

Suppose that you got a sudden urge to visit Vegas on a Tuesday night ... tonight, to be specific. You'd find that the customer is king, at least as far as pricing goes. A few minutes spent browsing Travel.Ian.com yielded the following revelations.

The exception that proves the rule is Red Rock Resort, which is advertising rooms at $160/night. Better you should drive the extra couple of miles to Suncoast, where they're charging half as much.

• Downtown, believe it or not, is commanding a slightly higher price point that some well-regarded off-Strip and near-Strip locals casinos. Rooms at Boyd Gaming's California Hotel and Fremont are going for $40 while The Orleans is fetching but $34.67. The "Off-Strip Bargain" award has to go to Boyd, which can put you up at Sam's Town for $21. True, you can stay at Fitzgeralds for $22 ... but it's Fitzgeralds. 'Nuff said.

• Honorable mention goes to Palace Station, where $29.99 gets you a room, just a walk (admittedly a rather hazardous walk) from Rat Pack hangout The Golden Steer.

• Conversely, the "Don't They Know There's a Recession?" award goes to our old friends, Columbia Sussex, who obliviously charge $159* at the Westin Casuarina at a time when you might stay at adjacent Platinum or nearby Paris-Las Vegas for $129, Bill's Gamblin' Hall or Bally's for $69, or even the Flamingo for $50. Then there's the "On-Strip Bargain" winner ...

• Caesars Palace at $90. The Caesars price was hardly the lowest one found on the Strip, but if you were graphing room rate vs. quality of property, the two lines would intersect fortuitously at Caesars. It sure beats ...

• Staying at Circus Circus for $24.95 (assuming you're not going the Airstream trailer-in-the-RV park route; $45 a night in the depths of winter -- such a deal!). Though Harrah's Entertainment is, in our one-night snapshot, getting clobbered by MGM Mirage in terms of price points, it can at least take bragging rights in the "For the Truly Desperate" award category, offering Imperial Palace for $32.53/night. Clowns or bad karma: The choice is yours.

Without belaboring the exercise any further, there is one lesson to be drawn ...

Where Steve Wynn goes, the money follows. The rising tide that lifts all nearby boats is called "Encore." While Encore itself is a relative bargain at $169 tonight, Wynn Las Vegas is listing rooms at $299 (surpassed only by the Four Seasons, $319 at the other end of the Strip), Palazzo/Venetian is up to $199, as is Treasure Island, while even Trump International is able to eke out $109.33/night. And despite being the oldest of the Wynn-authored properties, The Mirage is kicking butt at $229 tonight. If it's true that MGM Mirage CEO Jim Murren is driving a hard bargain for that place, can you blame him?

* -- The local papers are constantly filled with rants about how much more affordable Vegas would be if got those damn unions out of here. Odd then that the Westin, a non-union shop, has some of the highest rates on or near the Strip, huh?

Buyers' remorse

Fri, 16 Jan 2009 15:36:00 -0700

Even if hotelier and Westin Casuarina (above) owner Columbia Sussex succeeds in extricating itself from Tropicana Entertainment, it's not out of the woods by a long chalk. It may have as little as nine months (or as many as 21) to pay off a $700 million loan -- or forfeit over a half-billion dollars' worth of hotel properties.

"Covenants are being triggered by those who have bought at high [long-term value] in 2006 and 2007," says Cedar Capital Partners veep Phil Golding, and Golding's time frame would coincide with the $3 billion-plus spending spree that netted ColSux CEO William J. Yung III not only Aztar Corp. but 14 Wyndham-flagged hotels when the seller's market was at its peak.

Judging by the tenor of the Property Week article, MGM Mirage also found an exquisitely inauspicious time to try and semi-reinvent itself as pure hotel operator (albeit so far only for the China and Dubai markets).

$376 million for the Trop?

Thu, 15 Jan 2009 15:01:00 -0700

Secured creditors of Tropicana Entertainment are being asked to take haircuts of 14-27%, as details continue to emerge of the company's reorganization proposal. The bigger shave would go to debtors of the company's 10 non-Vegas properties, the value of whose stake would be written down to $915 million.

Those who are owed money by the Tropicana Las Vegas (which would be spun off into a stand-alone TropEnt subsidiary) would reduce their claims to, if my calculations are correct, $376 million and change. Which means that, if CEO Scott Butera's #1 priority is to balance the ledger, a Strip property that stock and real estate analysts were valuing in the $1 billion-$1.2 billion range back in '06 might soon be had for less than $400 million -- or just over $11 million an acre.* How times change.

(* -- Obviously this does not take into as-though-redeveloped valuations, ongoing operating costs, EBITDA multiples, etc. But if MGM Mirage really is having trouble getting $1.2 billion for The Mirage in the present economy, then asking a third as much for the not-sought-after, rehabilitation-needing Trop seems quite plausible.)

Subordinated debtors, though, are being asked to take it in the shorts: Settle for less than $20 million of nearly $1 billion in debt. TropEnt's former CEO, William J. Yung III, may be going down but he continues to inflict collateral damage along the way.

Rogues' gallery

Thu, 15 Jan 2009 13:08:00 -0700

After a fitful start, blogorrhea is sweeping the business desk of the Las Vegas Review-Journal, resulting a veritable flood of news nuggets today ...

Planet Hollywood prexy Michael Mecca has resigned to pursue the proverbial "other opportunities" at a time when revenues have been up. On the next Vegas Gang, Jeff Simpson predicts -- with unassailable logic -- that Mecca is going over to Crown Ltd. to head up James Packer's North American gambling operations (in which case Mecca will have his work cut out for him, but congratulations all the same).

A less-charitable alternative theory would be that Mecca has been scapegoated by Planet Ho for having been in charge when it got dragged into the Omar Siddiqui scandal. (The indicted ex-Fry's Electronics exec lost $9 million there in one gambling session alone.) Planet Ho's lawsuit against Siddiqui got tossed last month.

"No more wire hangers!" Whatever the case, somebody leaked Siddiqui's player profile to the San José Mercury News and, geez, this "whale" sure is a whiny little bitch. (Sorry, I meant that to read, "a high-value, loyal customer and a good friend of our casino staff, who look forward to his every visit.")

Good news for visitors: The Nevada Department of Transportation is at least talking about widening I-15 south of Tropicana Ave. Whether NDOT can get the money from Gov. Jim "Scissorhands" Gibbons is another matter, but it can at least remind Midnight Jim that he himself identified California as Nevada's Numero Uno tourism priority in the course of disparaging Asian marketing as "a waste of taxpayer money."

And who knew that the Circus Circus RV park was the new "in" place to stay?

Randy Black, aka Mr. Thrift. Many of his employees are out of work, the former Si Redd's Oasis may be a hollow sepulchre these days and his Black Gaming has defaulted on debt. But we don't need to pass the hat for the self-aggrandizing Black Sr. quite yet.

Seeing financial havoc all around him, Black decided that austerity measures are for other people (like his employees) and awarded himself a nearly 4% raise for this year, escalating to 5% for each year afterwards. Whatever meagre EBITDA Black's Mesquite casinos achieve, 5% of that will be redirected into Black's pockets as a "management fee," on top of $21,200 in other goodies.

At a time when Nevadans from all walks are being asked, or sometimes told, to accept wage freezes and outright reductions, Black's greed is a disgrace to the state. R-J reporter Arnold Knightly is to be commended for keeping tabs on SEC filings and ferreting out not-so-niceties like this.

In other news ...

Folies Bergere: 49 is the new 50.

From showgirls to no-girls: What's Ron Thacker's first official act as president of the Tropicana Las Vegas? What else but shut down Folies Bergere well shy of its 50th anniversary? The no-frills spirit of Columbia Sussex remains, protestations to the contrary, clearly alive and well [sic] at the Trop.

Thacker's press release made noises implying that the Trop had a replacement for Folies waiting in the wings but, when pressed by Norm(!) Clarke, a Trop flack could only weakly respond that it was "exploring options" and was "definitely not closing up shop." (The Trop gave the Las Vegas Sun a different, more definitive story, saying it does have a new show en route.) Unspecified property improvements are also promised. Pardon my skepticism, but we've heard that before -- and are still waiting.

Geez, first Titanic and Bodies take a hike over to Luxor (where they're doing even bigger business). Now this. Since it's a just a wee bit too cold for swimming right now, is there any reason left to visit the Tropicana? Bueller ... Bueller?

Harmon blame game: It looks as though the truncation of The Harmon into a 25-story stump is ultimately the fault of the same people who overlooked scofflaw remodeling jobs at sundry Harrah's Entertainment properties: Clark County's ever-(not)-vigilant building inspectors. "What? Fifteen floors of deficient rebar you say? Gosh, I guess I missed it. My bad. When's lunch?"

The Las Vegas Sun's story comes with a helpful graphic that shows how Perini Building Co. and its subcontractors ineptly installed and then further compromised the rebar that ultimately turned the (would-have-been) 49-story Harmon into what we might call The Half Harmon. In the accompanying video, Clark County's Ron Lynn threatens the culprits with a "potential disciplinary hearing." Oh, they must be quaking in their boots.

Peppermill exec in line for state job. No, not the beloved Peppermill restaurant on the Strip but rather Reno's Peppermill Resort Casino. Director of Marketing Kim Stoll is one of six finalists for the job of Nevada's tourism czar. Not making the cut was underqualified Gibbons crony Kirk Montero. Then again, Gibbons wants to eliminate the selfsame job that he tried to gift-wrap for Montero, so maybe the also-rans in this competition are its real winners.

From A(ztar) to Z(ilch)

Tue, 13 Jan 2009 16:05:00 -0700

If Tropicana Entertainment management's bankruptcy plan is accepted by the courts (one bond analyst thinks otherwise), former CEO/sole owner William J. Yung III will be left with -- what's the technical term? -- diddly squat. (So will his unsecured creditors, alas.)

Actually, he'll have less than nothing because he'll not only be forfeiting the remnants of his Aztar Corp. acquisition but also six TropEnt properties whose purchase predated the ill-starred Aztar buy. A portfolio cobbled together in bits and pieces over several years will be gone with the thwack of a gavel.

In which case, it will essentially close the book on The Worst Casino Acquisition of All Time, Bar None. Since Yung swung the Aztar deal by cross-collateralizing his motley fleet of casinos and riverboats, losing the Tropicana Atlantic City meant putting the whole kit 'n kaboodle up for grabs. Yung's dismissive attitude toward New Jersey casino regulations came with a $2.8 billion price tag.

Lighthouse Point: Last voyage departs soon.

I was going to write that no one in the casino industry will miss Yung, but he still owns the odd non-Trop casino, like the Westin Casuarina. So he's not going anywhere anytime soon.

The plan being for the secured creditors to roll their debt into TropEnt equity, one can see why CEO Scott Butera was at pains to complicate, stymie and/or outright thwart various asset sales initiated either by Yung or the New Jersey Casino Control Commission. As a Jan. 2, 2008 Morgan Joseph report pointed out, casino companies sell for higher cash flow multiples when peddled en masse, not piecemeal. For instance, Yung paid a whopping 11.3X EBITDA for Aztar, as compared to the 8.4X he plunked down for a Penn National castoff, the Belle of Baton Rouge.

So maybe Butera really thought he could land a higher price for Casino Aztar than Eldorado Resorts was offering or perhaps he just wanted to queer the deal that was on the table. Either way, the endgame was the same: more money. Since his plan hinges partly on regaining control of cash cow A.C. Trop and Casino Aztar, neither of which is a given (and one of which is exceptionally unlikely), TropEnt is still a long ways from being out of the woods.

Tropicana Las Vegas: Same this year, same next year, same in 2013.

Thinking positively, if Butera can't -- as seems inevitable -- get the Boardwalk property back, he can redirect money planned for Atlantic City upgrades into that eternally deferred Tropicana Las Vegas facelift. There's a case to be made, if not much of a case, for New Jersey to brush aside the $550 million offered by Cordish Co. for the A.C. Trop -- particularly if Butera were bound to the same conditions the Division of Gaming Enforcement recommended imposing on Yung 14 months ago: a one-year probationary license and a 26-point set of benchmarks.

But the Garden State is so revenue-parched that it's unimaginable it will tell Cordish to keep its money. And whatever tenuous faith the NJCCC might have in Butera won't necessarily be bolstered by his turnaround plan. The document makes some concrete promises (including $153 million in A.C. Trop upgrades), and its property- and market-growth projections are mostly conservative. For instance, Butera clearly harbors no illusions about the difficulties ahead in Baton Rouge, where Pinnacle Entertainment has a new riverboat coming over the horizon. God bless him, he's an optimist, though: Who else would postulate five straight years of single-digit revenue growth in Atlantic City?

But Butera's strategy posits revenue growth within the context of relatively flat operating and maintenance budgets. Some outright reductions, at least, can be attributed to the cessation of operations at Lighthouse Point in 2009 and Horizon Tahoe two years later. Were it not for that, Butera's numbers would look like something out of the Bill Yung playbook. In fact, certain of the promised reforms, like "Optimize [read: "tighten"] ... slot hold," centralized corporate purchasing and "utilizing third parties for certain services" are purest Yung. Others, such as a Nevada-wide loyalty-card program, appear to be new. (But why stop at Nevada?)

As for a reinvention of the Vegas Trop, don't expect anything before 2014, at the earliest. Likewise, the overdue replacement of Casino Aztar just isn't in the budget. It's a lean regimen for grim times, but give Butera this: He's not spending money he doesn't have and now the creditors to whom he is answerable will be literally invested in improving TropEnt's performance ... if they hope to see their money again.

Lanni: The official story

Mon, 12 Jan 2009 17:27:00 -0700

My favorite exchange in one of my favorite current TV series, Mad Men, takes place when weasel-like junior exec Pete Campbell (Vincent Kartheiser) goes to rat out his boss, Donald Draper (Jon Hamm), to company owner Bertram Cooper (the cunningly cast Robert Morse). "Draper" is, Campbell has discovered, a Korean War deserter who has risen to the upper reaches of Madison Ave. circa 1960 under an assumed identity.

