David Mckee's Stiffs & Georges - Fontainebleau

Adieu F-bleau, hello Hollywood?

Mon, 26 Oct 2009 13:37:00 -0700

Look what just fell into the S&G mailbag:

Beginning January 1, 2010 Penn National Gaming will partner with RPM Advertising to develop and execute a brand identity for Hollywood Casinos. The full service assignment will incorporate research, brand development, media planning/buying, creative execution, production services and direct marketing. Penn National, one of the top five gaming companies in the world, owns and operates seven Hollywood Casinos across the country including facilities in Aurora, IL; Bangor, ME; Baton Rouge, LA; Grantville, PA; Lawrenceburg, IN; Bay St. Louis MS; and Tunica, MS.

Forgive me if I have a coughing spasm after reading Penn National describe itself as "one of the top five gaming companies in the world." I suppose it would depend on your definition of "top" (number of facilities and/or employees, market cap, etc.) but in an industry that contains MGM Mirage, Harrah's Entertainment, Wynn Resorts, Las Vegas Sands, Boyd Gaming, Station Casinos and even woebegone Trump Entertainment Resorts, the best Penn could hope for in terms of name recognition would be eighth place. (Enter RPM, stage right.)

As for the marketing alliance, given the timing of the belated decision to try and unify the brand, it looks like Penn is going to attempt a Harrah's in reverse: acquire a Strip property (Fontainebleau) and then create a company-wide brand-loyalty program to incentivize customers to visit its shiny new megaresort.

Sounds a bit cart-before-horse to me but, after today's bulletin, it's no stretch of the imagination to suggest that F-bleau could soon become Hollywood Las Vegas or some close variant thereof. At least in terms of brand equity, it would represent a step or two up from F'bleau, whose name recognition factor is now entirely negative.

Green shoot? Weekday room rates for early December at Vdara have nudged upward to $145/night (from $129) according to J.P. Morgan analysts.

What's wrong with this picture? The media night for Wayne Newton's new Tropicana show, Once Before I Go (could we have that in writing?) looks more like a Dancing with the Stars tour stop. In addition to former contestants Sabrina Bryan and Jennie Garth, four DWTS regulars -- including Cheryl Burke and Kym "Tina Sparkle" Johnson -- will be on hand.

Except for Ms. Johnson, who's presumably in town to rehearse current partner Donny Osmond, the quartet is available because they've all been eliminated. (For instance, Alec Mazo helped Olympic swimmer Natalie Coughlin dance her way to a premature exit.)

Trouble is, they'll be in the audience and the Wayner will be onstage. Wouldn't you prefer the reverse proposition? And since Newton is strictly a short-term proposition for the Trop (six months and out), would it be too much to hope for a Vegas offshoot of DWTS as his successor?

Quote of the Day

Wed, 21 Oct 2009 17:28:00 -0700

Penn National Gaming "has not lost its senses and, [contends] that at the right price and through the right vehicle (and only with a sizable strategic partner who would bring something special to the project, presumably some hotel experience), its involvement in Fountainebleau could make sense.” -- quote from Penn's 3Q09 earnings report, according to J.P. Morgan analyst Joseph Greff. This is the first we're hearing about joint-venture F-bleau partners, though.

F'bleau: Wait 'til 2012; Satre returns

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

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

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

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

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

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

Night of the living dead

Thu, 15 Oct 2009 13:06:00 -0700

Will the last person leaving the Riviera please take down the Charo in Concert, Abra-ca-Sexy! and Tom Stevens posters? Everything about last night's visit to the casino suggested a business that's died but doesn't realize it. Not that it helps to be literally in the shadow of the rotting whale carcass that is Fontainebleau. Between it, Echelon and the apparently defunct Plaza project, that neighborhood is one giant buzz-kill.

Still, even on a Wednesday night one does not expect to see such a thinly populated casino floor. There were more players around the electronic table games than the real ones. In the parking-garage elevator, one of the braille "3" panels was missing from the keypad. Management's solution? Scrawl "3" in red ink where the braille pad should be. (ADA non-compliance much?) If the Riviera is blowing off its interest payments in order to use the money on operating costs, it's not going very far, from the looks of things.

The moribund feeling extended to the upstairs showroom, where Charo has given way to Andrew Dice Clay (or, as the Riv bills him, "Andrew DICE Clay"). Even with a 90-minute cocktail party as an inducement, Clay rolled snake eyes in terms of media turnout. It was a small crowd [sic] and even ~~some~~ many of the local bloggers blew it off, so scant was the event's cachet.

Maybe they were at the Tropicana, checking out Wayne Newton, whose new show ...

Features Rich Natole. This confirms well-sourced reports LVA had been receiving that the impressionist would land a new gig at the Trop and it was merely a question of when. Natole, who was subletting a time slot from Anthony Cools, got caught in the crossfire between Cools and Trop CEO Alex Yemenidjian. When Cools, Bobby Slayton and the Penny Lane show were sent packing, Natole found himself briefly at loose ends, too. The Natoles are nice people, so I'm glad this Vegas saga has a happy ending. On a sadder note ...

Lanni ailing. Former MGM Mirage CEO J. Terrence Lanni has an undisclosed form of cancer. The news comes almost a year to the month since he abruptly resigned from the gaming giant. At the time, Lanni denied that health problems were involved but he also said it had nothing to do with a resumé-inflation scandal that threatened to bring him under investigation in New Jersey, Illinois and Nevada. (Another possible motive for Lanni's abrupt departure: MGM stock had just sunk below $10/share.)

S&G sends wishes for a speedy and full recovery to Lanni, and to his family. I've lost a couple of friends to cancer, so I can imagine the ordeal the Lannis are experiencing. And, if it's not inappropriate, a tip of the Panama hat to low-budget broadsheet Gaming Today, which beat all major news outlets to this sad story.

Reality bites. At least if you're trying to maintain your price point at Aria. The megaresort has cut rates to $159 -- and thrown in a $75 amenity credit -- to entice two-night stays, through April 1. Wouldn't it be ironic if, instead of cannibalizing Bellagio, as feared, Aria wound up gravitating toward the mid-market crowd?

Please spare a thought for the Queen of Comps, the beloved Jean Scott, who's in her sixth week of convalescence from the flu. First, a hepatitis scare, now this. Let's hope LVA's most popular blogger catches a break -- and soon.

Case Bets: Net bets, Mohegan Sun & What's F'bleau worth?

Tue, 13 Oct 2009 12:46:00 -0700

You can't play poker for money on the Internet but you can now play the ponies in Illinois via the Web. This is yet another example of legally enshrined hypocrisy under UIGEA, the parting gift of "Slick Billy" Frist and Jim Leach to the American people. (Speaking of Dr. Frist, M.D., if we must, he just sat like a bump on a log when Bill Maher stupidly railed against the swine-flu vaccine last week. Thanks, doc.)

Setting Sun? The incoming chief of the Mohegan tribe is saying the right things about the imminent need for diversification. Specifics, however, are few on the ground. Mohegan Sun, meanwhile, finds itself between several rocks and hard places: potential competition from Massachusetts and Long Island, $1 billion in debt, falling revenues and the economic inability to finish planned improvements. Depending on how quickly Massachusetts gets its act together, Mohegan's moment in the sun could soon pass.

You've heard of "pocket pool," now the Review-Journal's intrepid Howard Stutz reaches deep into the demimonde of PocketCasino, the new, portable sports-betting technology in play at Venetian/Palazzo. No word yet on whether excessive play causes blindness or hair growth on one's palms.

(Seriously, as a longtime skeptic of Cantor Gaming's portable-gambling applications, I have to say it looks like the Cantor boys have come up aces this time. As for handheld substitutes for table games, the jury is still out on that, four years after their legalization.)

Fontainebleau Las Vegas from Running Bull Productions on Vimeo.

Pennies for F'bleau. What's Fontainebleau worth? Jack shit, according to Penn National Gaming (aka, 15 cents on the dollar). In return, Penn is willing to accept a 10% return on investment ... provided it can bring the project in a no more than $1.5 billion (not counting the billions already spent and written off).

This remains an iffy proposition, in part because it's predicated on increased profitability at Penn's patchwork assemblage of casino properties. Those have to be welded into a Harrah's Entertainment-like loyalty program that drives visitors to Las Vegas. This is a huge "if," as Penn currently has no casinos in major destination markets, unless you stretch that to include recently singed Empress Joliet. Bringing customers to Vegas or even Atlantic City is terra icongnita for Penn.

To put it bluntly, Penn was a third-tier operator -- mainly of racinos -- that "married up" by taking over Argosy Gaming, the classiest of the riverboat operators. However, the Vegas market is notoriously unforgiving of new-to-town operators and Penn will have a very steep learning curve. Also, Penn is not associated with upscale properties, so F'bleau will either have to be repriced downward to reflect the Penn customer base or may need to offer promotional allowances up the ying-yang (more likely both).

If that weren't sufficient cause for concern, Penn's oft-brandished $1.5 billion (the breakup fee from an ill-advised and abortive LBO) is covering multiple bets. Penn is the primary mover behind a pro-casino ballot initiative in Ohio -- partly to protect its Hollywood Lawrenceburg investment just across the border in Indiana. It also recently bought out Cordish Gaming in hopes of getting piggybacked onto the Kansas Speedway casino license, should the Sunflower State's lottery board approve.

At least Penn is working on ways to trim the completion price of F'bleau. Costs to date -- and projected ROI -- being what they are, it behooves Penn CEO Peter Carlino to get this rampaging beast under some semblance of control.

Good times ahead?

Mon, 12 Oct 2009 14:58:00 -0700

New Yorker economic columnist James Surowiecki puts current consumer-spending strends in perspective -- and what he finds should gladden the hearts of casino owners. Basically, he finds historical evidence the current tendency toward thriftiness will soon pass. Of course, when Americans' savings rate (now 6%) dipped below 0%, that should have been a canary-in-the-coal-mine moment for heedlessly expansionist gaming moguls. But they'd probably laid off the canary in order to "maximize shareholder value."