Cooper takes all this in imperturably, bestows upon the youngster a pitying gaze and says, "Mr. Campell ... who cares? This country was built and run by men with worse stories than whatever you've imagined here. The Japanese have a saying: ‘A man is whatever room he is in' — and right now, Donald Draper is in this room."

Which was pretty much my reaction to the J. Terrence Lanni resumé-inflation flap (it came and went too quickly to qualify as a scandal). The casino industry was built by men who did far worse things than list a nonexistent MBA on their curriculum vitae. Heck, Harrah's Entertainment is operated by a Ph.D late of the Harvard University faculty and it's not exactly an advertisement for fiscal well-being these days ($415 million lost in 2008, and counting). For that matter, we've entrusted our country for the last eight years to men with MBAs who said they'd run it like a corporation. How'd that work out?

And even if Lanni deliberately padded his resumé to get ahead ... who cares, Mr. Campbell? At worst, the reins of MGM Mirage might have gone to somebody more obviously "qualified" ... like a Gary Loveman or a Frank Fertitta III. MBA or no, Lanni was good enough for owner Kirk Kerkorian, a man with a Ph.D from the School of Hard Knocks.

Simply put, at a time when Mob-tainted Clifford Perlman is in the American Gaming Association's Hall of Fame (presumably soon to be joined by the late Lefty Rosenthal) and when Columbia Sussex CEO William J. Yung III got run out of New Jersey for running a rogue outfit in Atlantic City, but retains casino licenses in Nevada, Louisiana and Mississippi, outrage is difficult to muster.

Which is not to excuse the whitewash (Steve Friess has an even harsher term for it) that ran in Sunday's Las Vegas Review-Journal. Basically, the story amounts to a regurgitation of MGM's company line, which boils down to, "We (sort of) planned it this way." Less charitably, the R-J lends its credibility to an attempt to sweep Lanni's speedy and inglorious exit under the nearest available rug.

"(T)here is never a perfect time" for MGM's CEO to step down, we are told. No, but ringing up Kerkorian on the evening of Nov. 12 and giving him two weeks' notice is something less than the "smooth transition" MGM and the R-J are trying to depict. CEO-in-waiting Jim Murren stepped gracefully into Lanni's shoes but the timing and alacrity of Lanni's departure leave many questions hanging.

Given the extreme proximity between the Wall Street Journal's exposé on Lanni's credentials and his resignation, the official stance that it was all just a big coinky-dink, while possible, is difficult to swallow. (After all, a plan for Lanni to remain on the MGM board was quietly withdrawn when casino-oversight three states, including Nevada, began to probe the academic-credential issue.)

But let's give everybody the benefit of the doubt on that one and consider what else might have propelled the CEO toward the exit:

Perhaps Lanni, a man well-served in Asian sensibilities, was falling on his sword for the good of the company. After all, Nov, 12 marked the first time in at least five years that MGM stock closed at $10/share. Maybe, as Jeff Simpson has suggested, Lanni placed a "sell" order on himself once the stock price hit that inauspicious threshold.

The massive Harmon screw-up was already known to him. Or perhaps the sale of Treasure Island and writedown of $1.2 billion related to the Lanni-supervised takeover of Mandalay Resort Group were already done deals, and Lanni foresaw himself presiding over the partial dismantling of an empire he'd helped build.

Or maybe he just woke up that morning and, channeling Danny Glover in the first Lethal Weapon movie, growled, "I'm getting too old for this shit." That, at any rate, is The Official Story (minus the scatology).

It appears we will never know what ultimately prompted Lanni's leap ... or at least not for a long time. I'm with those who say, "he will be judged on his leadership." He certainly did much more than any executive I can think of when it comes to making diversity a priority in a boy's-club industry. He extended the company's reach into new overseas markets. And if MGM's reach exceeded its grasp toward the end of the Lanni Era, it did not do so to the extent that has Harrah's, Station Casinos and several other companies presently skirting the edge of bankruptcy.

Heck, we only demand honesty from CEOs on a selective basis. On Oct. 29, Lanni said no asset sales were on the table at MGM. Two weeks after Lanni left, Phil Ruffn plunked down $775 million for Treasure Island. Perhaps that deal really did come together in a fortnight, although it's not been MGM's style to move so fast. If, for purposes of argument, Lanni had been in talks with Ruffin in late October and told the press that asset sales were being discussed, what would have happened? MGM stock might easily have dropped like a brick. So if Lanni did fib about the Ruffin talks, do we further discount his credibility or do we say that it was his fiduciary duty to fudge the truth every so often?

One could go further about Lanni's accomplishment (which also include the complete domination of the Detroit market and the development of a strong executive team), but let it suffice to say that J. Terrence Lanni was "in the room."

Nor did he deserve the non-person status he fell into upon his resignation. His name was scarcely even mentioned at the most recent G2E and, when it was, it was sort of muttered in the corners of the press room. Honestly, there was neither a death in the family nor anything about which to be embarrassed -- and casino regulatory bodies have matters more material with which to deal than with the occasional fudged resumé. The probity and financial solvency of the mergers and alliances they are asked to bless might be a good place to start.

Good thing they don't gamble ... do they?

Fri, 09 Jan 2009 18:09:00 -0700

(Well, only with their shareholders' money, perhaps.)

Huffington Post, with the considerable assistance of VegasTripping.com, has sifted through the contributions of casino industry moguls during the last election cycle and all I can say is I'm sure glad these folks' business acumen (usually) exceeds their political prescience. Overwhelmingly, the captains of our industry backed loser after loser, with a preponderance of contributions to going to newly unemployed Jon Porter (R-NV) and to the vaporware presidential candidacy of Rudy Giuliani.

Las Vegas Sands President William Weidner has a truly dreadful political batting average. Boss Sheldon Adelson can gloat that he connected with more pitches than Weidner did. (Since the RNC and RSCC failed their main tasks in '08, I'm counting those as "strikes.")

William Weidner exaggerates the extent of his political acumen.

Former MGM Mirage CEO J. Terrence Lanni more or less "broke even," while Wynn Resorts Director Elaine Wynn's early and frequent support of President-elect Barack Obama gives her the Prescience Award. (Husband Steve didn't do too badly when it came to picking winners, either ... especially if one counts his primary-season support of Sen. Joseph Biden toward the latter's eventual vice president-elect status.)

Harrah's Entertainment CEO Gary Loveman is the closest thing to a liberal -- with donations to Sens. John Kerry and Christopher Dodd in '04 and '06, respectively -- and the only consistently Democratic donor in the bunch. Columbia Sussex CEO William J. Yung III (three Dem donations to one GOP one) went 0-2 at the federal level and 2-0 at the state one ... though it still hasn't gotten him a Kentucky casino.

Still, given the number of times this roster of CEOs and presidents (including multiple Fertittas [Fertittae?] and a Maloof) rolled snake eyes, you wouldn't want them placing bets on your behalf.

A house divided

Wed, 07 Jan 2009 11:54:00 -0700

Give credit where it's due to the Las Vegas Review-Journal for today's interesting revelation that Columbia Sussex had been running the Las Vegas Tropicana with rival GMs overseeing the casino and hotel operations, respectively. This appears to confirm rumors I'd heard that ColSux likes to 'silo' the gambling and lodging aspects of its casino-hotels into separate profit centers which compete against each other instead of operating symbiotically.

With corporate thinking like that, it's no wonder that even Global Gaming Business Editor Roger Gros said, at G2E, that ColSux "didn't understand the [casino] industry." A newspaper interview with Casino Aztar interim skipper Tom Dingman details the decimation that took place there on ColSux's watch. Given how rundown the Casino Aztar infrastructure was when Dingman arrived, his ability to turn around business there is all the more impressive. Whoever succeeds Dingman shouldn't tinker with his business model, as it's proven to be an indisputable success.

Further down in the same assemblage of news briefs is the announcement of Brooke Dunn's New Years Eve resignation from Shuffle Master. The former Shuffle Master senior VP has been under a cloud ever since the SEC recommended civil prosecution against him for allegedly passing privileged information to an unrelated third party. Dunn's resignation was sadly inevitable, as he can neither fuufill his job responsibilities nor be entrusted with sensitive information as long as the SEC's accusations hang over his head.

Also out the door is the Ameristar Casinos Chief Accounting Officer Thomas Malone "who has resigned to pursue other opportunities," such as the opportunity of not having the doorknob hit you in the butt. Former Progressive Gaming CFO Heather Rollo replaces Malone. Given the performance of its casinos despite the recession, Ameristar has been unaccountably jittery of late, with Malone's abrupt departure being merely the latest tremor.

Update: Yet another executive who is choosing to "pursue other interests," like updating his resumé, is Tropicana Entertainment CFO Robert Kocienski. After a brief tenure in the job, he's been shown the door in favor of ex-Shuffle Master CFO Richard Baldwin, a long-tenured slot industry executive. Combine this with the hiring of Ron Thacker to run the LV Trop and it's one ex-Cosmopolitan executive in, one out. So I guess they can put that big Cosmo Class of '08 reunion on hold.

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.

More gems from Ruffin

Mon, 29 Dec 2008 14:29:00 -0700

During his days at the helm of the New Frontier, owner Phil Ruffin was pretty shy with media access. So when he talks, it behooves one to pay attention. To wit:

• He says his deal with MGM Mirage has a one-year lifespan and then Treasure Island has to become a stand-alone property. The question of what this means for Mystere (considering Cirque du Soleil's exclusive arrangement in Las Vegas with MGM Mirage) is simply begged.

• Despite having made $1.2 billion (before taxes) on the New Frontier sale, Ruffin describes himself as "tapped out." So speculation about "What will Ruffin buy next" is likely to peter out, too.

• Citing his low ($275 million) debt load, Ruffin says Treasure Island won't have to compete in the $200-$300/ADR niche. Which will probably make it one of the first stops for comparison shoppers in Vegas who are looking for something affordable ... but classier than Circus Circus, let's say.

• According to Ruffin, he knew the handwriting was on the wall for the casino industry when people were taking out first and second mortgages against little or no equity. A pity others in the industry didn't twig to this as soon as he.

• It's interesting to compare the career trajectories of Ruffin and Columbia Sussex grand poobah William J. Yung III (who could personally lose as much on the foolhardy Aztar Corp. acquisition as Ruffin spent out of pocket to acquire Treasure Island). The one started with a lone gas station, the other with a single motel. But Ruffin sold at the top of the market while Yung bought. Not only that, the latter publicly proclaimed himself to willing to pay any price -- and piled the debt-laden Aztar buy atop a similarly costly acquisition of 14 Wyndham-branded hotels. Presented with a fiscal buffet, Ruffin was selective while Yung tried to eat everything in sight. Thus, when times are bad, Ruffin has money to burn (read: invest wisely) while Yung can only fume about the deals he might be making had he not splurged so shortsightedly. It'd make a good business-school case study.

• He may be the first casino owner to call for more regulation.

• On Iraq: "The fact that they might have better roads in Baghdad than we have in Massachusetts, that’s crazy."

• And if you wanted to summarize the casino crisis in three sentences, you couldn't do much better than Ruffin's "I don’t like a lot of debt and that’s what happened to very good companies, well operated, but they took that debt on, and that’s a real big problem. It’s not that they’re not doing business. They are doing business, but the debt loads are too heavy."

Pinnacle's Bahamas debacle

Fri, 19 Dec 2008 18:22:00 -0700

It wasn't so long ago that Pinnacle Entertainment was the fair-haired boy of the casino industry, especially after it hit a home run in the Lake Charles, La., market with tony L'Auberge du Lac. Then it nearly followed Columbia Sussex over the precipice in the crazy Aztar Corp. bidding war. Its much-anticipated Lumiere Place in St. Louis is now regarded as a succes d'estime, a budgetary overindulgence. (It's certainly failed to make any significant dent in proximate Ameristar Casinos and Harrah's Entertainment operations.)

Pinnacle paid a bundle to agglomerate land on Atlantic City's Boardwalk that it now can't afford to develop -- and may be regretting the precipitate fashion with which it shut down and demolished the Sands, which could have been generating a modest revenue stream all this time. A Baton Rouge riverboat project is behind schedule, and now ...

Isle of Capri Casinos and Harrah's now can welcome Pinnacle to the club of U.S. casino owners who have found nothing but a dead end in the Bahamas. (In fairness to Harrah's, it never got a chance to operate there, its Baha Mar project having fallen victim to internecine plotting and counterplotting that still haven't been sorted out.) The torrent of red ink from Exuma has done a number on Pinnacle's bottom line, which really doesn't need any more bloodletting right now.

It seems that Pinnacle decided last summer to either sell or outright close its casino on Exuma and will draw the blinds on Jan. 2 (which tells you just how bad business must be). Given that the Bahamas also turned out to be a fiscal graveyard for "Pile of Debris" (one of the bad decisions that ushered out the Goldstein Era), no wonder Pinnacle's Exuma casino is wanting for takers. Yes, they couldn't even get James Packer to take this turkey, so things must be very dire indeed. The ill-starred property has even been purged from Pinnacle's corporate Web site. "Bahamas casino? What Bahamas casino? No, we never had one of those. Where did you read that?"

I'm tempted to say this is the end of U.S. casino operators trying to reinvent the Bahamas as a market for Vegas-style gambling. But this is an industry with no shortage of persistence and optimism, mostly justified but sometimes not.

Last-minute reminder: The final episode, "Vegas" of Stargate Atlantis -- partly shot on the Strip -- airs tonight at 9 p.m. Eastern and Pacific. I'm just sayin'.

Next up: Gladiators, orgies & bear-baiting

Fri, 19 Dec 2008 16:21:00 -0700

"In Atlantic City, whose casinos saw revenue decline by 8 percent last month compared with the same period last year, the Tropicana staged its own version of Pamplona’s Running of the Bulls on Saturday — participants dressed as Santa Claus ran through the casino chasing scantily clad Hooters waitresses." -- If de facto Trop President Pam Popielarski is trying to make Columbia Sussex look good by comparison, she's off to what you might call a running start.

Phil Ruffin's big deal

Mon, 15 Dec 2008 17:30:00 -0700

As you've already read umpteen times over by now, MGM Mirage sold Treasure Island over the weekend to Phil Ruffin. The latter's sitting on a massive chunk of change ever since playing El Ad Group to the tune of $1.24 billion -- or $36 million/acre) for what used to be the New Frontier.