If wishing made it so ...

... Chicago would have had a casino a long time ago. Some city parents think they've found the perfect site, but it's still a long shot. Just keep it out of the Loop, OK? Seriously, downtown Chicago is looking livelier than it has in a while and doesn't need a big-ass casino plunked in its midst. The likelihood that it would be Windy City version of, say, a classy anomaly like MGM Grand Detroit is pretty remote.

So much for speculation that Australian casino magnate James Packer would get into the running for Fontainebleau. Seems that Packer is buying up Crown Ltd. stock instead. (Indeed, why would Packer write off his F'bleau investment, then double down on the failing development?) Packer has raised at least $772 million by disposing of non-gaming assets and appears on course to make a takeover bid for Crown, of which he owns 40% at present.

What's a Trump casino worth?

Thu, 08 Oct 2009 15:07:00 -0700

Only $14 million in cash (plus a $100 million equity infusion), according to The Donald. Bondholders say, we'll see your $115 million and raise you $100 million. The latter would recoup at least some -- but not very much -- of their $1.25 billion debt under their plan, while Das Trump would send them away virtually empty-handed. (Moral: When Donald Trump asks you for a loan, take a page from Nancy Reagan and Just Say No.)

The bondholders' assignment of a $75 million valuation to Trump Marina seems awfully optimistic for what is, in essence, a corpse that can't be sold. In essence, the real value proposition is resurgent Trump Taj Mahal, with the other two casinos scarcely better than throw-ins. The Marina is, if anything, an albatross around the company's neck. Still, given that CEO Mark Juliano is going to exceptional lengths to champion the Trumpster's bid, which is a big "screw you" to the debtholders, here's hoping Judge Judith H. Wizmur holds firm for a more responsible solution.

Ho: No! "I don't see major resorts opening for the next couple of years now," says Lawrence Ho. thereby raining pessimism on the expansion plans of Las Vegas Sands, Wynn Resorts and Galaxy Entertainment. The younger Ho also speculates upon the Chinese government's motivation for throttling, then somewhat relenting upon travel to Macao. Interesting tidbit: Marketwatch.com reports that "Venetian Sands" [sic] has cut its number of table games by 25%.

Nevada revenues in. And yeah, they suck. They're much less sucky than usual (-9%), showing an upward trend in baccarat plus two locals-oriented bright spots in the form of Aliante Station and M Resort. It's unclear, though, how much of the growth generated by the last two is new business vs. redistribution of dollars from elsewhere in the valley. The Sun's analysis is far more informative than that found in the R-J.

Wait 'til next year. That's the timeline for casinos in Massachusetts. Even though western Mass looks like slim pickings, lawmakers will probably have to put a casino there just to get the bill onto the floor.

Penn bid falls. Lenders to bankrupt Fontainebleau won a small victory or two, as the judge overseeing the case seems determined to keep lead developer Jeffrey Soffer as far from the disposition of F'bleau as possible. (Soffer is both a debtor and creditor on the project.)

F'bleau, for its part, revealed that Penn National Gaming's offer is now "substantially less" than $300 million, but would include money to replace the windows that are reportedly falling off the building. (One more reason not to build a Strip megaresort tower flush against the "pedestrian realm.")

Groundbreaking today for the long-awaited SugarHouse casino in Philadelphia, under the shadow of a stick-it-to-SugarHouse tax that's been proposed in the Lege. Table games, meanwhile, might be off the table in the face of a $200 million lawsuit. You see, non-racino casinos are allowed to have 5,000 slots (in return for a $50 million fee). Small "resort" casinos -- known as "Category 3" -- only have to $5 million and get 500 slots (accessible only to guests). That's proportional, obviously, and seems fair.

However ... lawmakers want to tilt the playing field by giving Category 3 casinos 30% as many slots as, say, Rivers Casino or SugarHouse, instead of 10% ... and open those games to the general public, not just guests. Of course, the state can't go to the one existing Category 3 casino and ask for another $10 million -- can it? Casino operators are also solidly behind the GOP position on table games: $10 million upfront plus a 12% tax. But, unless House Dems completely capitulate, the gaming bosses are unlikely to get what they want, at least where the tax rate is concerned.

Penn whiffs again. Although Penn Nat'l was supposed to be a bidder in the bankruptcy auction for the Lone Star Park racino, it evidently didn't get into the action and the track went to the Chickasaw Nation for $27 million. (A lot less than Harrah's Entertainment paid to get into Ohio.)

Which means that if/when gambling is legitimized in Texas, the Chickasaws will have a double advantage (parimutuel + tribal status), while Penn will be looking at yet another missed opportunity. Penn's corporate strategy is a baffling alternation of rashness and hyper-caution.

In other tribal news, much-criticized National Indian Gaming Commission Chairman Phil Hogen is gone, thank God, and with him his new, more-restrictive Class II rules. Hogen was justly pilloried for attempting a rollback of hard-won gains in what games tribes could offer. His new rules reflected Bush administration paternalism toward tribes and while they're officially postponed for a year, I think it's safe to say they're dead.* No wonder Rep. Dan Boren (D-OK) is smiling. Watch out for that doorknob, Mister (Ex-)Chairman.

(* It's probable the same thing would have happened under a President McCain, as either candidate would have brought a more enlightened attitude to D.C.-tribal relationships.)

Supporters of video gambling are starting to push back in Illinois, at least in rural, conservative McHenry County. So far it's been the urban areas where this expansion of gambling hasn't been gaining traction.

A repeal of UIGEA continues to gain ground in the House of Representatives, even if it got pulled off the floor in the Senate. (Thanks for nothing, Harry Reid.) The money quote, literally, is a reference to an amendment Rep. Jim McDermott (D-WA) which would would specify that "corporate taxes owed on regulated Internet gambling activities are collected, as they currently are from the land-based casino industry." [emphasis added]

If that means what it implies, it would remove the spectre of industry-wide federal gambling taxation from the discussion and leave taxation to the states. If not, then the nose of the federal casino-tax camel is still sticking through the legislative tent. And you know where that leads.

We've seen a nationwide gaming tax get shot down during the Clinton administration but there are desperate times, obviously. Republicans like Mike Huckabee and Rep. Steve King (R-IA) have been looking to sock it to casinos at the federal level for some years now, so I fear it could have bipartisan support, should such a debate come to pass.

It's playoff time. A tired, flat-footed Minnesota Twins squad looked positively dreaful last night, flailing at outside pitches from C.C. Sabathia (if you couldn't reach that slider in the first inning, your arms aren't going to be any longer in the seventh, son). Cliff Lee made short work of the Colorado Rockies (besides, Jim Tracy can't win in the postseason), the St. Louis Cardinals look set to continue their tradition of postseason underperformance and my Anaheim Angels are forever reduced to a quivering heap of Jello in playoff games against the Boston Red Sox. Why am I having visions of brooms?

Signs of the Times

Wed, 07 Oct 2009 14:02:00 -0700

You know the casino industry's in the crapper when, next week, Spectrum Gaming Group is hosting a conference entitled, Distressed Gaming Properties: The State of the Industry. This is so hot-of-the-presses Spectrum hasn't even got the registration page up ... yet.

Quoth Spectrum's e-mail blast: "With the recession battering gaming jurisdictions from Connecticut to Nevada, a new sector of the industry has come to the fore: distressed operations. Investment firms now have funds that specialize in distressed gaming assets, regulators are being asked to deal with situations they never considered, and operators are turning to outsiders to either right their operations or provide interim management services. In this session, experts will discuss the benefits and risks to distressed Gaming M&A, and how regulations and bankruptcy court can impact a successful takeover. They will also discuss how to properly apply multiples, and how EBITDA can be enhanced by skilled operators."

Maybe Penn National Gaming CEO Peter Carlino should attend this before he goes all in on Fontainebleau. His spokesman says Penn "is evaluating other Las Vegas opportunities." They may have "evaluated" Planet Hollywood right out of their grasp and passed on God knows what else. But F'bleau? That's a keeper. Yeah.

$300 mil for F'bleau?

Tue, 06 Oct 2009 13:10:00 -0700

That's the latest; namely, that Penn National Gaming will put down less than $300 million as a "stalking horse" bid on Fontainebleau. Penn would also be on the hook for the costs of the project's bankruptcy proceedings. Potentially getting a Strip resort for less than 10% of its cost sounds like a good deal for Penn ... until you think about the hundreds of millions of dollars (possibly as much as $2 billion) that stand between F'bleau and the finish line.

Sue Lowden evidently didn't get the memo that Mike Ensign is no longer writing fat campaign checks at Mandalay Resort Group. How else to explain the Archon Corp. treasurer's loud and frequent fealty to Ensign fils, the ethically challenged junior senator from Nevada? Lowden's proclamations provided an irresistible temptation for Democratic Senatorial Campaign Committee spokesman Ed Schultz, who sniped, "Sue Lowden's support of John Ensign may have fundraising value to her, but it is a reflection of her own character and fitness for office. She has shown more fidelity to him, than he has shown to his own wife." (Lowden is gunning for Sen. Harry Reid's seat.)

In her capacity at Archon, Lowden could line the younger Ensign up with a dandy post-senatorial job as a casino greeter at her Pioneer Gambling Hall in Laughlin. (As for Lowden, at least she's off Jon Ralston's "Chicken List," after gracing the Face to Face set. Your turn, Sheldon Adelson. Does Sue Lowden have more huevos than you?)

The perils of Packer. Reeling from a $1 billion loss on his overseas casino misadventures, James Packer and his Crown Ltd. are putting some of their Melbourne land on the block.