(Slightly less than three acres of undeveloped land, previously destined for Tower II of Trump International -- which now appears to be on permanent hold -- remain in the hands of one Phillip G. Ruffin of Wichita, Kansas. The land directly titled to El Ad -- 18.4 acres would work out to a staggering $67.3 million/acre, so the exact breakdown of Ruffin's bonanza can be difficult to ascertain.)

At $775 million (7-8X projected cash for flow 2008-09), it's an entirely reasonable price -- and at 6X EBITDA for 2007, it borders on a steal. "I would not be able to get a property like [Treasure Island] in normal times," the billionaire candidly told Forbes. Moreover, it leaves Ruffin still theoretically sitting atop a veritable throne of cash, with casinos aplenty to be had -- not always worth having, but other top-tier properties may soon be on offer.

Already the 'Net is abuzz with speculation as to what MGM might part with next, in order to close the financing gap on CityCenter: MGM Grand (aka "the Green Monster"), New York-New York, Monte Carlo, Circus Circus, maybe even The Mirage itself ... not to mention various and sundry pieces of raw land, although the greater appeal of an up-and-running, brand-name casino is obvious. As for Ruffin, with greyhound racinos in his native Kansas having a snowball's chance in Hell of happening, it's no wonder that he decided to re-enter the fray on the Strip, especially at such a favorable price.

Not only that, he'll help make the deal pencil out by keeping Treasure Island affiliated with MGM Mirage's loyalty-card program. As MGM explains, "We're working out a Technical Services Agreement to provide for that and a variety of services including hotel and accounting systems, parking, tram, etc." And if Ruffin's going to affiliate with MGM on one property, why not two?

Between the fact that A) nobody expects Ruffin to tear down Treasure Island, unlike the New Frontier, and B) it and The Mirage are listed jointly as one property for tax-assessment purposes, it's difficult to use this transaction as a benchmark of land value on the Strip. Thomas Weisel Partners analyst Jake Fuller approximates a $15 million/acre valuation for the deal. (Since that'd work out to an improbable 52.6 acres, Fuller is obviously building a valuation of the existing casino-hotel into his math.)

MGM's Alan Feldman responds that the purchase price was arrived upon strictly on an EBITDA-multiple-basis, "not per acre. That's because [Ruffin is] buying the operation rather than making a real estate development deal. We'll know the acreage once we go to subdivide as part of the close." Even if Ruffin winds up with considerably less than half of the 84 shared Mirage-Treasure Island acres (plus 14 acres' worth of parking lot out back), we're looking a substantial downward correction in the value of being on Strip, compared to the giddy heights reached in '06, especially in the El Ad and Columbia Sussex deals.

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.

Expunging the Columbia Sussex brand

Mon, 08 Dec 2008 17:40:00 -0700

If Columbia Sussex ran its Tropicana Entertainment casino hotels the way it maintains its regular hotels, TropEnt CEO Scott Butera is looking at a big refurbishment tab. Southwest Hospitality Management picked up a couple of ColSux discards in Charleston, W.V., in June '07 (which would coincide with a period in which ColSux was trying to sell off assets to pay down Trop-related debt) and, "I feel that if we hadn't done the renovations, we would be hurting more than we are now," according to an SHM exec. (Plus, in a reversal from ColSux policy, wi-fi is now free.) "It is certainly more pleasant and looks more modern ... not what they used to be."

Another ringing endorsement of the Columbia Sussex spare-every-expense business model.

Quote of the Day

Wed, 26 Nov 2008 14:24:00 -0700

"The massive staff layoffs, the turnover in senior management accompanied by their replacement with personnel with less extensive casino management experience, the cleanliness crisis experienced in the late winter-spring 2007, the regulatory violations directly related to inadequate staffing, and the failure to recognize the immediate need for a conforming independent audit committee, and the intransigence in adopting a conforming committee, all attest to the ultimate conclusion that the Tropicana AC license should not have been renewed," -- written opinion of the New Jersey Supreme Court, applying a rhetorical boot to the posterior of Columbia Sussex.

Palace more 'impotent' than ever

Wed, 26 Nov 2008 12:51:00 -0700

More nails are being pounded into the coffin of the Imperial Palace. The official word is that eateries The Ming and Cockeyed Clam are closed for good. As for the others, operating hours are being truncated "periodically. Nothing is written in stone." Not even the future of "Impotent Palace," it seems.

G2E attendees taking the monorail north to the Las Vegas Convention Center were treated to the daily spectacle of Harrah's Entertainment demolishing the last of the apartment buildings that sat on the acreage it's accumlated between Audrie and Koval lanes. Now it's nothing but magnificent desolation, save for some fugly, little, white apartment shoeboxes owned by holdout Oscar Nuñez, and Columbia Sussex's Westin Casuarina.

ColSux up to old tricks. The Kentucky-based hotel/casino operator is embroiled in a contract fight in Baltimore that bears a striking resemblance to the long-running stalemate that took place at the Las Vegas Tropicana. (A conflict that was resolved in swift and statesmanlike fashion by Tropicana Entertainment CEO Scott Butera.)

The Trop's Culinary Union employees had it easy -- ColSux's Sheraton Baltimore City Center workforce has been in a two-year standoff. Bill Yung's minions are dangling a princely $728/year raise -- which they propose to offset with a "moderate" increase in health-benefit costs. So don't go out and spend those 728 clams (before taxes) in one place, guys!

Taking a page from the Obama campaign, Unite-Here has upped the ante by enlisting student activists as foot soldiers in its war with ColSux. Hmmmm. Makes you wonder if the Culinary Union should have tried that tactic at the Trop.

Case Bets: Hooters; Defection at Borgata; Yung vs. Butera

Tue, 25 Nov 2008 14:56:00 -0700

"All of the economists who gave us information predict 2007 is going to be a year where the economy slows throughout the country and Nevada. Then we will see a pickup in 2008-09." — Deborah Pierce, CFO, Hooters Hotel, Las Vegas, November 2006

With prognositication like that, no wonder Hooters has consistently fallen short of expectations.

Mullin mulls Oz offer. Shortly after he had to pink-slip several hundred employees, Borgata COO Larry Mullin relieved himself of duty. He's not falling on his sword but moving to greener pastures instead, becoming CEO of the casino division of Australian gambling firm Tabcorp. Which means he'll have four casinos to operate, not just one. Boyd Gaming's Bob Boughner, left twiddling his thumbs after Echelon's plug was temporarily pulled, will fill in at Borgata. Congratulations to Mr. Mullin on his new opportunity.

Leap of faith. Sure enough, it looks like any hopes Tropicana Entertainment CEO Scott Butera had of getting back into the good graces of the New Jersey Casino Control Commission took a massive hit below the waterline. They were torpedoed when Columbia Sussex CEO William J. Yung III unexpectedly paid a visit.

Why U-Boat Yung surfaced at the New Jersey Supreme Court hearing and where the heck Butera was is a good question -- as is how Butera managed to get blindsided by this PR disaster. Does Yung still fancy himself the string-puller at TropEnt? Was he trying to stick it to Butera somehow? Or was this merely another example of Yung's professed -- and sometimes demonstrable -- cluelessness about virtually everything on Planet Earth, up to and including documents he signs.

In any event, the sole shareholder of the company Butera ostensibly controls just trampled him like a rogue elephant. The odd Yung-Butera dynamic suggests conjoined twins who aren't on speaking terms but can't be surgically separated either.

If the NJCCC can somehow ignore the Yungian elephant in the middle of the room, there's a good argument to be made for letting Team Butera have a crack at the Atlantic City Tropicana ... especially after a state-appointed trustee left hundreds of millions on the table in a bungled sale of the property. But that's a mighty big "if" and the NJCCC probably hasn't the faith sufficient to make that leap.

Quote of the Day

Sat, 22 Nov 2008 17:33:00 -0700

"If they don't [know how], it strikes me that they lack sufficient business judgment to be in the industry in the first place." -- New Jersey Supreme Court Justice Roberto Rivera-Soto on Columbia Sussex's inability to form an independent audit committee -- or to grasp the importance of doing so -- at the Tropicana Casino & Resort in Atlantic City.

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.

Butera up to old tricks; Dog days for Ruffin; Fowl play

Mon, 17 Nov 2008 18:07:00 -0700

Grasping at straws in his attempt to wrest control of the Tropicana Casino & Resort back from the New Jersey Casino Control Commission, the CEO of Tropicana Entertainment, Scott Butera, has seized upon a letter from state Sen. Richard Codey. In his Nov. 14, 2007 missive, Codey requests that Unite-Here Local 54 be allowed to intervene in NJCCC hearings against TropEnt owner Columbia Sussex (which, back home, was the beneficiary of some rare -- but no doubt welcome -- good news).

Codey's letter, Butera's lawyers contend, smacks of "political interference" and tipped the scales of justice against ColSux.

But Local 54 was only allowed to make a statement toward the proceedings' end, not be an active participant, as Codey wished. ColSux lawyer Paul O'Gara was given the opportunity to object to this at the time -- and didn't. TropEnt also revives the old Bill Yung whine that it doesn't understand what New Jersey law means when it requires every casino to have an independent audit committee.

Let's see ... Independent. Audit. Committee. Not a difficult concept to grasp, save possibly for ColSux, which ultimately formed a committee of one, that one person being a lawyer it already had on retainer (which shoots the "independent" requirement right in the ass). Sounds like the New Jersey Supreme Court isn't buying it, either.

Those must have been some NJCCC hearings, too. According to The Associated Press, they "presented evidence of roach and bedbug infestation in hotel rooms, floors and appliances caked with mud and dust, and long waits for slot jackpot payouts following massive job cuts ..."

Is that what Bill Yung meant about his being "ahead of the curve"?

Phil Ruffin is back in the news. Like other dog track owners -- and the State of Kansas -- he's in a financial bind. He contends it's not a viable economic proposition to run races at this two Kansas tracks. Ergo, he'd like his cut of the dog-running revenues upped to 58% from the current 40%. But a cash-strapped Kansas Lege may not want to dicker -- or, worse yet, Topeka-bound lawmakers may see this as opportunity to repeal Kansas' casino law. That alarming prospect alone should make gambling advocates wary of Ruffin's proposition, even if you don't think dog racing should be abolished.

Poultry in motion. In "I hate G2E," I sang the praises of the tic-tac-toe-playing rooster, late of Atlantic City. Seems he was furloughed a while back from the A.C. Trop (no, Bill Yung didn't fire the chicken). But Harrah's Entertainment was astute enough to snap up our feathered friend and install him at Tunica's Sheraton Casino Hotel. According to Raving Consulting, Harrah's staked $100K and sent out a "Chick Tac Dough" mailer, inviting all comers to try their luck against the mojo-bearing bird in the "Final Chicken Challenge."

No sightings of the rooster at G2E, though. I'll keep you posted.

Quote of the Day

Wed, 12 Nov 2008 15:08:00 -0700

"I was ahead of the curve." -- Columbia Sussex CEO William J. Yung, taking credit for being the first casino owner in Atlantic City to engage in massive layoffs and service reductions.

Indiana: It's all relative

Tue, 11 Nov 2008 13:07:00 -0700

Sifting through my massive pile of unwritten Questions of the Day and unstudied analyst reports, we come to Indiana's October revenues. Ultimately, whether any particular metric is good or bad depends on context and perspective.

To start with the big number, revenue was up 14% from October '07. But that turned into a 1% decline once new racinos Hoosier Park and Indiana Park were sifted out, and goes even lower if you minimize the numbers from the recently augmented Horseshoe Hammond. So, whatever "bounce" Indiana is getting from the smoking ban in Illinois, it's being diluted by gambling expansion within the Hoosier State. So it's good for tax coffers, not so good for individual operators.

Harrah's killed with Horseshoe Hammond, which is more like an aircraft carrier with slots than a casino. But it proved a potent "one-ship task force" (a sometimes sacrcastic nickname given the U.S.S. Boise after it claimed to have sunk six Japanese ships at the Battle of Cape Esperance), more than making up for declines at Horseshoe Southern Indiana. Hammond revenues went up 52% and Harrah's overall take rose 20%.

Despite the panicky attitudes manifested of late at Ameristar Casinos, its East Chicago property was off but 3.5%, despite the Horseshoe Hammond factor, which ate far worse into Don Barden's Gary, Ind., flotilla.

What to make of Blue Chip? To see the glass as half-full, the double-digit revenue declines that began in August '07 are slowly starting to narrow. Business has been off as much as $10 million year/year, and October's 18% decline comes atop a 22% declivity the year before. But it looks like Blue Chip is going to bottom out at 60%-65% of its former market share. And it was Indiana's seventh-winningest casino in October, keeping Boyd Gaming out of the bottom tier.

Down south, only Casino Aztar showed revenue growth (5%), which continues to validate current management's aggressive mindset -- but business still hasn't returned to pre-Columbia Sussex levels. As for French Lick, so long hyped as a casino destination, so greatly anticipated, it has proven Indiana's most disappointing market. It's the least-lucrative in the state and continues to give indications of having peaked.

Slots are tight at Belterra. How else to explain a 10% win increase on -14% handle? The last time somebody managed a feat like that He fed a large crowd with but a few loaves and fishes.

Aztar sale flops

Fri, 07 Nov 2008 15:25:00 -0700

Tropicana Entertainment President Scott Butera had a $225 million deal to sell Casino Aztar in hand. Not good enough, he said. Thus, a second round of bids was solicited. The grand total number of offers received: one.

This lays the groundwork for Butera to do what I think he's been meaning to do all along: Declare the lone bid inadequate (maybe even a "fire sale"), much like the previous Eldorado Resorts deal he's trying to vacate. The next step would be to petition the State of Indiana to be allowed to resume control of Casino Aztar.

Whether the state plays ball is another matter. Evansville's mayor, Jonathan Weinzapfel told WEHT-TV he "looks forward to a new owner." Maybe my English is rusty, but that sure sounds like he wants no part of TropEnt, even in its post-William J. Yung III incarnation. Having been singed aplenty ever since the Aztar Corp. sale went through, Weinzapfel's "once burned, twice shy" frostiness is quite understandable. Butera's persuasive skills are going to be tested in the weeks ahead.