Not buying it. Although MGM Mirage CEO Jim Murren may have predicted that CityCenter's premiere would increase Vegas visitation by 10%, but gaming analysts aren't having any of it, especially when all the new room capacity is at the high end. Also, it's remembering that the 1998-2000 roll of megaresort openings and the 2005 debut of Wynn Las Vegas coincided with robust U.S. economies. Andrew Zarnett advises casino bosses to look at current numbers as the new baseline -- which sure beats pining for the vertiginous and unsustainable levels of two years ago.

Macanese machinations. Conventional wisdom on the advisability of floating IPOs in Hong Kong continues to seesaw. The Wall Street Journal runs the numbers and finds gaming stocks defying the market's downward trend. Which is good news for Steve Wynn and possibly even Las Vegas Sands' public offering, which is taking forever to reach the launch pad.

Scarlett saved?!? & other Case Bets

Thu, 01 Oct 2009 16:28:00 -0700

Splendid news, lads (and lasses). Scarlett, Princess of Magic may return to the Riviera in nine months or a year ... that is to say, whenever the economy eventually rebounds. This comes straight from Riv management.

Of course, there's a good chance the Riv itself won't be around in nine months or so. It's miracle it's stayed out of Chapter 11 as long as it has. Then again, President William Westerman has an enviable track record when it comes to beating the odds. People were writing him off 11 years ago and he's still here.

Ah, the good old days. Remember when the Gold Spike was hands-down the scariest casino in Las Vegas? The Siegel Group has done a splendid job of spiffing the place up but a reminder of the Spike's dodgy not-so-distant past came in the form of a guilty verdict in a Nov. 17, 2008 shooting. According to the Pulitzer Prize-winning Las Vegas Sun, the attempted murder was a "grizzly homicide." Does that mean the assailant was firearm-proficient bear?

Now that autumn is here, get out and enjoy Lake Mead while you still can.

Investors may be tiring of endless debt swaps and postponements. A proposed 64-cents-on-the-dollar (at 10% interest) issuance of MGM Mirage debt laid an egg. When it took out $12 billion-plus, due next June, MGM must have been either high as a kite on CityCenter cash-flow projections when it agreed to that deadline or assumed that, when push came to shove, it'd just rejigger its debt load anyway.

A wise colleague of mine once said in re Donald Trump, "All he ever does is restructure his debt because that's all he can do!" That has now become the modus operandi of the casino industry at large -- except for Mr. Cash-and-Carry, Phil Ruffin. So I guess Trump can legitimately claim to have been ahead of his time.

Penn hearts F'bleau. Well, sorta. Penn National Gaming has acknowledged that it's been sniffing around bankrupt Fontainebleau but cites several disincentives to a deal. Penn's CFO even called F'bleau worthless (and few in town would give him an argument at this point). Penn's publicly stated criteria for a Las Vegas acquisition have included that it be affordable and unencumbered. F'bleau is neither. So if Penn can't make liens and litigants go away, perhaps it can trash-talk F'bleau's price down so far that completion-related headaches become grudgingly acceptable.

Trop, Sands purges continue

Wed, 30 Sep 2009 17:36:00 -0700

It's official: "Pit Bull of Comedy" Bobby Slayton has snarled his last at the Tropicana Las Vegas. Thus endeth a brief, inauspicious reign by Anthony Cools over the Trop's upstairs showroom. A well-placed source advises LVA that Beatles tribute show Penny Lane was pulled after EMI hit it with a cease-and-desist letter. In any event, it left as invisibly as it arrived.

Trop CEO Alex Yemenidjian still has three shows he inherited from predecessor Scott Butera but it's pretty clear that he's going to put his own stamp on the property. As for Cools, well, he'll always have O'Shea's.

Movement at Cosmo. Buried in the Review-Journal (six items deep) is the news that the Cosmopolitan has wooed ~~John~~ Marshall Andrew away from Las Vegas Sands to be its CFO and hired Station Casinos refugee Marshall Andrew as chief information officer. Deutsche Bank looks serious about making that September '10 opening date.

Will the economy have improved sufficiently to have absorbed most of the CityCenter rooms and the Planet Hollywood Westgate ones by then (and maybe, but not very likely, Fontainebleau)? Boyd Gaming is betting otherwise. The Echelon cranes have been seen coming down, marking an additional hiatus in the project, which reportedly will not be resumed until 2012.

Las Vegas Sands: Execs overboard!

Andrew is just the latest exec lured -- or chased -- away from Sheldon Adelson's employ. Former Venetian veep Paul Pusateri (who helped launch Paris-Las Vegas back in the day) was just nominated as president at The Palms and ever-helpful Sands spokeswoman Mindy Eras has gone to Preferred Public Relations. Whether these moves are part of Adelson's promised cost reductions or are a winnowing out of perceived William Weidner loyalists, it must be getting lonely at the top.

There's quite a debate going on at the Las Vegas Sun on the rise and fall of themed resorts on the Strip. Surf over, check it out, maybe weigh in, if the spirit moves you.

Hell no, they won't; Penghu punk'd; Barbarians at the gates (again)

Mon, 28 Sep 2009 19:12:00 -0700

Pay taxes, that is. Two Indiana racinos are pushing back against a tax rate that averages 38%. Considering that the two tracks -- one run by Cordish Gaming -- are the newbies on the Hoosier State scene, one could fairly ask them, "Didn't you know what you were getting into?" As the article notes, neither Harrah's Entertainment and Boyd Gaming -- both which recently heavily reinvested in Indiana -- aren't whining about their tax rates.

But the racinos have a point. In states where the number of casinos is artificially capped by the Legislature, solons become the custodians of the industry's economic future, like it or not. And it only stands to reason that if the market is going be diluted, tax relief is in order. Considering that same-store revenues in Indiana have been nothing but down since the racinos opened, some push-back on the tax front was probably inevitable.

Hell no, they won't either. Allow casinos in Penghu, that is. Voters on the Taiwanese island voted against gambling expansion there, putting the issue off-limits for three years. The notion of planting mega-million-dollar casinos in remote, hard-to-reach parts of Taiwan never made that much sense to S&G, but big industry players like Sheldon Adelson and Gary Loveman have kicked Taiwanese tires in the recent past.

Did Adelson and Steve Wynn mistime their leap into the Hong Kong stock market? One Wall Street Journal columnist thinks so. Bad timing isn't the exclusive province of the public sector, though: A Washington State tribe borrowed $375 million on the strength [sic] of revenue forecasts that proved grossly over-optimistic. Percentage-wise, neither Harrah's nor Station Casinos missed the mark this badly.

Bob Stupak, R.I.P. The penultimate Vegas maverick is gone, having spent much of the last decade as a recluse. One especially thorough obit contains a quote by former Klondike owner John Woodrum that ought to be engraved on Stupak's gravestone (or at the base of that now-vanished Stupak statue): "If ever there was a guy beyond the rim of reality, there was Bob. But somehow he made reality happen."

Just what we don't need. They're baaaaack. Never mind the smoking wreckage they've made of Harrah's and Station, private-equity firms are rooting amidst the flotsam, looking to extend their morbid clamp on the casino industry. Leading the pack is Leon Black's inaptly named Apollo Management. Both indirectly (Planet Hollywood by way of Harrah's) and directly (Cosmopolitan, Fontainebleau), Black is reported to be scarfing up what few independent properties remain, raising the prospect of a Total Rewards oligopoly stretching from just above CityCenter to the southern frontier of the The Mirage.

There are also a few bottom-feeders in play. Hooters hardly seems worth buying unless Onex Corp. wants to do a tear-down and extend the Tropicana Las Vegas eastward. Current ownership of the Riviera is tapped out but the place still has prospects as a fixer-upper (not something that fits with Apollo's sack-and-pillage business model). If non-bottom-feeder Green Valley Ranch is really on the bubble of insolvency, then Penn National Gaming ought to quit chasing F'bleau, and try to drive a wedge betwixt Station and its Greenspun family partners. Penn would stand to inherit a beautiful property with far fewer problems than Big Bleau.

Penn hearts F'bleau ... maybe

Thu, 17 Sep 2009 21:24:00 -0700

So the much-bruited suitor for stalled, bankrupt Fontainebleau has been "outed" and it's ... Penn National Gaming. Ace reporter Alexandra Berzon, late of the Las Vegas Sun, broke the story. However, she notes that Penn and F'bleau have been dickering for three months: "Talks could still fall apart at any moment."

Given the criteria that Penn CEO Peter Carlino has been citing for any major casino purchase, F'bleau is an illogical choice. It's expensive, it's unfinished, it's location-challenged, it's a high-end property in a depressed market, it has a problematic condo component (read: units that will never sell) and, most of all, it's a snakepit of litigation. Plus, the cost of completion seems to escalate by the hour and is currently pegged at $1.5 billion.

Remember, Penn balked at paying $1 billion-plus for The Mirage, a turnkey, trouble-free resort. Meanwhile, Harrah's Entertainment is snatching Planet Hollywood right out from under Penn's nose and the company whiffed on a chance to acquire newly ascendant Greektown Casino in Detroit. Go figure.

A Penn spokesman "could not confirm or deny" the Wall Street Journal story. We'll take that as a "yes."

Aubrey has landed. As in "O'Day." Webmistress Jessica has forwarded the following from Holly Madison's Twitter feed: "@hollymadison123 Damn! I can't take one day off work without everything going to hell in a handbasket! Back to spreading the positive energy!" Like I said, word from the wise is that Madison and new Hitler-lovin' co-star Aubrey O'Day are anything other than BFFs.

Harrah's buying spree

Tue, 15 Sep 2009 17:33:00 -0700

Thanks to reader Todd Bristow, who tipped me to Harrah's Entertainment's $89.5 million purchase of Thistledown Race Track, near Cleveland. Thoroughbred Times reports that over half of that amount ($47 million) is a "contingency" payment. The extra 47 mil would kick in if legislation is upheld that would allow conversion of Thistledown to a racino. The track is one of several assets being disposed of by bankrupt Magna Entertainment. If Harrah's can't step up to the plate, Penn National Gaming and Pinnacle Entertainment are in the on-deck circle.