Having also scuttled the sale of Horizon Vicksburg, Butera's plan is obviously to reconstitute TropEnt at full strength (including the Atlantic City Tropicana). Not only would this increase the potential for cross-marketing the merged Columbia Sussex/Aztar portfolio to consumers, it's undoubtedly crossed Butera's mind that TropEnt is a much better resale proposition if kept intact ... not peddled off piece by little piece, as Yung was doing.

Five years ago today ...

Thu, 06 Nov 2008 16:37:00 -0700

... Columbia Sussex came to town. Considering that CEO William J. Yung III purchased a dead, disreputable hotel-casino and put $90 million into reworking it into an attractive property (people whose judgment I trust swear by the comfiness of its beds), he got off on the right foot here. Later, he would venture out of his niche and try to be a Strip operator, and ... let's just say it didn't go so well. Turn the page in your textbooks to Chapter 11.

Speaking of ColSux, comes shocking news today that Las Vegas Sands is in danger of bankruptcy. The company's debt-to-earnings ratios are out of kilter (or, in proper financial parlance, gone all skeewumpus). That's an event which, like ColSux's loss of the Atlantic City Tropicana, will set in event a cascade of other defaults, should it come to pass.

In the short term, this means Sheldon Adelson needs to find some loose change in his sock drawer, pronto, and will have to apply the brakes to several developments. According to Liz Benston, both the Marina Bay megaresort in Singapore and what's left of Sands Bethlehem will be finished. Everything else ... not so much.

Adelson: Little about which to smile.

This is bad news for the Cotai Strip™, unless you're of the persuasion that Sands expanded in Macao far past what the market would bear. So a forced slowdown is a blessing in disguise. I should add that the Motley Fool warned of this very scenario last June, when it pegged Sands as a "deathbed stock.

Elsewhere in Adelsonia, the candidate for whom Freedom's Watch stumped the hardest, Sen. Gordon Smith (R-OR) waved the surrender flag.

All in all, this is one shitty day to Sheldon Adelson.

Winners! We've got winners!

Thu, 06 Nov 2008 12:06:00 -0700

Yesterday's Columbia Sussex contest produced an unprecedented flurry of responses -- and I learned a lot about the bond market, too. Our S&G readership is a veritable V-8 engine of knowledge. As you'll recall, the question concerned the "defeasance" of a $967 million Columbia Sussex bond.

The first reader across the finish line with an answer to this abstruse question is Tom De Martini of Phillipsburg, N.J., who wins hard-copy and e-book versions of Bill Zender's Casino-ology, our newest Huntington Press title. But four other readers submitted correct answers.

What to do? A solomonic solution has been devised by our own Bethany Coffey. To wit: Runners-up will receive e-book copies of Casino-ology, thereby allowing you to enjoy the latest in cutting-edge LVA technology. (I'm reminded of the line in the 1987 Dragnet movie, in which Dan Aykroyd's Sgt. Joe Friday relates, in a hilariously uninflected voice-over, "After losing the two previous vehicles we had been issued, the only car the department was willing to release to us at this point was an unmarked 1987 Yugo, a Yugoslavian import donated to the department as a test vehicle by the government of that country and reflecting the cutting edge of Serbo-Croatian technology."

Whatever happened to the Yugo? (No, you don't get a prize for answering that.)

And now the winner(s):

8:52 P.M. EST, 11/5/08

Defeasance allows an issuer (the company) to collateralize outstanding debt with a portfolio of risk-free government securities (usually U.S. Treasuries) which ostenibly removes the debt from the balance sheet. It can also be accomplished with cash.

So, in this case, the Columbia Sussex bond has already gone through this process, reducing the outstanding value by 90%.

I covered the bond market for eight years ... I knew it would evenutally come in handy.

1:42 A.M. EST, 11/6/08

A defeased bond is a bond that is rendered void by a party by pledging a security or cash in order to pay the tems of the bond. In addition, all covenants and contract provisions are removed from the bond. Simply put, Columbia Sussex pledged cash or some other asset in order to defease (make payments) on the roughly $890 million principal balance and was released from the covenants and provisions which may have triggered a default on Columbia's part.

4:37 A.M. EST, 11/6/08

In simple terms, Fitch, the bond rating agency, is lowering the ratings on certain parts of ColSux debt. The lowering is due to potential litigation costs, which could affect ColSux ability to pay the debt off. The effect of lower ratings is a higher cost for capital for the company in the future.

As for the debt being defeased by 92%, this link will provide a full explanation, but it means the amount defeased is not a liability on the balance sheet when the company places cash or other assets with an escrow agent to cover the amount of defeased debt.

12:53 P.M. EST, 11/6/08

Securities that have been secured by another asset, such as cash or a cash equivalent, by the debt-issuing firm. Firms that have created defeased securities, which are typically bonds, will have sufficient cash set aside for retirement of the debt upon maturity. For example, the U.S. government could place the funds necessary to pay off a series of Treasury bonds in a trust account specifically created to pay the outstanding bonds upon maturity. The government sets aside these funds to ensure that it has enough cash to pay its bonds when they are due. Commonly, defeased securities are retractable.

Securities than can be defeased will often carry a lower yield than comparable securities, as the option to retire the debt early favors the issuer and caps the potential investment return for the bondholder. However, for a risk averse investor, this feature proves beneficial because it lowers the default risk of the security. The document you referenced really has little bearing on Columbia Sussex itself. It's actually pertaining to Asset Securitization Corp. and the bonds they issued to cover mortgages. It seems that on this particular loan, they've paid off 92% of the mortgage. It would sound like a positive sign to me, anyway.

12:54 P.M. EST, 11/6/08

The company "Asset Securitization Corp" has pooled together multiple commerical mortgages. The mortgage payments "pass through" this company. In other words, they collect the payments and send them onto investors. This pool of assets is what is being downgraded. "[O]ne loan remains in the pool" means that all other mortgages have been paid off with the exception of ColSux.

Here's another link with an excellent definition of defeasence. Downgrading the pool of mortgages of which ColSux is the only remaining mortgage doesn't have any direct effect on ColSux.

President-elect Obama is on Line Two, guys. He says he needs you to help him sort out the mess at Treasury. But seriously folks ...

Congratulations to everyone who participated. I think we've started something. And I've learned a lot of somethings. A day without new knowledge is a day wasted, IMO.

Columbia Sussex contest

Wed, 05 Nov 2008 18:11:00 -0700

I've got to confess that bond-market lingo is hardly my strong suit. So can anyone out there explain what this bulletin means for casino industry pariah Columbia Sussex?

One loan remains in the pool: Columbia Sussex, which has been fully defeased and has an anticipated repayment date in 2015. As of the October 2008 remittance date, the transaction's outstanding principal balance has been reduced by 92.0% to $77.3 million, from $967.2 million at issuance.

Be the first one to answer and a free copy of Bill Zender's Casino-ology shall be your reward.

Open mouth, insert foot. That's"President-elect Chickenshit" to you, Congressman.

Great moments in journalism. The Wall Street Journal's editorial page can be pretty hardcore. But it seems to strike exactly the right, measured tone today, rising to the occasion with grace.

Las Vegans, on the other hand, can be ever so proud of the example set by the Review-Journal, whose editorial writers -- as is so often their wont when vox populi is not vox R-J, curl up in the corner kicking and screaming in impotent, infantile rage.

Butera to NJCCC: Your people are dopes

Thu, 23 Oct 2008 15:15:00 -0700

Tropicana Entertainment has formally petitioned the New Jersey Casino Control Commission for the return of its former Atlantic City casino. Oh, to be in the room when the arguments are thrashed out!

Short of conducting an exorcism of the spirit of Columbia Sussex CEO William J. Yung III, it's hard to see how the NJCCC will be able to bring itself to do a 180 on this matter. (Especially when TropEnt's publicity releases still flow from Yung's mouthpieces at Beacon Advisors.)

But if TropEnt can convincingly demonstrate both liquidity and independence, it's hard to argue against it. One might feel otherwise had Justice Gary Stein not made such a total clusterfuck of the attempted sale of the Trop. Heaven only knows if even the pallid Cordish Co. bid will still be on the table by the time the New Jersey Supreme Court gets around to adjudicating TropEnt's forcible ejection from the Garden State, which could take several months.

But CEO Scott Butera, whose scattergun public pronouncements are becoming a matter of routine, may have shot himself in (or very near) the foot this time. His petition's assertion that "it is imperative that competent professionals, experienced in casino operations, be brought to bear," perhaps unintentionally implies that Pam Popielarski and the current Trop management team are incompetent and inexperienced. Which, since they were appointed under the auspices of the NJCCC, probably isn't the best way to go about making friends and influencing regulators.

Butera's got a well-respected sidekick in the person of former NJCCC Chairman Bradford Smith. Maybe he ought to let Smith do the talking, at least in situations where a modicum of diplomacy is required.

Adelson's megaphone muted

Wed, 22 Oct 2008 15:29:00 -0700

If Sen. John McCain pulls off the Nov. 4 comeback he's predicting, it won't be any thanks to Sheldon Adelson, who puts his mouth where his money is. (Hence those queasy-making odes to Chinese totalitarianism: "People seem to be living a good life in China. Look at the incredible progress China has made. How can someone say they're doing the wrong thing?")

Politico reports that, stung by the hornet's nest that is present-day Wall Street, Adelson has "pulled the plug" on one of his pet projects, Freedom's Watch.* The latter's "neverending campaign" has downsized from an artillery barrage ($200 million in planned expenditures this election cycle) to the rattle of small-arms fire ($30 million).

Small wonder, then, that Las Vegas Sands spokesman Ron Reese airily informed the Washington Post that "Mr. Adelson does not comment on his political activity." Except when he does, of course.

I've long wondered if Adelson's high-profile GOP affiliation worked against him in Kentucky, where Sands found the door rudely slammed in its face. Mind you, the object of Gov. Steve Beshear's bromance, Columbia Sussex CEO William J. Yung III, has also been a lifetime Republican backer -- until he saw how the chips were falling, so to speak, in the Bluegrass State. Whereupon he strewed Beshear's path with greenbacks.

As politically polluted as Pennsylvania's casino-selection process has been (Give Democratic, get a casino!), at least one right call was made: Handed a choice between a Yung-backed Allentown project and Adelson's Sands Bethelehem, Pennsylvania regulators opted for the GOP-friendly mogul with a track record of impressive projects, not the one who would shortly become a synonym for insolvency.

* -- Back when Adelson's wallet was still open, conservative activists used to bitch extravagantly (but always anonymously) about how many strings he would attach to the use of what was, after all, his money.

He's baaaaaaaaaack!

Fri, 10 Oct 2008 14:56:00 -0700

Score one for Columbia Sussex CEO William J. Yung III. The New Jersey Supreme Court will hear his appeal of the New Jersey Casino Control Commission's revocation of his license, even though a lower court booted it, 3-0. ColSux has been superseded by Tropicana Entertainment, but Yung was still calling the shots when the NJCCC kicked him out of the state. If the Supremes rule in ColSux/TropEnt's favor, there's nothing to stop* TropEnt owner Yung from retaking control of the company and rampaging back into the Garden State. What can we expect then? Oh, probably something like "mass layoffs, regulatory violations and unsanitary conditions ranging from bedbug-infested guest rooms to overflowing toilets."

*[Editor's note: Actually not. See next item.]

Trop this!

Thu, 09 Oct 2008 17:38:00 -0700

The fourth time's the charm -- at least if you're Justice Gary Stein, the tortoise-powered conservator of the Atlantic City Tropicana. Having prolonged the timeline for selling the mammoth hotel-casino three times already, he's asking the state for a fourth extension. He double-pinky swears that, if the New Jersey Casino Control Commission gives him until Nov. 12, he'll have deal with Cordish Co. signed, sealed and delivered. Honest Injun.

It's difficult to see that the NJCCC has any choice in this matter. Stein's playing chicken with them, considering that they have to vote on his request on Oct. 15, one day before his current deadline to get the deal done. The commissioners picked this nincompoop to handle the Trop sale, so responsibility for this latest delay redounds right back to the NJCCC. Besides, if you had Stein's cushy $650/hour gig, would you be in any hurry to wean yourself off the Garden State's teat?

Stein's slumbrous pace is only further aggravating Tropicana Entertainment CEO Scott Butera. He says the NJCCC should give his company a chance, since it's "essentially" a different entity now. That "essentially" is certain to be a sticking point, as it's a tacit admission that owner William J. Yung III is still lurking in the shadows. Unless TropEnt creditors wrest every last share of equity from Yung's purse, it's impossible to envision a scenario in which TropEnt gets its wish.

When I joked earlier that Butera had gone "off his meds," I didn't know the half of it. Now he's making off-the-wall remarks about "making an offer for an existing [Atlantic City] casino, or trying to build a new one."

Butera's remark would not be ridiculous on its face were TropEnt not in Chapter 11 and limping along with an emaciated cash flow, thanks to the loss of its most lucrative property (the A.C. Trop). Oh, and its flagship riverboat, Casino Aztar, is now being run by the State of Indiana. So Butera would have to sing a very sweet siren song to investors to get them to part with the kind of dough his plan requires. And even then, it's still a Yung-owned entity, so he's back to Square One with the Jersey regulators.

Let's put the build-a-new-casino idea aside for a moment, because it looks prohibitively expensive for a company as waterlogged as Butera's. Let's say he can scrape together the hundreds of millions it would require to buy somebody else's casino. (It's a stretch, but work with me.)

Perhaps he could go for one of the market's laggards, like Resorts Atlantic City or the Hilton. Both perform better than Trump Marina (market value: $316 million), so perhaps a deal could be swung for a half-billion or less.

Or maybe Harrah's Entertainment, which is getting hurt in Atlantic City by Harrah's Chester, in Pennsylvania, would like to lower its oceanside exposure. The Showboat would be the obvious candidate to pursue; it brings in the lowest daily average win of the four Harrah's properties and it uses a brand that Harrah's has effectively discontinued. But you're talking about a casino-hotel that (with a smaller facility) pulls in Trop-sized revenues. So if Butera really thinks the Trop is worth $950 million or more, what would the Showboat fetch?

If Butera is serious about being a buyer in Atlantic City and not just trying to make a nuisance of himself in order to wear down the NJCCC, he's getting into a bit of a bind. The higher the price he says the Trop ought to merit, the more it's going to cost him to get back onto the Boardwalk or into the Marina by buying from someone else. Is his strategy crazy or crazily brilliant? It's sure got me foxed.

Still more Trop follies

Fri, 03 Oct 2008 12:57:00 -0700

Just when I was ready to get behind Tropicana Entertainment CEO Scott Butera's quest to reclaim the company's eponymous Atlantic City casino, he goes off his meds, so to speak. He blustered that "Our creditors, our employees and our neighbors in Atlantic City cannot afford to have this marquee Atlantic City property purchased at a severely depressed price."

I'm sure the creditors are hopping mad about the sale price but I sorely doubt that the employees are losing any sleep over it. Most are probably happy to have the continuing uncertainty about the Trop's future heading toward a resolution. As for the "significant investments" that Butera is saying he'll make, that's bold talk from a company that's in Chapter 11 and doesn't have any high-yield properties. Or, to quote one of my Mom's favorite queries, "Using what for money?"

It's unclear upon what Butera's stated valuation of $950 million for the Trop is based. Unless perhaps he's going by the high-end bid made by a shadowy group of New York investors. That offer was a non-starter, predicated as it was on the buyers being approved sight unseen. Butera can say $700 million (of which only $450 million is in cash) is not "acceptable" until he's blue in the face, but that doesn't make the Trop inherently worth more. The market will tell him what it's worth and right now the market isn't feeling any too generous.

In Butera's defense, if Trump Marina -- with a hotel-room base 29% of the Trop's, a third of the convention space, 53% the number of slot machines and 44% the number of table games -- went for $316 million, one can see where Butera's $950 million figure might have justification. But the Marina sold before the credit market cratered. Which means that re-selling the Trop at some more seller-friendly juncture means an interregnum of indeterminate length.

Besides, as the Las Vegas Sun's Jeff Simpson pointed out during yesterday's "Vegas Gang" taping, no matter how much Butera tries to talk around it, TropEnt is still a wholly owned subsidiary of Columbia Sussex, a company whose name is mud in Atlantic City. New Jersey regulators aren't going to sign off on any deal that might allow William J. Yung III to sneak back into the Trop through a side door, metaphorically speaking.

Taking a chill pill. With the imposition of Atlantic City's smoking ban less than two weeks away, Mayor Scott Evans is amenable to a delay. Matters wouldn't have reached this juncture had the city council not felt goaded into levying a total ban by the casinos' snail-like compliance with the previous 75% cutback on smoking areas.

However, there's nothing like a recession to refocus one's priorities. Council members face an unenviable choice on this one, caught as they'll be between het-up constituents who have breathed as much secondhand smoke as they care to and the prospect of further casino-revenue declines -- and higher unemployment.

Lipstick on a pig

Tue, 30 Sep 2008 15:26:00 -0700

That's how Atlantic City Tropicana conservator Justice Gary Stein is trying to pass off a deal that continues to make a loud "Oink!" He's trying to spin the media that his $700 million agreement with Cordish Co. is really an $800 million purchase once you factor in a promised $100 million worth of renovations. (Does he have that in writing, mayhap?)

Having made his bed with Cordish, Stein finds himself having to lie in it. What looks like $700 million on the surface turns out to be $450 million in cash and $250 million in securities. And when people hear the term "securities" right now, they feel anything but secure. The alternative was an all-cash, $575 million offer -- this for a casino that was drawing bids in the $850 million-$950 million range a scant five months ago. Stein -- does it bear repeating? -- shredded those offers even as the market started to soften and now finds himself a seller in a buyer's market.

Right now my sympathies are with Tropicana Entertainment CEO Scott Butera, who has to maximize the value of the Trop in order to satisfy a host of creditors. Instead, he's seen Stein fritter that value away. And remember, since Columbia Sussex CEO William J. Yung III weaseled out of paying the fines imposed on him by the State of New Jersey by instructing in lordly fashion that they simply be deducted from the eventual sale price, that means Butera is looking at an increasingly meagre payday. His repeated cries of "fire sale" are sounding less and less like a catchy exaggeration and more like the ugly truth.

If Stein can't get a good price on the Trop, it's time for the New Jersey Casino Control Commission -- which appointed this Barney Fife to run the sale -- to seriously consider putting the property into Butera's hands and seeing if he can make a go of it. ColSux apparently couldn't have cared less if it drove the Trop's revenues straight into the ground (which it did), but with debtors' knives at his ribs, Butera has a considerably sharper incentive to make the Trop competitive again.

Hell may freeze over before Station Casinos puts the first shovel in the ground on its Inspirada project. Considering how saturated the locals-casino market in Las Vegas is, Station would be crazy to proceed at this time. But that's not stopping the company from trying to annex a 22% increase in the size of the project's footprint.

Never let it be said of Station that it was content to take an inch when there was a mile to be had. And, should the economy continue to go south or were Station to strangle on its LBO-related debt, the more real estate it has to flip, the better its chances of survival.

$150 million

Thu, 25 Sep 2008 17:51:00 -0700

That's at least how much money was left on the table by Tropicana Atlantic City's state-appointed conservator, Justice Gary Stein, when he chucked out all the first-round bids last spring. One of the lower known offers at that time was Colony Capital's $850 million -- far more than the $700 million for which Stein has had to settle.

(It does, however, hit the benchmark set by UNLV's David G. Schwartz, who gets the Nostradamus Award for correctly predicting the eventual sale price.)

Never fear, said Stein when giving the thumbs-down to Colony and other bidders, there's a billion dollars to be had out there. Not only did Stein have visions of sugarplums and inflated Trop valuations dancing in his head, he'd also been exchanging some ex parte pillow talk with companies who led him to believe there were big bucks to be reaped by the state, if only he'd reopen the bidding.

If there was any doubt remaining that Stein was a damn fool -- and that the New Jersey Casino Control Commission, which appointed him, was following him through the looking glass -- it has now been erased. Stein had the opportunity to strike while the Trop iron was hot. Instead, he dithered and dithered, then dithered some more. All the while, Atlantic City casino revenues continued to trend downward, as did the Trop's market value.

Stein's eventual pick, Cordish Co., was one of the spurned first-round candidates and it's unclear how Cordish's initial offer compares to the new one. Even so, Cordish was the logical choice, especially with Trop-savvy executive (and former regulator) Dennis Gomes on board. In essence, Stein has spent a great deal of extra time and money to arrive at a result that could and should have been achieved months ago. If he's keeping the previous bids secret (and Cordish could still be outbid at bankruptcy court), it keeps some of the egg off his face.

Stein's salient accomplishment has been to fling the door wide open for Tropicana Entertainment CEO Scott Butera to try and throw a body block on the deal. He's right to call Stein's timing "odd," seeing as how the judge had three more weeks to wait for a better offer to materialize. He's dragged what was supposed to be an expeditious resale process out for nine months. What's three more weeks?

What's also odd, though, is that Butera hasn't submitted a petition for the reconveyance of the A.C. Trop that he says he wants. He'd better get on the stick, and faces a few obstacles. As he's pretty much acknowledged, Butera has to convince the NJCCC that TropEnt is now a William J. Yung III-free zone. Also, if the state were to reconey the Trop to Butera, it would have to forego the revenue that might be realized from the Cordish sale. There may not be much appetite for that.

Cordish, for its part, is talking about putting another $100 million-$200 million into the Trop. Butera's TropEnt is mortgaged to the topmost hair of its head and would be hard-pressed to match Cordish's proposed capital improvements.

Stein might have avoided this if he'd sold the Trop with dispatch at a time when TropEnt parent Columbia Sussex was in disarray. By taking the tortoise-powered course he did, Stein gave Butera time to reorganize and counterattack. If the NJCCC goes through a year of shopping around the Trop only to have a court hand it over to Butera, this time the fault will be entirely the commission's own.

What a complete frigging botch.

Kansas, Round 2: It's Cordish!

Fri, 19 Sep 2008 14:59:00 -0700

OK, I was wrong. Incredibly wrong. As you'll hear on the next Vegas Gang podcast, I stuck by my prediction that Kansas' largest casino contract, the one for the greater Kansas City area, would go to Mohegan Sun. Why? Biggest budget, most amenities, a track record of large-scale casino development. At least I covered my butt by saying that Cordish Cos.' piggybacking of their proposed casino onto the Kansas Speedway gave them "dark horse" status. Also, franchising the casino under the Hard Rock brand was not to be gainsaid.

A racino of a different stripe

So when the winner was announced today, Cordish was it. While Mohegan Sun was willing to put a bigger investment ($740 million vs. Cordish's $680 million) on the table, Cordish's synergy with the Speedway appears to have done the trick. They'll whip up a temporary casino (2K slots, 75 tables) sometime next year, to get the cash flowing while the full-scale project rolls toward a 2011 debut.

Here's the real shocker: Mohegan Sun got zero votes, primarily because state consultants projected its revenues as the lowest of the three proposals remaining on the table. (Pinnacle Entertainment and Las Vegas Sands has already withdrawn from the fray. With a major project underway outside St. Louis, plus others in holding patterns in Atlantic City and Baton Rouge, Pinnacle's chances seemed remote. It's difficult to imagine Kansas being willing to take a place at the back of that queue.)

Which means that three of the seven votes went to -- surprise! -- Golden Gaming, a company whose chances I will freely admit to having severely undersold. It says a lot for CEO Blake Sartini's reputation and for Golden's presentation that it came within an ace of winning, despite having a relatively modest track record -- at least nothing remotely approaching the $662 million casino it proposed to build. With Penn National having sulked its way clear out of Cherokee County and the Kansas lottery board starting to display skepticism toward the Ford County bidders, Golden has at least one, maybe two more opportunities it could pursue in the Sunflower State.

Ten months ago, at the time its casino empire was starting to collapse, Columbia Sussex announced that it had sold the Horizon Vicksburg to casino investor Nevada Gold for $35 million. Seems now that it's yet another William J. Yung III transaction that's (pardon the pun) gone south, following the cancellation of the sale of Casino Aztar to Eldorado Resorts.

Juding from the language that ColSux successor Tropicana Entertainment "have been in discussions regarding a possible alternative transaction" without avail, it appears as though new CEO Scott Butera wants to hang onto the riverboat property (whose on-shore facilities are leased, not owned, by the way -- a common ColSux practice). "(N)o alternatives exist that are suitable to both parties" sounds like a nice way of saying that if any other TropEnt properties were worth having, then they weren't on the table. Then again, given Nevada Gold's current financial situation, it might have been the one getting cold feet, but the formal language doesn't encourage that interpretation.

Either way, Butera's been making some expansionist noises of late and pining for the return of the Atlantic City Tropicana. While Butera has operational experience in that market, from his days at Trump Entertainment Resorts, it's exceedingly difficult to imagine New Jersey regulators letting TropEnt back onto the property so long as Yung has one thin dime of equity in the company.

More Trop tomfoolery

Tue, 16 Sep 2008 13:12:00 -0700

Justice Gary Stein's trusteeship of the Atlantic City Tropicana continues its slide toward disaster. The UAW has filed a charge with the National Labor Relations Board, accusing Stein of a lack of good-faith bargaining. Stein has said in the past that he's reluctant to bind a new buyer to the terms of a contract negotiated by a third party.

That was a viable argument back when it looked as though Stein could get the Trop sold by Spring or early Summer. Then he sniffily deemed the offers on the table not good enough (talk about failing to bargain in good faith!) and reset the whole process to "zero."

Given Stein's miserable, foot-dragging performance, it could be months more before long-suffering Trop employees have a new owner, in which case it's unconscionable to continue to allow this situation to fester. Heck, considering the speed with which Scott Butera was able to bring peace to the Las Vegas Tropicana, maybe letting him have the A.C. Trop back wouldn't be such a bad idea, after all. (Not that it's going to happen as long as sole shareholder William J. Yung III has so much as one thin dime of equity in Tropicana Entertainment.)

While restored Trop President Pam Popielarski has shored up the A.C. Trop's financial performance, some of the UAW's charges, if true, suggest she's working off the Columbia Sussex playbook: "denial of Family and Medical Leave Act benefits for dealers, changes to the casino floor, and unilaterally changing the attendance point system and start times for workers."

President Closed ... Again. For the third time this year, Pinnacle Entertainment's President riverboat has pulled up its gangway on account of flooding. Which means that the President will have lost at least 47 business days (and counting), depleting what is already a pretty attenuated revenue base. Given the President's fairly negligible contribution to the St. Louis casino market, perhaps Pinnacle should mothball the old gal. Having grown up near St. Louis, I can well remember the President in her glory days, resplendent upon the St. Louis riverfront. It's sad to see her come down in the world like this.

Note: In honor of Scott Butera's fresh start at the LV Trop and his efforts to put the 'ColSux' era behind him, I've started a new "Tropicana Entertainment" category, as a gesture of faith.

Mont-blew it; more E-Can; Trump struggling

Fri, 05 Sep 2008 13:45:00 -0700

"Montbleu screwed our pooch." That's the conclusion of Chuck Monster, who chronicles a bait-and-switch at the former Caesars Tahoe. It's now part of the prospering casino fleet that is Columbia Sussex and its "pet friendly" package turned out to be more like "pet indifferent." After withholding it for a full year, in hopes of a partial refund that materialized, Chuck has finally released a Montbleu-by-blow account.

New casino overseer Scott Butera may be promising a new, improved Tropicana Entertainment but, from what Chuck says, it's still ColSux as usual for the time being. At least the incident gave him excuse to post numerous photos of Montbleu being inspected by a totally adorable pug named Maxine, who is certain to steal your heart.

E-Can makes the rounds. The reviews of Eastside Cannery keep rolling in. There's a Compton/Dancer critique of its gambling value (good). Steve Friess went a while back and was mildly amused/bemused. For his part, Chuck Monster deconstructs its decor. Our new issue of Las Vegas Advisor contains a lengthy appraisal by Anthony Curtis.