As you've probably heard, Harrah's is also gobbling up the debt carried by Planet Hollywood. It's a strategic move, considering that Harrah's already owns acreage that extends back from Bally's and Paris-Las Vegas to Koval Lane and then wraps south around Planet Ho. It's also been posited that this could be a "passive investment," a gamble that Planet Ho will come back in a big way in the future. Sounds rather iffy to me but stranger things have happened.

Mind you, this is also the same Harrah's that has been buying back its own debt at distressed rates (most recently at 67 cents on the dollar) and restructuring payment schedules like mad to stay ahead of an avalanche of $19 billion-plus it owes on its LBO. Harrah's creditors, are you feeling like suckers yet?

Or perhaps the money is coming from sugar daddies Apollo Management and Texas Pacific Group. Apollo has already been kicking the tires of Fontainebleau and may well be the "potential buyer" who's poised to take the keys to that Edsel. Even with Harrah's skill set, a high-end condo-hotel like F'bleau would be new business model with which to tangle.

At least the likely scenario is that Harrah's would be merely the mechanic, pocketing a fee for trying to get F'bleau up and running. Gives new meaning to "cash for clunkers," no? (Then again, Penn Nat'l may be smarting so much from that thwarted breakup fee in Ohio that it decides to buy F'bleau as a bank-shot means of getting back at Harrah's. Who knows, when CEO's egos have been bruised.)

As the cherry on top, Harrah's furtive move on Planet Ho inspired the following "No shit, Sherlock" headline, courtesy of the Las Vegas Review-Journal: "Harrah's debt purchase could lead to takeover, analyst says." Gee, ya think? I look forward to, "Beginning of autumn could lead to lower temperatures."

Colony Capital comedy

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

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

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

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

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

Just what the doctor ordered

Wed, 19 Aug 2009 14:29:00 -0700

With Eastern Division President Carlos Tolosa calling it a day, Harrah's Entertainment is dispatching Atlantic City native Don Marrandino to try and turn things around out there. (No word on whether the Alizma triplets will accompany him eastward.)

Marrandino's portfolio will encompass far more than Harrah's quartet of A.C. properties but his entrepreneurial flair is something that the Boardwalk and Marina districts could sorely use. Gross profits were down 20% in 2Q09, with only Boyd Gaming's Borgata (+8%) bucking the trend.

S&G wishes Marrandino luck in his new assignment. He'll certainly be missed back here. One doesn't know what to expect from successor Rick Mazer, currently Harrah's top man in Indiana. Following an exponential expansion of Horseshoe Hammond, it's become The Casino That Ate Everybody's Lunch. However, the re-branded Horseshoe Indiana, at the southern end of the state, has been losing market share. Maybe taking the Caesars name off the place wasn't such a good idea, after all? Harrah's bought a brand (Horseshoe) with great equity but has mostly bumbled thereafter.

Did you know that the Greek Isles is a gold mine just waiting to tapped? So says a flack for the new owners, who enthuses, "Although the current environment in Las Vegas is challenging, the property’s exceptional location, as evidenced by its proximity to the proposed Convention Center expansion and recent hotel/casino developments on the north end of the Strip, should provide the new owners with significant upside potential through a redevelopment or repositioning of the hotel as the market recovers."

Yup, between stalled, bankrupt Fontainebleau and a proposed Convention Center addition (unlikely under current austerity budgets), the Greek Isles is a can't-miss investment. Where else can you see so many parking lots and garages from the comfort of your hotel room?

But seriously, folks ... how did anyone ever get a $120 million appraisal (or an $83 million purchase price) on a hotel-cum-slot route that's losing over $1 million a year? If the Greek Isles were a dog, somebody would have put it down by now.

That half-assed wrap on the would-be-classy Mandarin Oriental has also drawn the attention of Steve Friess. And it turns out that The Rio isn't the only Harrah's property in Vegas badly needing a paint job, either. The Paris-Las Vegas balloon has seen better days, too. This sort of chintziness was only to be expected once Texas Pacific Group and Apollo Management got their claws into Harrah's, but nobody wanted to hear about it back in the day when the words "private equity" sent analysts and regulators into a delirious swoon.

Colony Capital strikes (out) again; Big Bleauh

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

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

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

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

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

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

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

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

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

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

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

The dream is dying

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Case Bets: F'bleau, Adelson, Oscar

Fri, 17 Jul 2009 14:03:00 -0700

Whether it's the banks or the subcontractors, somebody's going to take a big screwing at Fontainebleau. That's the nub of a new lawsuit, whereby developer Jeffrey Soffer asserts that Turnberry West Construction (which he also owns) has superior repayment rights to those of the project's backers.

I believe this is called, "One hand washes the other." However, the legal issues involved make fascinating reading. Some new-to-Vegas casino developers have screwed the pooch and eventually come out smelling like roses (Sheldon Adelson, for one). I don't Soffer's going to make into that elite club. And you can forget about Big Bleau opening before July 1, 2010, at the very least.

Speaking of Sheldon ... results at his new Sands Bethlehem continue to disappoint. Adelson's tradition of half-assing his casino openings, dribbling the product onto the market, may finally be catching up with him. Marina Bay Sands should be the acid test of this managerial style. (Personally, I believe it's going to be Adelson's Waterloo, at least to the extent that the casino is expected to drive everything else.)

Sands Macao: Sheldon's best bet

Ironically, it was the comparatively "quick and dirty" Sands Macao, built for considerably less than any other Adelson casino, that has been his biggest hit. The cost-to-date of Sands Bethlehem, by the way, has been revised downward to $675 million (from $743 million), which ought to help the ROI numbers. However, early predictions that Sands Bethelehem was going to siphon business from the Philadelphia area were clearly unrealistic and should have been reported with greater skepticism.

Berzon: caped crusader

Truth, justice and the American way have one less champion in the Las Vegas area now that Pulitzer Prize-winning Alexandra Berzon has been hired by the Wall Street Journal. Good for Berzon, better still for the WSJ. But who will keep a gimlet eye on OSHA enforcement and the CityCenter clusterfuck now? (And she was moving into gaming coverage, too ... the prospect of a Berzon/Liz Benston/Rick Velotta trifecta would have dwarfed all other casino reportage in this burg.) With the loss of Berzon and editor Drex Heikes, the Las Vegas Sun is suddenly in a world of hurt.

Oscar gets whacked. Somebody's fantasy, anyway. (Were there any thumbless graffiti taggers in the house? Homeless advocates? Civil libertarians?) Hizzoner was the celeb-victim at the reopening of Marriage Can Be Murder in its new digs at Fitzgeralds. MCBM recently left the Four Queens and a good move it was, seeing as the 4Q is at risk of being evicted. Movie veteran Goodman (Casino) evidently forgot whatever he learned from The Master (aka Martin Scorcese) and didn't hit his "mark."

As for MCBM, a dinner-theatre show, I can't say it compared favorably with the ones we did at Grinnell Community Theater. I was the "juvenile lead" in several shows there and humbly submit that our gung-ho amateur troupe could have done better. Hey, we "killed" with Ten Nights in a Barroom. That thing could have run for six months, easily.

Moulin Rouge: Whoops!

Tue, 07 Jul 2009 14:27:00 -0700

The Moulin Rouge development that will never be.

Oh dear, oh dear. Seems like the City of Las Vegas unwittingly obstructed its own arson probe into the demise of the Moulin Rouge when it allowed the property to be immediately demolished. Sloppily, the actual tearing-down was farmed out to the property's former owners, who happened to have a demolition contractor on site during the blaze.

The fire's cause remains speculative and no finding of arson has been made -- and now perhaps never will. But the city's decision not only looks overhasty, it was (at the very least) cavalier to entrust it to dispossessed Moulin Rouge Development Corp. and not new owner Olympic Coast Development. The latter's prexy, John Hoss, told the Las Vegas Sun he found the chain of events "a little odd" and "a weird coincidence." Since Hoss is only trying to corral a $100,000 insurance claim, the city could get stuck with an asbestos-removal tab as high as $1.1 million.

Can they screw this up any further? Is the Pope Catholic?

F'bleau-minus. The bankrupt resort's developer, Jeffrey Soffer, proposes some unspecified corner-cutting to get the project back on budget. ("On budget" being a very relative term where Fontainebleau is concerned.) Combine this with the allegedly secret "Enhanced" costs for F'bleau's highly touted amenities and the moral of the story is that what you see on the Web site or in the design renderings has a tenuous relationship to what you'll actually get.

At least Soffer is offering to chip in some equity, unlike former investor James Packer, who scuttled away from F'bleau the moment the chips were down.

Gator on the loose. One of Las Vegas' larger parks got a lot more interesting yesterday when a 42-inch-long alligator turned up. Instead of entrusting the spunky fellow to a local zoo or perhaps one of our local casino-based wildlife habitats, the Wildlife Dept. killed him. Bastards. I hope they never get their mitts on our beloved Mojo ...

Mojo, the monarch of Huntington Press.

Speaking of James Packer ... griefs are arriving in battalions (thanks, Mr. Shakespeare) for City of Dreams. In terms of mass-market business, Venetian Macao is eating City of Dreams' lunch. "Despite 41,000 people walking through City of Dreams every day since it opened in the first week of June, most of the visitors were just admiring the decor instead of sitting down at its tables for a game of baccarat," reports The Age.

Not only is one analyst projecting a 15% earnings shortfall for Melco Crown Entertainment, another has tripled his loss-per-share projection. J.P. Morgan is also revising its 2010 cash-flow projections on the $2.1 billion megaresort to 13% ROI, down from 17%. (That's still a better return on investment than you can get on the Las Vegas Strip.)

Did Steve Wynn take Packer to the cleaners when sold him 37% of a casino concession for $1 billion? Wynn had a chance to size up Packer and deemed him not yet ready for the big leagues. Score another one for El Steve.

Case Bets: CityCenter, W, Bernie Goldstein, Roger Thomas

Tue, 07 Jul 2009 13:15:00 -0700

Some rueful condo buyers are probably calling MGM Mirage's ultra-mega-super-duper resort "ShittyCenter," judging by their ire. It's difficult to know with whom to sympathize in this ongoing dispute. Condo depositors want to renegotiate prices (which range all the way up to $9.4 million/unit) while MGM -- though not unsympathetic -- maintains buyers got a special deal going in and therefore have relatively little cause for complaint.

Good luck trying to renegotiate the price of that Saturn on which you just made a downpayment. MGM needs those condo purchases if CityCenter is to remain in balance (look what happened to Fontainebleau, which has sold nary a timeshare). And it really can't afford to start refunding some of that $313 million that depositors have already placed in the kitty.

However ... there might be a pragmatic argument to be made for MGM bending to pressure. Condo sales in the valley haven't been robust -- a mere 1,172 units in 2007-08 and a measly 52 closings this year. Scarier still, the Wall Street Journal notes that 7,000 more luxury condo units are under construction as we speak.

There's basically no market remaining for high-end condos and every unit that goes on sale dilutes the value of a CityCenter aerie just a little bit more. MGM hasn't been ashamed to offer discounts to players and vacationers. Maybe it's time to extend that philosophy to condo buyers. If CEO Jim Murren has to sell a few casinos to make up the difference ... well, so be it.

Not everybody is having a hard time moving property in this market. J.P. Morgan reports that Starwood Hotels & Resorts Worldwide just sold its W San Francisco for 14X cash flow. Geez, try to get half that multiple for a Strip property and watch potential buyers yawn in your face.

Bernie Goldstein, R.I.P. Not only are there second acts in American lives, the late Mr. Goldstein proved there are third acts as well. The granddaddy of Midwestern riverboat gambling, Goldstein built Isle of Capri Casinos into the first company of its ilk with a recognizable brand identity and saw it outlive several of its rivals. If the company's business plan went astray in recent years, that doesn't diminish the scope of Goldstein's achievement. Thankfully, the gallus-snapping Goldstein was inducted into the American Gaming Association's Hall of Fame just in the nick of time.

Congratulations to Roger Thomas for being named the next recipient of the Jay Sarno Award from Casino Design and G2E. While I'm not sure it's flattering to receive an award named after the man who covered Caesars Palace with unsightly cement mesh and gave the world Circus Circus, it's the sentiment that truly counts.

Basically, Thomas (and architect DeRuyter Butler) set the template for the last two decades on the Strip and everybody else has been tinkering around the edges. Thankfully, he's rescinded his retirement from Wynn Resorts, so we can look forward to years more of standard-setting design work.

Quote of the Day

Mon, 06 Jul 2009 18:18:00 -0700

"This is a family who pays their debts no matter what.'' -- business associate of Fontainebleau developer Jeffrey Soffer. F'bleau has been accused by Bank of America of trying to simply write off $1.3 billion its owes to its lender.

Sandbagged at F'bleau

Sun, 05 Jul 2009 16:47:00 -0700

Bank of America has fired another salvo in the ongoing war of legal briefs involving bankrupt Fontainebleau. The latest B of A blast depicts F'bleau management as considerably less than candid with its lenders. Not only did the former allegedly stiff-arm the latter when meetings were requested, there was an episode that might be called the casino industry's version of an "October surprise."

According to page 18 of the court filing, last April 17, F'bleau sprang a double whammy on the bank. Supposedly, it had been budgeting upfront for a "Base" plan while keeping hidden an "Enhanced" plan that "included restaurants, retail, nightclubs, and pool deck gaming and bar area." Not only did F'bleau reveal that the "Base" budget was unfunded to the tune of $180 million, the "Enhanced" budget would tack on another $203 million.

What F'bleau told the bank -- but not the public -- was that it wanted to push back the opening until Feburary 2010. Its own estimates also showed that it would recoup only 60% ($35 million) of the projected LEED credits. In short, the bank is accusing F'bleau of merrily spending away even as it knew the numbers weren't going to add up.

Three days after the F'bleau surprise, the project was notified that it was in default. At that time, the megaresort was still $1.5 billion away from completion, a sum that couldn't be financed without ignoring existing loan covenants -- and one that included $300 million in change orders.

An appraisal ordered by B of A concluded that F'bleau -- which was on pace to cost $3.2 billion -- was worth only $1.76 billion. Even that figure may be optimistic, as it's predicated on F'bleau doing better-than-Strip-average numbers on the casino floor, especially at the tables, plus a 91% hotel occupancy rate.

The project also stands accused of asking to be simply forgiven over $1.3 billion in existing debt. That's more than the cost (in unadjusted dollars) of either Bellagio or Mandalay Bay and roughly equivalent to that of the new Aladdin (now Planet Hollywood). You or I could build quite a dandy casino-resort, too, if we were allowed to pay for it in Monopoly money.

Of course, if one pretended that aforesaid $1.3 billion in costs had simply ceased to exist, it would soften some gloomy ROI projections. According to the Las Vegas Sun, F'bleau's own number-crunchers found that, after two years of operation, the resort would generate $162 million-$252 million in cash flow. So we'd be looking at a 5%-8% return on investment on a $3.2 billion megaresort (the unspoken implication being that would come after two even leaner years at the start). We can have megabudget megaresorts on the Strip or high-yield Vegas casinos but we clearly can no longer have both.

House of wax

Fri, 03 Jul 2009 13:05:00 -0700

I call your bluff, comrade. As you may have heard, casinos in Russia can stay open by converting to poker rooms. A tip of the fedora goes to reader mike_ch for pointing out this story, which delineates some of the pros and cons. In Vegas, even the strongest poker rooms don't generate nearly the body count that table games and slots do. But Russian casinos are much smaller and at least a few might be able to hang on, depending on the size of the rake.

It's mighty big of the Kremlin, by the way, to concede that poker is a sport, not a game of chance. Now if only Uncle Sam would do the same ...

Rescue the Riv! Random observation from driving down Las Vegas Boulevard last night: The Riviera suddenly looks so much better and more classic when juxtaposed with the incredible bulk that is Fontainebleau. Land values have fallen, RIV stock is worthless and the property itself provides ready access to the Las Vegas Convention Center.

Time, methinks, for Penn National to get off its duff and make an offer ... unless Penn CEO Peter Carlino is waiting for the Riviera to go into bankruptcy, so he can pluck the carcass at auction. Then again, if Carlino really thinks that Planet Hollywood and some or all of Station Casinos are low-hanging fruit, who am I to second-guess him?

Who's the dummy? The purpose of our excursion was to attend an incredibly pointless media event at Madame Tussauds at The Venetian. If there was a point, it was so that the assembled media hordes would serve as extras for yet another episode of Kathy Griffin: My Life on the D List. A waxwork of Ms. Griffin was being unveiled and suffice it to say that Wax!Griffin looks far better than Real!Griffin. (I must be Officially Jaded, for I scarcely gave the comedienne a second glance.) The various and sundry female impersonators on hand -- led by Frank Marino -- had clearly taken greater care of their appearances than Griffin had of hers. There was, in fact, just about every stripe of LGBT humanity on hand last night, so it was almost more Rainbow Coalition than media event.

What excitement there was went on outside, where a smallish crowd surrounded the Michael Jackson statue. Tributes were in evidence but everything was tasteful and no hysteria was to be seen. As for Mme. Tussauds itself, I've been to the original one in London, and I recall its wax figures as being more believable and the setting itself as more atmospheric (especially the tableaux of infamous British homicides and regicides) ... but that was 35 years ago this month.

Give Vegas Tussauds props for having a Joan Rivers dummy who looks more animated than her real-life counterpart, as seen on the NBC sitcom Celebrity Apprentice. All that's missing is to give the waxwork Rivers a voice box that periodically squawks, "A pokuh playah! A pokuh playah!" Still, we easily spent more time checking out the doodads and gizmos in Brookstone than we did in the wax museum.

Quote of the Day

Mon, 29 Jun 2009 12:13:00 -0700

“The opening date never moved. We always threw more money at it. You just have people work overtime to fix problems. We were building, redesigning, tearing stuff out and starting again.” -- Fontainebleau engineer, explaining how the project (which is at least 90% over budget) progressed in Keystone Kops, higgelty-piggelty fashion. Amazingly, not only is this common practice but F'bleau still isn't completely designed.

By request ...

Wed, 24 Jun 2009 13:40:00 -0700

'Tis another day of hopscotching betwixt the doctor and the dentist, which sure cuts into quality blogging time (as did a nasty attack of fibromyalgia yesterday). However, by reader request, we present this special, (not) exclusive S&G photo of a special plenepotentiary Apollo [Mis]Management representative -- perhaps Leon Black himself ...

... contemplating piling additional money into Fontainebleau.

Serously, overspending -- not lack of business -- is what really got this town into its present pickle. Profligacy and/or dangerous incompetence at the highest levels are the true culprits for the Vegas meltdown. Yet it is people like maids, cocktail servers, security staff and -- by extension -- customers who are literally paying the price for clownery in the executive suites.

F'bleau and Cosmopolitan need to take a page from the Echelon playbook: Say "that's a wrap" and wait 'til the economy improves, attendant litigation is settled and the tsunami of new hotel rooms that is CityCenter has ebbed a bit. We don't need multiple new megaresorts now for the simple fact that the market will not support them.

Then again, if Harrah's Entertainment or Wynn Resorts wants to sail its luxury liner straight into the Big Bleau iceberg (or the Cosmo) ... it's their money. Just don't complain to the press when you can't get triple-digit room rates, 'kay?

F'bleau: 'But who would want it?'

Tue, 23 Jun 2009 20:11:00 -0700

No sooner had I -- perhaps foolishly -- posed that question than the Las Vegas Review-Journal answered it. Top dogs from both Wynn Resorts and Harrah's Entertainment had been given tours of Fontainebleau, as had sundry other potential investors.