Trumped. Perhaps the single most interesting fact in Chuck's review is buried way down at the end and it's this: On an upcoming weekend, when E-Can is commanding $129/night ($1 less than Circus Circus), rooms at Trump International are going for $163/night -- $38/night less than Excalibur. Yes, Excalibur! (And $346/night less than Wynn Las Vegas.) Can you say "bomb"? I thought you could.

Quote of the Day

Wed, 27 Aug 2008 11:30:00 -0700

“The real story here is the workers, who put up with the worst working conditions, having the fortitude and tenacity to say we’re not going to be run out of here by someone who has come in from Kentucky to destroy our standard of living,” -- Culinary Union Secretary D. Taylor, on Tropicana workers' long-in-the-making victory over Columbia Sussex CEO William J. Yung III. New Trop management capitulated to the Culinary's demands last week.

Just as I suspected ...

Wed, 27 Aug 2008 11:10:00 -0700

... and tried to imply the other day, we have two conflicting agendas in the ixnayed Casino Aztar sale. One is that of the creditors, who think the boat can fetch a higher price than the $220 million for which Columbia Sussex CEO William J. Yung III had to settle. (You will recall that prospective buyers were distinctly thin on the ground at the time.)

They're walking a tightrope, as they don't want to alienate putative buyer Eldorado Resorts and, should Eldorado walk (having already been told its money's not good enough) they don't want to be stampeded into a fire sale before Sept. 28. That's when disposition of the vessel passes into the hands of the State of Indiana.

The other endgame, as I tried to hint earlier, is that of Tropicana Entertainment CEO Scott Butera. He, creditors fear, may be trying to hang onto Casino Aztar by putting it back on the market and then saying -- as was already bruited in the Wall Street Journal -- that no offer is good enough, so TropEnt is keeping it. Which means creditors, instead of getting hundreds of millions of dollars now, would be asked to settle for a dribble of cash over the long haul. Butera seems able to charm the birds off the trees, but that might be a tough sell, even for him.

(The Evansville Courier Press story comes with a helpful timeline. Note the succession of three general managers in 14 months -- a period in which Casino Aztar's revenues sank lower and lower and lower, only beginning to rise again in May.)

Then again, the would-be casino titan whose company managed to lose $1 billion-plus in a year still has his fans. Raves Courier Press reader lmajors_koch, "[Bill] Yung is the smartest man alive!!!! He's going to end up keeping Casino Aztar before this is all over with. You guys just watch."

Yeah, we will.

On the other hand ...

Mon, 25 Aug 2008 18:01:00 -0700

... if Illinois casinos are sucking wind (which they are), why hasn't this redounded more to the benefit of neighboring states? For instance, it looks like Indiana had a good July, but once you back out two new racinos, a 2% gain turns into an -11% retreat from last year's numbers.

And the northern Indiana boats ought to be doing better, even if Horseshoe Hammond's revenues (-18%) were depressed by a temporary closure and Boyd Gaming's beleagured Blue Chip (-40%) is a drag anchor on the regional average. Still, a -15.5% year/year comparison -- even with those two factors taken into consideration -- doesn't suggest floods of nicotene-deprived gamblers storming the gangways.

Only Majestic Star, of all unlikely vessels, had a revenue-positive July. Year to date, Ameristar Casinos is doing the best of any single company, which makes its recent decision to run up the white flag and sack 244 employees, fretful over a newly expanded Horseshoe Hammond, look doubly defeatist. Current Ameristar management just doesn't look like they're in it for the long haul (read "not cut out for it" or "lack the stomach for it").

A change of brand, to Horseshoe, isn't doing the trick -- yet -- for Harrah's Entertainment's Glory of Rome. The glamorously named Horseshoe Southern Indiana (formerly Caesars Indiana) is the only casino in the Hoosier State's southern reaches to post negative revenue comparisons for every month of 2008. The others either swing like weathervanes or, in the case of Casino Aztar, improved dramatically with a change in management.

If French Lick isn't licked, it appears to have crested. The turnaround at Casino Aztar (currently under state trusteeship) blunted its revenue growth, as did the debut of the Indiana Live and Hoosier Park racinos. Until the economy improves, it looks like it's maxed-out at $8.5 million-$9 million per month.

Missouri is another puzzle, down 3% once the effects of Pinnacle Entertainment's nascent Lumiere Place are subtracted. The St. Louis market, closest to Illinois, was -8%, while Kansas City -- the market with the least to gain from Illinois' troubles -- was up 2%. Go figure.

All companies except Harrah's had a revenue-positive July, even Isle of Capri Casinos. Harrah's lost market share in St. Louis and Kansas City, and Ameristar gained in both markets. (See previous comments about unwarrantedly panicky Ameristar execs.)

And see them again once we note that Ameristar had the best July of any publicly traded company in Iowa, +3%. (Harrah's and Penn were flat, Isle down almost 6%.) Ameristar had the third-highest performing casino in the market, trailing Harrah's Horseshoe-branded racino and the Prairie Meadows track. A good month at the tracks offset a flat one on the riverboat, making Iowa revenue-positive for the month.

This was the first full month of year-over-year comparisons for Isle's newest casino, in Waterloo, which was down over 13%. Wow. The bloom went off that rose fast. The previous Isle regime's business model of growing revenues by opening more and more casinos is well and truly out of gas.

Isle's Bettendorf casino, however, was the only one of the company's quartet of Hawkeye State riverboats to increase revenue in July. Could it be ... the Illinois smoking ban coming into play? I'm going to opt for Occam's Razor and say, "Yes."

Trop to Eldorado: "Never mind"

Mon, 25 Aug 2008 11:26:00 -0700

In the strongest sign to date that company owner William J. Yung III has been banished to the doghouse, Tropicana Entertainment formally reneged on its sale of Casino Aztar to Reno-based Eldorado Resorts. The latter could walk away with as much as $7.1 million for its troubles, but appears determined to enforce the sale. Tropicana, meanwhile, already has its bankers out beating the bushes for prospective buyers.

“We are committed to obtaining maximum value for our assets and doing what is right for all of our constituents,” declared Trop CEO Scott Butera, sounding for all the world like ornery debtholders have him at knife point. If they're convinced they can get more for the asset than the $220 million that Eldorado offered, they may right. After a full year of mostly horrendous year/year comparisons (as much as -19.5% at one point), Casino Aztar has been the only Indiana casino to post three straight months of year/year growth ... an improvement that occurred not long after Yung's people were shown the door in favor of trustee Robert Dingman. Coincidence? I think not.

Eldorado's best hope probably lies in the Indiana Gaming Commission, which might still say "nyet" to Butera's proposed re-bidding, according to one report. It could also restart its own probe into the way Yung ran Casino Aztar, something that seems even more likely now that Butera is making noises about Tropicana hanging onto the boat (which appears to be the endgame). Butera's considerable skills of persuasion will get a good workout as he tries to steer Casino Aztar past that shoal.

Vote of (limited) confidence. In this morning's news roundup from JP Morgan, analyst Joseph Greff notes a hiccup from the Kansas Lottery Gaming Facility Review Board that connotes fears about belt-tightening at Harrah's Entertainment. The company "was informed by the attorney for the board that it would be in default of its contract if it did not build the $560 million contract in full, including a development of a retail shopping area with hotels/residences."

Hmmmm ... Harrah's and the State of Kansas have just gotten hitched and we're already hearing the rustle of divorce papers. As the saying goes, even a majority of one vote is a mandate of sorts, but this goes a long way toward explaining why Harrah's wasn't a prohibitive favorite, winning its bid by a margin of 4-3.

Quote of the Day

Thu, 21 Aug 2008 12:25:00 -0700

"You can't save your way to success." -- Tropicana Entertainment CEO Scott Butera, commenting on the new collective-bargaining agreement at the Las Vegas Tropicana. Funny, but that's almost a word-for-word reprise of Dennis Gomes' analysis of parent company Columbia Sussex's downfall in Atlantic City ("you can't save your way to prosperity [in the casino industry].")

From bad to worse

Tue, 19 Aug 2008 14:56:00 -0700

British Reuters lays out a dire scenario for casino bonds, the second-most-distressed sector of the junk-bond market (only media firms are doing worse).

"We believe it probably hasn't hit its bottom," is the grave verdict of Moody's Investors Service analyst Keith Foley. His formula for highest risk: lone-property operators with heavy debt burdens. Stateside, this would seem to spell "Las Vegas Sands," where debt is approaching $10 billion and Palazzo has been a dud, at least by the benchmarks expected of a new Strip megaresort. (Morgans Hotel Group, which staked its future on the Hard Rock Hotel & Casino, probably ought to be worrying, too.)

So far, one could argue that recent wave of casino bankruptcies has had a Darwinian effect, singling out the bottom-feeders (Columbia Sussex) and market laggards (Greektown). The deeply distressed bond status of Trump Entertainment Resorts may portend yet another visit to Chapter 11, but Station Casinos' bonds are doing little better.

Other danger signs identified in the article include ...

• Debt-to-cash flow ratios of 9- or 10-to-1 (five times in excess the ratio deemed "investment grade"); Harrah's Entertainment, with its $29.7 billion buyout tab, is singled out, a poster child for ...

• LBOs conducted "at the worst possible time."

• "Financing for casinos is also in dire straights [sic], a concern for companies that depend on expansion to drive growth," like Isle of Capri, at least under its previous regime.

Well worth repeating: "With this heinous act of sheer unadulterated corporate greed and disregard for customers, Harrah's has proven that they don't care at all about our 'fun' regardless of how they have sold the concept of gambling being 'paying for entertainment.' This is all about Harrah's making Harrah's a profit even if Harrah's spokesmouth Gary Thompson tells Liz Benston in the LV Sun that the games were removed because they weren't popular with players. Wheel of Fortune? Not popular with players? How truly out of touch are these numbskulls?" -- Chuck Monster of VegasTripping.com, inveighing against Harrah's decision to start removing IGT's Wheel of Fortune from its casino floors.

Quote of the Day

Tue, 19 Aug 2008 13:19:00 -0700

"The foundation of every successful company is its employees. We certainly recognize the value and hard work that each employee at the Tropicana has provided throughout the years and continues to provide every day. I look forward to getting to know and working with all of the Tropicana employees. Currently, we are in the process of evaluating the appreciation programs that have been in place to find ways to improve upon them, but we will also develop new programs where there were none before." -- Atlantic City Tropicana Casino & Resort President Fred Buro, in an interview published in February 2007, shortly after Columbia Sussex took control of the property. By year's end, there would be 900 fewer employees left to "appreciate" ... including Buro.

Trop sale stumbles forward ... sorta

Mon, 18 Aug 2008 12:42:00 -0700

If Justice Gary Stein, the state-appointed trustee for the Atlantic City Tropicana Casino & Resort, isn't the most inept public servant in America, it's not for lack of effort. Add nepotism to his string of failings, as his ever-less-credible pronouncements now emerge from the mouth of his son, Martin Stein, a lawyer who has apparently joined Dear Old Dad at the public trough.

The Steins' latest bit of boobery involves not re-starting the bidding process for the Trop until sometime (as yet unspecified) after Labor Day and then having it wrapped up on Oct. 16, six weeks later. Their excuse for this foreshortened timetable is that advisers Moelis & Co. are "just beginning their work," even though they've been on the payroll for over a month and a half. I'm not necessarily saying the Stein-supervised process is slow, but I've seen glaciers that moved faster.

The Steins also continue to evince boundless optimism that they're going to get better offers the second time through the process. Considering that Atlantic City's revenue numbers have continued to weaken and the economy has not improved, I'd sure like a sniff of whatever "happy dust" they've been inhaling. Of course, the blame ultimately redounds to the New Jersey Casino Control Commission for appointing Justice Stein to perform a task for which he has proven, by all outward appearances, manifestly ill-equipped.

On other Trop-related fronts, the prospect that Tropicana Entertainment may renege on its sale of Casino Aztar is stirring up alarm in Evansville, Ind. As revenues predictably plummeted under the slash-and-burn regime of Columbia Sussex (TropEnt's parent), so did Evansville's revenue share: -27% the first year, with incremental decreases projected through 2009.

There's no guarantee Eldorado Resorts will reverse the slide, but this may be one case where the devil you don't know is distinctly preferable to the one you do. ColSux is playing with fire, too, because a nixed sale could (and probably would) re-start Indiana's investigation into its operation of Casino Aztar, an investigation that was forestalled only by the Eldorado deal.

Would you buy a used casino from this man?

What do you call a casino exec who loses $1 billion in a single year? Columbia Sussex CEO William J. Yung III, that's what. (Also "sucker".) Yung's also suffered the public indignity of having himself and his properties dissed by rival CEOs Gary Loveman, Penn National's Peter Carlino and Pinnacle Entertainment's Dan Lee, not to mention the private one of having other Atlantic City casino operators quietly encourage Unite-HERE in its get-Yung-out-of-town campaign. Clearly, the man had a facility for making enemies in the industry.

In today's Las Vegas Sun, Liz Benston takes a look back at Yung's Aztar Corp. acquisition, a deal so expensive and so elaborately collateralized (not to mention one that put a walloping financial burden on a grab-bag of second- and third-tier casinos) it was all but predestined to fail. Unfortunately, Benston buys into some of Tropicana President Scott Butera's revisionist history, particularly his fish story to the effect that: "When the economic decline began to hurt earnings, Yung was forced to make cuts that eventually proved counterproductive."

That's a face-saving spin Butera has been shopping around since he took the Trop job but the fact is Yung's Aztar purchase was in some respects predicated on making those cuts. They were part of his "road show" presentation to would-be financiers (despite representations to the contrary to New Jersey regulators) and he even hinted broadly at what was coming in a Casino Enterprise Management interview where he talked about making hotel maids do double-duty on the casino floor. The ColSux supremo had to promise savage payroll and personnel reductions if he was to persuade investors he could make this turkey fly -- and now he's got a slew of age-discrimination suits to show for it.