You've got to wonder how this news is playing with two constituencies: Harrah's bondholders and Wynn employees. Both have been poor-mouthed of late, with the latter absorbing severe pay and benefit cuts for the company's sake. As for Harrah's debtors, they're probably long since resigned to taking a bath on their investment, since the timeline for repayment already stretches far into the next decade. In other words, it's not the best moment to be seen out shopping.

Also, there's the small matter of cost. F'bleau's official budget has now crept up to $3.1 billion and -- if its bankers are right -- the completion money needed is close to $1 billion. (Insert Dr. Evil inflection here.) Steve Wynn might have enough socked away to swing that. Gary Loveman, on the other hand, says his company doesn't even have enough scratch to change its letterhead to "Caesars Entertainment."

Theory: Perhaps Loveman's sugar daddies at TPG Capital and Apollo Management underwrite the completion of F'bleau, maybe more -- but as a separate entity. Harrah's is then jobbed in to run the joint. It'd mean some administrative headaches for Loveman but nothing compared to those involved with being the out-and-out owner. Personally, I'd give Wynn better odds of actually getting this Spruce Goose into the air, but it's liable to be a charity case, whoever inherits it.

There's another reason for Wynn and Harrah's to approach F'bleau as they would a live grenade: the morass of litigation that surrounds Big Bleau. The latest batch of lawsuits alleges diversion of funds. Any casino company riding to F'bleau's rescue is going to want to be well indemnified against being dragged into this nightmare. No, Turnberry West and Fontainebleau will surely have to sort this out themselves.

Out of danger: That's where MGM Mirage says it is, largely by dint of mortgaging several key properties. CEO Jim Murren, meanwhile, complains that offfers for MGM assets aren't "close to what we believe the values are worth. The multiples are low. It seems like the wrong time."

Damn that free market! S&G humbly suggests that the low multiples are a reflection of the parlous state of the industry. Seven times cash flow just ain't what it used to be. Agree about the "wrong time" thing, though. Few are buying and even fewer banks are lending, so it's a heckuva juncture to be peddling one's wares.

Ensign concubine unmasked! He two-timed his wife with her? Beauty comes in many forms, but I'm thinking "lox," not "fox." As for well-remunerated cuckold Doug Hampton, he looks big enough to clobber the Nevada senator. Instead, he wrote a whiny letter to Fox News.

Despite his primitive spelling, grammar and punctuation, Hampton parlayed his husband-of-mistress status into a high-ranking sinecure at Allegiant Air. The latter says Hampton's employment was based on "his credentials and experience" ... not his education. Still, I feel as though my B.A. in English ain't worth the sheepskin upon which it's printed.

As F'bleau turns ...

Fri, 19 Jun 2009 16:48:00 -0700

Fontainbleau's grisly zillion-grievance bankruptcy has been sent to mediation. (I don't envy the mediator.) In the process, F'bleau has obliquely confirmed lenders' accusations of cost overruns. F'bleau has a union-affiliated financier lined up to provide funding above and beyond the final $656 million that the $2.9 billion (and climbing) resort's bankers have withheld.

One possible instance of profligacy involves F'bleau's on-hold condo component. Then-CEO Glenn Schaeffer had a handsome preview center erected along the Strip and staffed it up. But ... no matter how much you might want an F'bleau condo they wouldn't sell you one. No, they'd just take your contact information and get back to you -- sometime. With such half-assed decisionmaking, no wonder F'bleau alienated its backers.

And now the lawsuits pile up and contractor Turnberry West is being accused of featherbedding. This project really needs a third-party rescurer, but who would want it?

Burton is back? That's what Mike Weatherford is reporting. Lance Burton, it is hinted, will be returning to his Monte Carlo gig on July 1. Why all the delay and mystery? If I had to guess (and I do), my hunch would be that MGM Mirage is angling for a bigger slice of the gate receipts.

Atlantic City Death Watch: This is particularly worrisome -- Pennsylvania Gov. Ed Rendell is opening the door to full Class III status for the Keystone State's slot parlors. Sensibly, Rendell advocates waiting and seeing until all of Pennsylvania's planned slot houses are up and running before upping the ante.

However, he's also giving legislators his tacit blessing to force the issue. His advocacy of expanded video poker in Pennsylvania isn't going to do besieged Atlantic City any favors, either.

F'bleau evacuation

Thu, 18 Jun 2009 11:12:00 -0700

Yesterday, Fontainebleau staffers were seen pulling out of the corporate office on Convention Center Drive. An S&G source says furniture was being trucked out and it looked like the evacuation was almost finished.

F'bleau: another triumph for Packer

Wed, 10 Jun 2009 14:06:00 -0700

James Packer sure knows how to pick 'em, doesn't he? He's just written off $250 million invested in (read: "wasted on") Fontainebleau. His Crown Ltd. also took the opportunity to kick F'bleau while it's down, stating it felt "no obligation and has no current intention to contribute any further equity or debt to Fontainebleau or participate in any restructuring under any bankruptcy arrangements." In other words, please excuse me whilst I push you under the nearest bus.

James Packer picked a peck of putrid portfolios.

Packer is on the Mendoza Line, now batting 1-for-5 in U.S. casino investments, with only a minority interest in Cannery Casino Resorts providing any ongoing yield. In baseball, a .200 average gets you a ticket to the minor leagues. S&G humbly suggests that, the next time Packer gets the urge to invest in American gaming companies, he ought to have a lie-down until the fit passes. Failing that, he might simply proceed to the water closet and "invest" his money straight down the crapper. The ROI should be about the same.

As for F'bleau, the significant storyline emerging from its bankruptcy appears to be the revelation that ex-CEO Glenn Schaeffer and associates spent $2.1 billion, performed years of construction ... and were only 70% finished when lenders pulled the plug. Which is significant because F'bleau execs maintained, right up to the bitter end, that they'd open in October -- giving them less than six months to do 30% of the work. I'm starting to have a glimmer of sympathy for the banks' point of view.

Welcome to Albania: Otherwise known as Post-Gibbons Nevada. And good riddance to the 2009 Lege for aiding in this debacle.

Quote of the Day

Wed, 10 Jun 2009 11:45:00 -0700

"It is unfortunate that our lenders forced us to take this step. ... Our goal now is to secure funding to complete this world-class project and restructure our existing debt." -- Fontainebleau Chief Restructuring Officer Howard Karawan, on the project's June 9 bankruptcy filing.

"What Las Vegas Vacationer wants to stay in what looks like an 1970's IBM office tower? the kids will be in the back seat crying and screaming 'Please Dad, not there'." -- Las Vegas Sun reader rejco100. S&G usually doesn't reprint anonymous Internet comments but this one was too damn clever to overlook.

Trump: The Coup

Mon, 08 Jun 2009 14:35:00 -0700

Despite having publicly washed his hands of Trump Entertainment Resorts, timeshare pitchman Donald Trump has been quietly plotting an external takeover. But Trump's former company has no intention of quietly yielding to his embrace.

But they really mean it this time. Despite being not up to regulatory snuff "in every category," Las Vegas Gaming is receiving exceptional indulgence from the Nevada Gaming Control Board. Although, through his attorney, new CEO Jon Berkley basically admits to being overwhelmed and out of his element, he received the NGCB's blessing. True, Chairman Dennis Neilander promised "zero future tolerance. I’m at the end of my rope." But Las Vegas Gaming has been able to get pretty far out of compliance without any evident consequence. Neilander needs to show that his threat is not any empty one.

Satisfy them. A consortium of German lenders find themselves badly upside down on that never-very-likely Elvis-themed high-end resort. If you accept soon-to-be-ex-owner FX Real Estate & Entertainment's revised valuation of the property, center-Strip land has has fallen to $12.4 million/acre. Think what that acreage might have fetched when we were at the height of the Strip bubble.

Schreckliche idée, revisited. Prominent gaming attorney Frank Schreck continues to lug water for one of the less-potable ideas of recent years: Allow institutional investors to own as much as 25% of casino companies without deigning to subject themselves to Nevada scrutiny. In the course of shopping this around, Schreck has either revised his proposal or his sales pitch. He's now emphasizing that these companies would be passive investors.

That may be more palatable to both regulators and the public at large, but I'm not sure it will be much of an incentive to mutual funds, etc. Judging by the tugs of war we're seeing at Fontainebleau, CityCenter and Station Casinos, Wall Street isn't in the mood to fork over even more money to casino developers in return for being at management's mercy.

As for F'bleau, its owners have pressing problems to worry about on the home (i.e., Miami Beach) front.

Quote of the Day

Mon, 01 Jun 2009 13:00:00 -0700

"Why do I get the feeling that this place is shaping up to be a financial disaster that will make the $1 billion New Aladdin look like a mild blip?"-- Steve Friess, on the sudden departure of Fontainebleau CEO Glenn Schaeffer.

Brooks: Steve Wynn sucks

Wed, 20 May 2009 14:10:00 -0700

State of the art Las Vegas ... if you're David Brooks.

OK, so David Brooks didn't go that far in his latest New York Times think piece, but if you applied his nostrums to the casino industry, Las Vegas would still look a heckuva lot like it did in 1988.

"The methodical executives at successful companies just make the same old four-door sedan, but they make it better and better," he writes. Then, further down: "The C.E.O.’s that are most likely to succeed are humble, diffident, relentless and a bit unidimensional. They are often not the most exciting people to be around. ... the virtues that writers tend to admire — those involving self-expression and self-exploration — are not the ones that lead to corporate excellence."

Hmmmmm. Steve Wynn can be egotistical, assertive, self-contradictory, multifaceted, expressive and reflective -- often all of the above in the space of a few sentences. His business track record must be a complete train wreck, mustn't it?

So hit the bricks, Wynn. You too, Anthony Marnell II & III, Glenn Schaeffer and Jim Murren, you art-collecting college-boy snobs. (They probably sip wine too, doncha bet?) We don't need none of yer out-of-the-box, smarty-pants thinking. Just give us the next iteration of the Boardwalk or Bingo Palace and make it snappy, OK?