And let's not forget that while Yung no longer has a title or a board seat at Tropicana Entertainment, he's its sole shareholder, the power behind Butera's throne. Until this spectacularly maladroit casino operator liquidates the last of his TropEnt shares, presumably in a debt-for-equity swap, his bad karma will continue to dog the Tropicana and Aztar brands.

Casino CEO disses own games. "They're boring." Yes, that's really what Trump Entertainment Resorts CEO Mark Juliano said about the very sort of electronic table games he installed at Trump Plaza. Combine this with the imminent demise of live dealers at Excalibur's poker room and you've got the beginnings of a trend in the major resorts that appears both inevitable and discouraging.

Trop turnaround?

Tue, 12 Aug 2008 13:14:00 -0700

While the New Jersey Casino Control Commission continues to bobble the sale of the Atlantic City Tropicana, at least its stewardship has arrested and perhaps finally the property's decline. While a 5.5% decline in business is nothing to crow over, only Caesars Atlantic City lost less ground, down 4%.

Of course, nobody did remotely as well in dollar volume as the newly augmented Borgata. Whatever struggles Boyd Gaming has experienced in cracking the top, er, echelon on the Las Vegas Strip, it's had the rest of the Atlantic City market playing catch-up, mostly without success, for five years now.

As for the Trop, its gambling revenues are still just keeping pace with Showboat Atlantic City, a property with 7% fewer slots and half the poker/table game capacity. So, while the NJCCC has largely stanched the bleeding, the problem of an attenuated market share remains. Thanks, Columbia Sussex. Don't let that doorknob hit you on the way out.

But the Trop's doing way better than Trump Marina, whose owners -- coming off a wretched quarter and not yet having booked the $316 million they're getting for Trump Marina -- are merely considering using the money to pay down debt. After all they could "look elsewhere for growth opportunities" -- like Panama. (I kid you not.) That's quintessential Donald Trump: Don't address your problems; just run away.

(Presumably the new "Chairman" tower at Trump Taj Mahal is supposed to evoke the glowering, orange-haired Trump himself. But, if you grew up in the Sixties, "the Chairman" was Mao Tse-tung or maybe -- if you were just a few years older -- the Chairman of the Board himself, one Francis Albert Sinatra. I guarantee that no one will ever call Trump "the Chairman." Ever.)

Golden Heartland: Coming soon-ish to a Kansas near you?

Golden Gaming's PR peeps contacted me to very politely dispute my characterization of Golden as a probable also-ran in the Kansas casino sweepstakes (see "Don't tax me, bro!"). They pointed to CEO Blake Sartini's 15 years in the upper ranks of Station Casinos, his 40-tavern operation in Nevada, the Pahrump Nugget and a trio of Black Hawk, Colo., casinos (with an aggregate of 778 slots and no table games).

I would respond that Golden's most imposing rival in Kansas, Mohegan Sun, probably has a larger installed slot base in its Connecticut casino alone (a mind-boggling 6,199 one-armed bandits) than Golden probably has in all its 40-plus properties rolled together. That Colorado is the minor leagues, casino-wise. That all those taverns, nice as they are (and they're some of the very poshest in Nevada), amount to one big-ass slot route -- no disrespect intended. And that we're talking about a $600 million casino-resort contract -- far, far bigger than anything Golden has attempted.

Bottom line: I still think Golden is very much the underdog in Kansas. In fact, I'm even more convinced of it. Which isn't to say it won't pull off a stunning upset. But, given the scale of operation that the State of Kansas wants to see, Mohegan Sun's resumé makes the most logical fit.

Don't tax me, bro!

Wed, 06 Aug 2008 18:19:00 -0700

Guess who's kvetching about his property tax bill? Why it's our old buddy, Columbia Sussex CEO William J. Yung III -- or at least his surrogates at Horizon Vicksburg. It's been the better part of a year since Yung announced the sale of this riverboat to Nevada Gold, yet the deal still hasn't closed. (Too bad, because the promise of that $35 million was being used to palliate angry debtholders last winter.)

Even though Olympia Gaming and Las Vegas Sands have bailed out of their respective pursuits of casino ownership in Kansas' Wyandotte County, two Vegas-based companies are still in the running. Pinnacle Entertainment has a lot of irons in the fire already and its wait-and-see attitude toward Atlantic City development may not be what the Kansas Lottery Gaming Facilities Review Board (now there's a mouthful!) wants to hear. Golden Gaming's experience, a brief stint at the Vegas Hard Rock Hotel & Casino aside, is of the small-scale variety, which may also provoke skepticism.

While tribal powerhouse Mohegan Sun is hurting on the Uncasville homefront lately, it's coming off a solid performance in Pennsylvania. I like its chances. Cordish Cos., whose pursuit of the Atlantic City Tropicana was recently rebuffed (for no good reason), is obviously itching to get into the casino industry in a big way. Perhaps its proven track record as a developer will outweigh its inexperience in the casinosphere.

Robbing Luxor to pay (for) CityCenter?

Wed, 06 Aug 2008 17:54:00 -0700

No sooner had MGM Mirage brass sprayed Wall Street's fire during yesterday's earnings call than comes a new scare: Glenn Hausmann of Hotel Interactive Inc. reported that "A variety of industry suppliers who wished to speak off the record have told Hotel Interactive that the company has been diverting cash from planned renovations at Excalibur and Luxor into the CityCenter project."

A source at MGM responds that Hausmann's got it half right, that spending reductions are taking place, but: "The changes in project spending are not as a result of diverting funds to CityCenter." The source adds that Hausmann has subsequently spoken with MGM and stricken the paragraph in question, which had followed the quote by MGM CFO Dan D'Arrigo.

Luxor is a potentially problematic situation because it's still in the middle of a big retheming (or, more accurately, a revision). The spending slowdown might explain why the switchover of the Titanic exhibit from the Tropicana is taking so long. And somebody should clue in the Trop that Bodies is over at Luxor now, regardless of what the Trop's Web site says.

Sands: More is sometimes less

Wed, 06 Aug 2008 15:39:00 -0700

One of the advantages of availing oneself of Las Vegas' public-transit system is that affords me plenty of time to read corporate filings. Such was the case this morning, when I spent some quality time belatedly curling up with Las Vegas Sands' 2Q08 report.

There's been some scattered evidence, here and there, that Palazzo and Venetian are leeching off one another instead of devouring others' market share. For instance, their combined operating income only slightly exceeded that of hard-hit Sands Macao during the first six months of 2008.

But LVS' decision to mulch together several categories of Palazzo/Venetian revenue clouds the picture of each megaresort's impact on the other. Instead of clear-cut comparisons between Venetian and Palazzo retail, entertainment and F&B revenues, LVS offers some cumed numbers for both properties, followed by two paragraphs of uninformative bombast.

The Venetian: older but (performing) better

The most interesting sentence in the entire filing was this disclosure: "The Venetian's occupancy of available guestrooms decreased to 90.6% [in 2Q08] ... as we chose to spread a portion of The Venetian's booked business over the 7,100 total suite inventory of the combined Venetian and Palazzo complex." If that means what I think it means, LVS was shifting bookings to Palazzo to bulk up the latter's occupancy rate, which clocked in at 93%. (Venetian occupancy was 101% a year ago.) Although Venetian ADRs were just smidgen higher than Palazzo ones, the latter produced 2% more revenue per room. Overall, a 51.7% increase in rooms brought a 52.6% uptick in room revenues. So far, so good.

Despite a comparable number of table games (131 to 128), Venetian absolutely clobbered Palazzo there, generating 37% more win per table. At the slots, the older property came out 22% ahead, largely by dint of having 300 more machines at its disposal.

The opening of Venetian Macao appears to have really kneecapped Sands Macao. Hotel occupancy actually rose but ADRs plummeted 32%. Slot win per machine was up 16%, perhaps because 305 machines had been yanked from the floor, but slot business was still competitive with Venetian Macao. Table play was better (+14% per table) at Venetian Macao, though, even with a significantly higher number of gambling positions.

Lesson: Sometimes more is more. (Does this make Sands Macao the de facto 'slot joint'?)

In a month Four Season Macao opens, whereupon things should get very interesting. The mid-sized (by LVS standards) Marina Bay project in Singapore is pegged for a 4Q09 debut, but management's official statements are vague about the opening date for Sands Casino Resort Bethlehem. Going with LVS there was one of the relatively few decisions Pennsylvania's gaming commission got spectacularly right, selecting a developer who had the cattle to go with the hat.

Remember: A rival bidder was cheapskate Columbia Sussex, parent of insolvent Tropicana Entertainment, and heaven only knows what a mess the Bethelehem project would be if the Keystone State had gone that route. It might make the Don Barden trainwreck in Pittsburgh look like a mere fender-bender.

It's a metaphysical certainty that, regardless of when it opens, Sands Bethlehem will be the poshest of the Pennsylvania casinos, setting the standard for any that follow. It not only extends the LVS brand (however you define it) into new markets, the cash flow will provide a reassuring hedge against growing (over?)exposure in Macao.

Also, with debt creeping upward -- but still well short of backbreaking Harrah's-like levels -- and early retirement of same down 62% in the first half of '08 (and practically nonexistent in 2Q08) LVS could definitely use the extra money.

Curtains for downtown arena? Bits and pieces of the acreage accumulated for the REI Neon arena/condo/casino/anything-else-you-can-think-of project are being peddled off. I have to agree with the Sun's editors here and add that I've suspected for a while that REI Neon was but a stalking horse for opening up what used to be (part of) the Arts District to casinos.

Then again, anybody foolhardy enough to build a casino out on that fringe of downtown Vegas would be so isolated from both the Strip and the downtown gaming district that he'd be unlikely to scare up the needed critical mass of traffic. Besides, I don't know if you fellows behind that stalking horse have noticed, but the casino-centric business model has already been tried downtown and found wanting. The word "diversification" mean anything?

We're no Pyongyang!

Tue, 29 Jul 2008 18:25:00 -0700

A story about an unsightly, unfinished ziggurat in Pyongyang, North Korea afforded an architecture critic an opportunity to throw a roundhouse right at Las Vegas. Lumping it together with Shanghai as the bad-architecture capital of the world, California Polytechnic State University (San Obispo) Architecture Dept. professor Bruno Gilberti couldn't single out a single Vegas property for opprobrium, lumping the entire Strip together as something that “has no authentic sense of place and is thus more than a little soulless.”

Well, unlike Gilberti, I can nominate a single-worst building in Las Vegas and it's ...

Yes, Harrah's Las Vegas, the hotel that put the "Ugh!" in "ugly." This weird behemoth brings the charm of Warsaw Pact architecture to Sin City. The Bulgarian State Central Bureau of Collective Internal & External Revenue would feel right at home here.

Harrah's LV is also the despair of photographers, partly because of the extreme width of its façade (not shown) and the considerable distance that the hotel towers (I wanted to say "clump") are set back from the street. I'm reliably told there are only two decent photographic angles on this place: right up close to the façade, concentrating on one or two details (like the jester), or an extreme wide angle -- in which case you'll be lucky to pick out any detail at all.

Harrah's big makeover plan for the east side of the Strip is generally believed to start with the demolition of the Imperial Palace (just barely visible to the right). But at least the IP looks good at night, under the blue wash of its floodlamps. No amount of lipstick can spruce up the pig that is Harrah's LV. (But its casino does an extremely good volume of business, possibly the best on the Strip, so what do I know?)

In second place ...

If Michael Gaughan's South Point doesn't eclipse the fugliness of Harrah's it's not for lack of trying. Not only does it obtrude from the South Strip landscape like a swollen thumb on steroids, it's as unimaginative as all get-out. It's just one gargantuan Stalinist block, its charmlessness ever so slightly ameliorated by its canary yellow paint job.

In Gilberti's defense, he singles out the much-abused (but still lovable) Tropicana for embodying the "real and popular style that the old Las Vegas ... once had," which was pretty much my reaction when I walked in there for the first time in 1998. Of course, that was before Aztar Corp. began letting the place go to seed and then allowed Columbia Sussex to club it like a baby seal.

Gilberti also lauds the old Golden Nugget but I think he ought to take a gander at its current incarnation. Anyone nostalgic for golden age Vegas ought to feel at home there, since Tilman Fertitta has the place looking like the hundreds of millions of bucks he's reinvested there.

And as for the clunker "that has sat unfinished for more than a decade [it's North Korea; whaddya expect?] and has been ... called 'The Hotel of Doom'," surely Kim Jong-il can get his bosom buddy Stanley Ho to take on the task of finishing it. The Hotel of Doom looks like the sort of white elephant that old Stanley goes bananas over, thinking himself on the very cutting edge. If Kim Il-sung's degenerate playboy heir throws in a casino concession, it's a done deal.

Quote of the Day

Fri, 25 Jul 2008 13:57:00 -0700

"There is better stuff than that." -- Penn National Gaming CEO Peter Carlino, referring to the Las Vegas Tropicana, in a discussion of possible Las Vegas acquisition targets.

A dirty rotten shame

Thu, 24 Jul 2008 16:49:00 -0700

According to local entertainment scribe Mike Weatherford, the new ownership at the Sahara is trying to re-up with promoter Larry Marshak's ersatz Platters/Coasters/Marvelettes act. Thanks to the byzantine histories of these groups and their ever-rotating membership, sufficient loopholes have existed for Marshak to peddle a variety of impostor bands hither and yon.

The groups whose identities Marshak counterfeits have the common root of being ones whose members were largely anonymous to the public and were comprised of African Americans and a time when the latter were second-class citizens, with little means of recourse. The impostor act at the Sahara perpetuates a shameful history of exploitation. Current casino owner Sam Nazarian has a chance to either break with this sharecropper business or become complicit in it. Deplorably, it looks like he's opting for Door #2.

Chip off the old block. If you go to www.billyung.com, you'll find the son of Columbia Sussex CEO William J. Yung III striking out on his own, starting with an Osage Beach, Missouri resort. My favorite page is this one. No, the apple doesn't fall far from the tree, does it? Maybe the Web site designers were too busy puffing around Columbia Sussex HQ on the elder Yung's miniature choo-choo train (see end of story).

Gold Coast buffet update, etc.