The sound of obsolesence: The next time Review-Journal Editor Thomas Mitchell pens one of his endless series of musings wherein be strokes his moustache and is mystified by the decline of the newspaper bidness, he might ask himself this: Why did his paper run this wire-service story when the Sun had gotten to it two days earlier and in far greater detail?

The sad saga of Terrance K. Watanabe is rife with disturbing moral, ethical and regulatory questions. About the only clear-cut conclusion is that Watanabe's defense is a non-starter. (Harrah's Entertainment may be in trouble, but that's a separate issue.) Former Philadelphia Eagles owner Leonard Tose tried the same thing and had even less luck in court than at the tables. Fortunately, David G. Schwartz is right here to provide us with the relevant history and the precedent that augurs so poorly for the luck- and sobriety-challenged Mr. Watanabe.

It must be frustrating to keep trying to influence events and yet events refused to influenced, mustn't it? Let's ask this guy. He doesn't have a Puliztzer Prize, 'tis true. (Running stories two days after the Sun does might have something to do with it.) But some guy in Cedar City, Utah (who apparently couldn't find a copy of the Deseret News) is a big fan.

This just in: Schwartz also has the early word on a proposal to legitimize Illinois' gray-market slot route business. At first blush, this looks like a really good way to drive a dagger into the heart of the state's already-struggling casinos. Maybe Neil Bluhm should rethink that Chicagoland casino he's planning.

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.

F'bleau blues

Thu, 14 May 2009 16:01:00 -0700

Lawsuits are flying thick and fast in the sad saga that is Fontainebleau. From terminated construction overseer/auditor CCCS International comes a new set of allegations. If true, they would significantly strengthen the case that F'bleau was in default, as its underwriters contend. CCCS accuses F'bleau of being disorganized and dilatory (sounds like me), as well as engaging in some ledger-demain to the tune of $40 million, partly involving "inappropriate payment methods."

Some of these contentions bolster lenders' claims that F'bleau was behind schedule and over budget. Actually, we'd already been hearing the "behind schedule" rumor here at LVA well before the banks pulled the plug, but it was never more than scuttlebutt. Also, F'bleau spokesman Dave Satterfield's rebuttal goes well beyond the usual, "We believe the allegations are without merit" boilerplate.

If this dead-serious game continues in its present course, the inevitable next step will be for F'bleau to sue CCCS, accusing it of being in cahoots with Deutsche Bank. There's liable to be quite a cat's cradle of charges and countercharges before we see the end of this.

Perp Show

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

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

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

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

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

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

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

F'blown?

Wed, 13 May 2009 18:46:00 -0700

Ownership at Fontainebleau is alleging heinous doings by Deutsche Bank to subvert F'bleau (which gives every indication of being destined to fail without external assistance). Supposedly, Deutsche Bank was confabulating with a consortium of 10 other banks to shove F'bleau under the bus, in order to improve the chances of The Cosmopolitan. Deutsche Bank is the default owner of the Cosmo, developer Ian Bruce Eichner having proven illiquid.

Now, I love a good conspiracy theory as much or more than the next man but, absent hard evidence, I'm finding F'bleau's allegations a tad lurid even for my taste. Besides, Deutsche Bank's share of the $770 million in funding that got yanked out from under F'bleau -- a deplorable move, but for other reasons, IMO -- is only $80 million. That's chump change compared to the $3.9 billion Cosmo albatross around the bank's neck.

In the immortal words of Dr. Daniel Jackson, "Anyway, I'm sorry, but that just happens to be how I feel about it. What do you think?"

Ya think? Here's one for the "No shit, Sherlock" file. Enjoy.

Case Bets: Taxes, Stratosphere, Riviera, Treasure Island

Wed, 04 Mar 2009 13:43:00 -0700

If you, like me, had hoped for a breather from bad news today, you hoped in vain. In no particular order ...

Faced with a collapsing state budget and a scorched-earth set of spending cuts proposed by Gov. Jim Gibbons, do state Democrats take an Obama-like, "Hard choices are upon us" stance? You're kidding me, right? No, they're seeking refuge in weaselly evasions that they can't make specific proposals because they don't know the exact number that they have to hit.

Will they take on the mining industry or propose the gross-receipts tax on non-casino businesses for which J. Terrence Lanni used to stump? Nope. Even though sales taxes are by nature regressive and both they and gaming revenue are spiraling downward, 60% of the state's eggs will continue to be put into that fraying basket. (The best analogy for this budgetary formula is that of CityLife's Steve Sebelius, who likens it to building a house on the slope of an active volcano.)

The rest of the non-solution, as propounded by Ways & Means chair Morse "Moose" Arberry (D) consists of More Of The Same: Just jack up each existing tax a teensy bit and maybe nobody will notice -- or at least squawk too loudly. The rationale, as explained by one budgetary sage, is that everybody takes it in the shorts (basically), sparing legislators from having to confront one or two particular interest groups. It also means that the increased -- they hope -- revenue starts rolling in on Jan. 1, 2010 ... whereupon the larger issue of Nevada's revenue structure can be safely palmed off on the 2011 Lege, absolving the current bunch of responsibility. Yup, sounds like a real winner.

So Nevadans and tourists alike can brace themselves for higher taxes on: alcohol, tobacco, live entertainment, insurance premiums, property transfers -- and casino revenues. Not to mention the hotel-room tax that's already sailing through. Heck, it seems the gambling industry dodged a credit-chilling acceleration of the tax on markers largely because Midnight Jim went off half-cocked. Gibbons' characteristic ineptitude is rarely a cause for relief but here's an exception to the rule.

As for the Buckley/Arberry proposition that the people who are already paying (you, me, the guy behind the tree) should pay more while the ones who aren't will continue to skate ... to say that it's disgraceful, inequitable and it stinks would be a gross understatement. It's a sad day when Jim Gibbons is your local Profile in Courage but there you have it.

J. Terrence Who? The unfortunate Mr. Lanni was a no-show at his Nevada Business Hall of Fame induction. Maybe, just maybe he's keeping a low profile because MGM Mirage is cracking under the strain of debt that was run up on his watch. Then again, this is a town that has no compunction about giving sentimental awards to mobbed-up old casino execs. But fudge one resumé and you're a non-person, buddy.

More 401-ks stopped. This time it's the Goldman Sachs-owned Stratosphere and both Arizona Charlie's, etc. Gosh sakes, yes, let's raise gaming taxes right this minute.

If a Strip casino were to close, the odds-on favorite would be the Riviera. It has shuttered all but one of its restaurants and has got to be worrying that a rumored six-month postponement of Fontainebleau could be the kiss of death. If that weren't enough, Wachovia Bank has decided to give the Riv a shove under the bus by insisting that -- according to Riviera Holdings President William Westerman (via PR Newswire) -- "Wachovia could gain access to all cash held in Riviera's bank accounts by merely advising the banks of a notice of default without first allowing us the opportunity to cure the default, no matter how trivial."

He adds that Wachovia's alleged brinksmanship has been going on since last Oct. 14. What luck: Of all the banks willing to help prop up the casino industry, Westerman has to deal with the one that decides to play hardball instead. When you consider that people were writing Westerman off 10 years ago, he's no stranger to facing long odds.

Ready for some good news? Cash-parched MGM Mirage is close to gaining some desperately needed liquidity now that the Nevada Gaming Control Board has OK'd Phil Ruffin's purchase of Treasure Island. Ruffin has enjoyed excellent luck with Nevada regulators. Like his New Frontier acquisition, this one went through like greased lightning. An exhaustive LVA profile of Ruffin found him always to be on the up and up. And unlike James Packer, he doesn't plan to fix what isn't broken.

MGM Mirage: Uh-oh; "Off the box"

Fri, 27 Feb 2009 16:53:00 -0700

Following in the footsteps of Station Casinos and Harrah's Entertainment, now MGM Mirage is drawing its revolver, so to speak, to fund operating expenses. This is never a good sign. Earlier this week we learnt that all of Kirk Kerkorian's Tracinda Corp. stock (53% of MGM shares) has been pledged against CityCenter. I was guardedly optimistic about MGM's future, but now ... ?

At least if what LVA is hearing about Fontainebleau is true, MGM won't have to worry about competition from F'bleau for as much as 10 weeks after Aria opens.

"Off the box": That's the new coinage for describing public figures who go from being seen as assets to liabilities. It was inspired by Kellogg's dumping of Michael Phelps after those bong photos surfaced.

In the gaming sector, the obvious "off the box" candidate is Donald Trump -- so obvious, in fact, that Trump is trying to get himself off the box, demanding that Trump Entertainment Resorts become Something Else Resorts. Another OTB candidate might be former Cirque du Soleil wunderkind Criss F. Angel.

Anybody else?

Case Bets: Penn in Vegas, Fontainebleau, Fine Cotton R.I.P.

Sat, 21 Feb 2009 15:05:00 -0700

Phil Hevener, the guy who was onto the Imperial Palace sale before anyone else, says Penn National pitched offers for not only The Mirage but also Caesars Palace ... at insultingly low EBITDA multiples (see bottom of story). The Strip has seen much better days but it's not a flea market.

Et tu, F'bleau? It hasn't even opened and already Fontainebleau's viability as a going concern is in doubt. Those thousand condos represent a giant millstone around the resort's neck; the relationship between Vegas casino operators and the condo business has been akin to that between lemmings and the sea. Already, it's looking like a rerun of the Harrah's/Station scenario: Partial recovery for senior debtors and a dime on the dollar for junior ones.

See no evil, speak no evil. A robbery was committed at a casino "in the 4000 block of West Flamingo Road," an address that just so happens to exactly coincide with the Gold Coast. (The Palms is in the 4300 block.) This is at least the third time that I can recall offhand in which the location of a casino robbery was obfuscated by local law enforcement -- nor the first time that Las Vegas Metro has placed a higher priority on protecting casinos' images than on solving crimes. It might be easier to find witnesses if you told the public where the crime took place, no?