Mon, 21 Jul 2008 13:24:00 -0700

I just heard from Boyd Gaming and they say that the corned beef/chicken choice at the Gold Coast buffet's carving station was the luck of the draw and not indicative of a cutback. Roast beef, turkey and brisket are still in the rotation, I'm told -- just not on the night we were there. It's not the greatest buffet in Vegas but it's skies above the comparably priced one at the Tropicana, where they actually had the gall to jack up the tab recently, even though the food choices are few and service borders on nonexistent.

Win-win situation? A spy in the ladies' room after a Saturday-night showing of the Mamma Mia! film says that the buzz was very positive, with several ladyfolk saying it made them want to see its Mandalay Bay incarnation* (or see it again). So the notion that the movie might actually put new legs under the stage version, instead of kneecapping it, maybe isn't such a pie-in-the-sky idea, after all.

For those of you who are interested in such things, the movie pulled in $27.6 million its opening weekend, putting it in line with The Devil Wears Prada's opening and $2.5 million-$4.5 million ahead of projected grosses.**

*--Warning!: The video clip also features the horrific noise that is Jerry Lewis.

**--Anyone care to theorize why IMAX showings of a little number called The Dark Knight ($158.3 million in three days) are selling out at Red Rock Resort but not at The Palms? Have customers been burnt once too often by Johnny Brenden's habit of charging $14 for IMAX prints that look like 90 miles of bad road but which his cinemas are evidently too damn chintzy to replace?

Columbia Sussex follies. Even though Tropicana Entertainment is going to be shooed out of the Horizon, in Lake Tahoe, in 2012, owner Columbia Sussex is parting with a few pennies to try and make the place viable in the meantime. Well, at least to the extent of rolling out an Elvis Presley Suite.

That, and there are myriad deferred-maintenance issues to be addressed now that ColSux/Trop has capitulated to landlord Park Cattle Co. This might include the plumbling that got blogger Chuck Monster drenched one memorable night when "a water pipe burst in the ceiling of the casino... raining buckets of water on slot plunkers in the middle of the casino floor and a torrential river of water out the side door of the casino."

Ah yes, the Bill Yung philosophy of "Excellence in Hospitality" in action.

The Ameristar war begins

Thu, 17 Jul 2008 18:49:00 -0700

Just a quick hit on my way out the door to spend an evening prepping for The Dark Knight by watching Batman Begins ...

Ameristar's in play. No news flash there and, for the life of me, I can't figure out why the Motley Fool thinks MGM Mirage will be the ultimate acquirer. The company doesn't seem particularly interested in regional markets these days and has been pulling back from some of them -- the same outstate-Nevada kinds in which Ameristar currently operates.

On the other hand, as the article points out Crown Ltd. has $5 billion burning a hole in its pocket after the Las Vegas Tower deal went limp. I don't know offhand what the seven-times-cash flow number for Ameristar is, but $5 billion should cover it with room to spare. The Fool lays out a compelling case for how Crown could use Ameristar's properties to funnel customers to Fontainebleau -- much as Harrah's Entertainment did with The Rio, back in the Phil Satre era.

Then again, there's Penn National, which has about $500 million in mad money (after stock buybacks) right now, thanks to the breakup fee from its busted IPO. With another $775 million promised to Penn, it ought to be able to ante up the acquisition fee without breaking a sweat. Ameristar's Missouri properties have been money-spinners and, as the Fool points out, the acquisition of the Ameristar brand would enhance Penn's persistent second-tier image. A combined Penn-Ameristar would give Pinnacle Entertainment a run for its money in St. Louis, and could regain ground being lost to MGM and Harrah's in the greater Chicago market.

Whoever loses needn't feel too bad. The Atlantic City Tropicana is still out there and debtors will probably force a sale of the rag-tag remnants of Columbia Sussex's casino 'empire.' With its market cap languishing around $837 million, Boyd Gaming looks vulnerable and if you're in a thrift-store mood, Isle of Capri's fallen to near-micro-cap status, at $157 million. Then again, you have to figure out how to turn around 'Pile of Debris.' So maybe it's not such a bargain after all.

Indiana: It sure could be worse

Tue, 08 Jul 2008 21:00:00 -0700

... because you could be Illinois, where June gambling revenues went into the toilet (-21%). Which isn't to say that Indiana's numbers look good only by comparison. In fact, the Hoosier State may be benefiting from the Land of Lincoln's misery. It's sort of a "Yes, but ..." situation.

Yes, Indiana would be a lot worse off (-12%) without two new racinos, Hoosier Park and Indiana Live. Their addition has kept gambling revenues virtually flat from June '07. And that's two flat months (as in variance of less than 1%) after eight months of declines. In terms of gross, Hoosier Park vaulted into the #5 spot, while Indiana Live checked in at #9.

Yes, northern Indiana initially looks like it got clobbered (-11.5%). But once you back out Boyd Gaming's Blue Chip riverboat -- which is something of a special case -- the picture improves considerably. All northern riverboats except Resort International's are down, but not on average as much as the southern Indiana riverboats.

All of which suggests that gamblers fleeing Illinois' new smoking ban are taking refuge aboard the northwest Indiana boats. Blue Chip, which is the closest one to the tribal Four Winds Casino Resort, across the Michigan state line, is really taking it on the chin: -39.7% in June. Boyd's struggles here -- and with its Florida parimutuel (which isn't even shown on the company's official Web site) -- make it tempting to call for retrenchment. But, in the case of Blue Chip, it's on pace for $190 million in revenue, which is scarcely chump change ... good enough for the #6 spot in statewide gross.

Dollarwise, Harrah's Entertainment's Horseshoe Hammond now enjoys the top spot, once the exclusive preserve of Penn National's Argosy Lawrenceburg. The latter, however, still has bragging rights to the largest slice of market share (just under 12%, according to the Indiana Gaming Commission) in the state.

Amongst the southern Indiana casinos, only Pinnacle Entertainment's Belterra enjoyed [sic] a single-digit decline in June, while almost everyone else suffered double-digit slumps.

The lone gainer was -- surprise! -- Columbia Sussex's Casino Aztar, up 2.5%. A recent, regulator-placating, promotion-friendly change of administration at Casino Aztar may be the X factor here, as the riverboat followed January-April declines with two months of gains ... the only casino in the state to post that pattern. (Resorts Int'l must really be onto something, what with five straight months of growth in the teeth of an adverse economy.)

Casino Aztar's gain appears to have been French Lick Casino's loss. The lowest-grossing casino in the state, its novelty factor may have worn off, as it's down by almost 25% in June. Then again, French Lick's numbers have been all over the place this year, so who knows? However, it was perceived as the primary competitive threat to Casino Aztar, a challenge that may now have been blunted. We'll see.

And can anybody tell me why two adjacent casino boats, owned by the same company (Don Barden's Majestic Star and Majestic Star II) can have such disparate results? One is off by 4% while the other is down 13%. Then again, who can explain anything Barden-related these days?

Quote of the Day

Mon, 07 Jul 2008 18:50:00 -0700

"I'm pleased that we reached this resolution, and I look forward to working with all the parties to reach consensus on the continuing restructuring efforts of the company." -- Columbia Sussex CEO William J. Yung III, expressing his delight at being essentially kicked out of the casino industry last week.

MTR in retreat

Mon, 07 Jul 2008 12:48:00 -0700

If MTR Gaming is still afloat today, it's almost certainly thanks to the fact that its two remaining casinos -- racinos in Chester, W.V., and Erie, Penn., enjoy oligopolistic market conditions where competitors are few and far between. A long piece outlines the dilemma faced by MTR. Hunker down and pay off debt, as outgoing CEO Edson "Ted" Arneault puts it, or try to aggressively fight back against a pincer movement from Pennsylvania.

Not only is nearby The Meadows racino (soon to be owned by James Packer) looming as an ever-greater threat, so too might Pittsburgh's slot parlor ... if Don Barden can ever get it finished, which looks doubtful. And MTR's flagship racino in Chester is little more than a slot barn -- if you don't believe me, check out the pictures. Even second-tier Las Vegas locals casinos have evolved beyond that point, which may explain why MTR was a dud in the Vegas market (well, that and the fact that competition isn't limited by statute), especially its failed tenure at Binion's. These guys just don't seem geared for intense, Vegas-style competition nor for casino-centric products.

Beyond the racinos, MTR's holdings have dwindled to a few small-staffed harness-racing tracks, which might be hard to unload. Since they're unprofitable, says a Moody's analyst, how much gain lies in selling them? A source tells me that promised infrastructure upgrades in Chester never materialized (even as revenue grew 33%) and that access to Mountaineer wasn't much more than a two-lane blacktop. Hard to compete with Pennsylvania, given those conditions. No wonder cash flow is off 34% in Chester.

Like Atlantic City, Mountaineer has an ace up its sleeve in the form of poker and other table games. Blackjack, craps and roulette are all played there (unlike Pennsylvania) and, without them, Mountaineer would probably very soon be toast. If MTR can hang onto that West Virginia table game oligopoly -- and maybe scrap the harness tracks -- it looks like it's got a good chance to survive, though not thrive.

Trop still taking. The Culinary Union informs me it chatted up Las Vegas Tropicana management back in May and "certainly haven't thrown in the towel ... As you know, there are major ownership/management changes going on there which is a transition that makes scheduling negotiations challenging." Management changes we knew about, but ownership ... now this is intriguing.

Jerry's Nugget, up in North Las Vegas, is still hanging tough with the Culinary, too, over a year after its contract elapsed. Small wonder the Culinary doesn't want to take on the case of the overworked Imperial Palace maids: It's having trouble closing all the deals already on its plate.

Denial in the suites

Tue, 01 Jul 2008 18:16:00 -0700

Gary Loveman must be working on his stand-up act. In today's Wall Street Journal, he calls the present economic pickle "the toughest environment we've faced." It might not be quite so difficult had Loveman not steered Harrah's Entertainment (and its apparently sheep-like board) into a leveraged buyout, an act for which Loveman was handsomely compensated by new owners Apollo Management and Texas Pacific Group.

It gets better. Loveman tells the WSJ, apparently with a straight face, that Harrah's is "profitable." Somebody must have hid the most recent 10-Q from him. That little piece of paper shows a March 31, 2007 profit of $185.3 million swinging to a $187.8 million loss one year later.

And if you're "boosting visits to its regional casinos by chartering airplanes to fly in loyal customers," it sounds like something's wrong. I could understand that strategy if we were talking about getting them to Vegas, but why should you have to fly players to Caesars Windsor or Harrah's Tunica? Wasn't the beauty of the regional strategy that it brought the casino to the customer? And if you're having pay the freight for your loyal customers, what does it take to get the more fickle ones through the door?

As a savvy industry observer put it, "The timing of the leveraged buyouts of several companies increasingly appears to have been exquisitely bad." Station Casinos is having to use its Aliante opening, in part, to make a new home for workers forced out by a recent spate of layoffs.

Meanwhile, like Captain Ahab hot on the trail of Moby Dick, Penn National continues to pursue an LBO. Of course, if you were a Penn stockholder, you'd love this deal, as your shares would be bought out at more than double their current value ($67/share for a stock that closed at $29.73 today). If Penn were to abandon this LBO folly and think in terms of growth, it could probably pick up a lot of low-hanging fruit, from Harrah's, Columbia Sussex, Isle of Capri and other overextended companies, thereby penetrating a plethora of new markets.

Isle had the invidious distinction of making the Motley Fool's list of "Deathbed Stocks," with an Altman Z-Score that shows the company to be in very ill health indeed, hitting a nine-year low recently. (Some, though, maintain Isle is undervalued.) More of the old guard are being moved aside, too.

Of even greater significance, the recent reintroduction of the Lady Luck brand was couched as part of a new strategy "focused on increasing free cash flow through organic growth opportunities" In other words, no more growing revenue by simply opening new casinos ... and no more chasing chimerical revenue opportunities overseas. Tomorrow's Isle conference call should tell us if the new leadership team has other tricks up its sleeve for coping with the present adversity.

Court smacks down ColSux; Pinball and Dragons

Tue, 01 Jul 2008 14:10:00 -0700

This just in: The legal appeal by Columbia Sussex of its New Jersey license denial has been ashcanned by an appellate court. In a 44-page ruling, the court sided with the New Jersey Casino Control Commission, writing -- in part -- that "The findings made by the commission that Tropicana lacked the financial integrity and responsibility, as well as business ability, are amply supported by the record." (The full ruling can be found here.)

We may not have heard the last from the famously "contumacious" William J. Yung III, but it appears that all systems are go for a sale of the Trop ... if only the NJCCC and its bungling conservator, Justice Gary Stein, could ever get their act together.

Las Vegas' Pinball Hall of Fame gets some well-deserved love from the Los Angeles Times. As luck would have it, the Significant Other and I blew a roll of quarters (and then some) at the Pinball HoF last Sunday and -- when it comes to value for your dollar -- this is probably the best deal in Vegas. Not to mention that it's about as much sheer fun as you can find anywhere in town. Even though my hand-eye coordination is too f-ed up to make me a viable pinball player, there's no denying the endorphin rush. (The only game I performed well on was -- wouldn't you know it? -- Stargate.)

One bad boy. That'd be the new star of Mandalay Bay's Shark Reef, its seven-foot-long Komodo Dragon. This massive predator is such a badass that he'll bite you, then stalk you for as much as a week, waiting for his deadly saliva to do its work. Mandalay Bay's resident dragon looks like a cool customer and he fixed me with a hypnotic stare that was uncomfortably reminiscent of James Earl Jones as the shape-shifting Thulsa Doom in Conan the Barbarian.

As much as we admired the great predators (especially the water monitor and the crocodile) our greatest awe was reserved for the gentle majesty of the sea turtles, mystic creatures of great serenity. Amidst all its "wow" factor, Shark Reef does a terrific job of inculcating visitors with eco-friendliness and warnings as to the dangers of overexploiting the oceans. (Although there's an irony in the exhibit that decries the harvesting of sharks for the fins, even as some high roller is probably sitting down to a bowl of shark's fin soup somewhere else in the casino.)

Hats off to the former Mandalay Resort Group for making a home for this noble endeavor, and to MGM Mirage for keeping it going. There aren't many things in Las Vegas that ennoble the spirit but Shark Reef is one of them.