I got a horse right here, his name is not Paul Revere and if you backed this horse you had quite a lot to fear. A quarter-century ago, literal also-ran Fine Cotton wound up at the center of a bizarre racing-fraud scandal involving a -- get this -- impostor horse. Could Dick Francis have dreamt up a better yarn than this?

Station to the rescue. With Thunder Valley execs given the chop and new managment parachuting in from Station Casinos, work has resumed at the Sacramento-area casino-resort -- after some downsizing of the original expansion plans. Kudos, Station.

Case Bets: James Packer, Isle of Capri

Mon, 09 Feb 2009 18:30:00 -0700

Geez, maybe the Nevada Gaming Control Board shouldn't have been in such a hurry to green-light James Packer's purchase of Cannery Casino Resorts. (In a bow to noblesse oblige, Packer wasn't even required to put in an appearance at the Nevada Gaming Commission's vote on the matter.) At least the NGCB might have wanted to see how the Harry Kakavas scandal plays out, especially when Kakavas purports to have Crown Ltd. execs committing improprieties on tape. And since one of the people in the hot seat is Crown CEO Rowen Craigie -- with whom Nevada regulators have become quite familiar -- close attention is warranted.

Regulators from Pennsylvania -- a state not heretofore known for the thoroughness of its casino due diligence -- are taking this matter a little more seriously. In fact, they're sending a deputy Down Under to hear Kakavas' sub rosa recordings in person. Having dropped the ball on Don Barden and Louis DeNaples, the Pennsylvania Gaming Control Board clearly doesn't want a third botched background investigation on its ledger.

Packer, money soon parted: A $300 million writedown of other stateside Packer casino investments is on the way. Reuters' dispatch implies that some of Packer's Fontainebleau stake may be written off. That's neither a vote of confidence for Packer or F'bleau, which looks more and more like the wrong project in the wrong place at the wrong time. At the time Packer bought in, it'd looked like he'd found a "steal" -- and that F'bleau had been hard up for investors. Well, the second part may still be accurate.

Update: Then again ... maybe both still hold water. All though all of Packer's U.S. casino holdings (exclusive of Cannery) may be only worth $65 million combined, getting 20% of F'bleau for 65 mil still qualifies as a steal.

Isle bags U.K. venture: Even had it stuck to its knitting (U.S. regional casinos), Isle of Capri Casinos would still be in the doldrums -- its revenues weren't growing on a same-store basis. A duff casino project in the bowels of Coventry's Ricoh Arena just made things worse and now its end is nigh. Perhaps, as Isle contends, Britain's regulatory regime is partly to blame, but that's an excuse which suggests Isle didn't quite know what it was getting into -- nor would a strong performance in Coventry have cured the company's underlying malaise. Couple this with a 'debacular' Bahamas venture and Isle can't come home soon enough.

Dancing Tsar? No, not he: Normally admitting to be an ABBA fan wouldn't be a problem ... unless you happen to be Vladmir Putin, that is. Bjorn Again probably never imagined they were onto the publicity coup of their careers.

Penn Natl' > [your company here]

Wed, 04 Feb 2009 11:44:00 -0700

Wall Street remains gung-ho on at least one gaming stock: Penn National. Vegas-based casino owners who are pining for Penn to buy one of their assets may have to possess their souls in patience. Joseph Greff writes that Penn is keeping its powder dry "given the belief that market clearing prices for single asset acquisitions will dip lower in 2009. We are not expecting any acquisitions any time soon." The restraint displayed by Penn's board of directors stands in silent reproof to the sheeplike tendencies displayed at other casino companies in the recent past -- the manner in which the calamitous Station Casinos buyout was rammed through is one of the more egregious instances.

The real kicker comes toward the end of a J.P. Morgan research note, which lauds Penn's all-regional portfolio, which is expected to outperform the Las Vegas and Atlantic City markets. As LVA Editor Deke Castleman put it, who'd have thought we'd ever see the day when Wall Street likes Keokuk, Iowa, better than Las Vegas?

How bad is it at Riviera? All buffets have been closed and an eyewitness tells me that only two outlets are still open in the food court. It sounds like they're just hanging on by their fingernails until Fontainebleau opens and (we hope) stimulates business up thataways.

New man at the Trop

Wed, 21 Jan 2009 15:04:00 -0700

Last Sunday's Las Vegas Review-Journal carried an interview with new Tropicana Las Vegas President Ron Thacker. It delicately sidesteps potentially uncomfortable questions about the plug-pulling on Folies Bergere or the brevity of Thacker's tenure at Fontainebleau. His fondness for Who Moved My Cheese? earned him some reader derision. I found it a refreshing change from those execs who routinely cite Thomas Friedman's The World is Flat (presumably in search of clues on how to outsource the casino industry to Bangalore).

Thacker is a third-generation casino manager and a well-traveled operator. This should stand both him and the Trop in good stead after the clownish bumbling of hapless Columbia Sussex. He also evinces a longstanding affection for the property, which is a quality any executive there ought to possess. So that's another point in Thacker's favor and he's right that nostalgia is the main selling point down there. With the exception of parts of the Sahara, there's no property that says "old Vegas" (in a Rat Pack sense) quite like the Trop.

But when he says, "We're going to put some money back into the property with the infrastructure itself. Bring it up to the standards our customers expect and our employees expect," you have to wonder if he's read Tropicana Entertainment CEO Scott Butera's business plan. It earmarks $8.4 million for renovations and maintenance this year (that'll get you 1/30th of thrifty Eastside Cannery and about an 80th of Aliante Station) and an average of $5.2 million for each year afterward.

That's not much more than is set aside for MontBleu, up in Lake Tahoe and a small fraction of what Butera proposes to spend on the Tropicana Atlantic City. Then again, in order to do the latter, he'd have to persuade the New Jersey Casino Control Commission to let him have it back and ... well ... you know.

Casino CEOs get religion?

Wed, 21 Jan 2009 13:45:00 -0700

Industry leaders have had a near-death experience and seen the light ... or so they say. Considering that I paid $12.50 for a (mediocre) Bloody Mary at Encore last week, I'm going to believe "a back-to-basics approach that focuses on delivering a quality at good prices" when it manifests itself on a widespread basis.

Also, the timing of this 'come to Jesus' moment is problematic, seeing as the vast majority of incoming room inventory -- one estimate puts it at 85% -- is aimed at the luxury market. It's difficult to contemplate the looming form of Big Blue (aka Fontainebleau) and not brace oneself for a grinding collision between Supply and Demand.

Big Blue: brace for impact.

To give MGM Mirage CEO Jim Murren his due, he's been walking the walk. Kirk Kerkorian's portfolio of Strip properties has a plethora of value-oriented messages streaming through cyberspace these days. Interestingly, the only non-participant as of this week is Bellagio, so one can surmise nothing other than that Steve Wynn's grand dame continues to do bang-up business.

What's more, Murren endeavors to drive a stake through the Bellagio-is-for-sale talk by telling AP reporter Oskar Garcia that the Bellagio "brand" is underemployed and he's considering sublicensing it overseas (Bellagio Ho Tram anyone?), along with the titular MGM brand. Having set the completion of CityCenter as a do-or-die proposition, Murren openly puts other company assets on the table, including not only the Atlantic City acreage Jeff Simpson recently characterized as "low-hanging fruit" but also undeveloped property in Vegas.

Could this be the end of "Project Z" or even "City Center North"? If anybody foresaw the announcement of CityCenter and its all-in-one-big-gulp development as the moment that would make or break MGM, please step up to collect your Nostradamus Award cum laude.

As for Harrah's Entertainment, when its CFO is saying the U.S. casino market has reached saturation point, I guess that makes it official. Jonathan Halkyard, however, somewhat undercuts his credibility when he decries a "shocking lack of innovation" in slot machines. That's not only deeply unfair, it's an affront to the slot makers, who I've always found to be trying quite hard to innovate. (OK, so there was that addiction to themed slots but it's behind us now, much like collegiate "experimenting" with LSD and lesbianism.)

"I mean if you look at the slot machine, it's basically the same as it was 75 years ago," says Halkyard. By that yardstick, so's the automobile. Ditto the airplane ... or just about any casino game you could mention. It's probably best to write Halkyard's comment off for the hyperbole it clearly is, perhaps meant as another poke-in-the-eye provocation toward IGT and other Harrah's nemeses.

At least Harrah's is trying to keep its marketing messages in step with the era. While I didn't see the magic word Twitter, I'm sure that's the sort of thing Halkyard has in mind. The one company refusing to adjust to the times is precisely the one you'd expect: Las Vegas Sands. Yup, just keep building those big boxes and hang in there until the economy conforms to your strategy, not vice versa.

The prodigal son

Mon, 19 Jan 2009 18:03:00 -0700

Poor Kerry Packer; the late Australian mogul and famous high roller must be doing all his rolling in the grave now. Reputed for being daring at baccarat and cautious in business, the media baron is at least spared the indignity of seeing son James Packer blow through his patrimony at a record pace.

Going is the $33 million yacht; on hold is the $40 million corporate jet. Even work on the $2.5 million backyard swimming pool has been suspended. (Don't you hate it when that happens?) At least the pin placements on Packer's Greg Norman-designed golf course are still "changed every day at massive expense," reports Rupert Murdoch's News.com.au.

More seriously, Packer is reported to be suffering from depression, though other media reports dispute this. Given the debilitating, even paralyzing nature of the disease (something for which I can vouch firsthand), it puts a potentially very different cast upon Packer's December no-show for a Nevada Gaming Control Board hearing.

When Packer did turn up, Chairman Dennis Neilander admitted to being somewhat foxed by Packer's acquisition of Cannery Casino Resorts (for $1.8 billion). "You and me both," I thought. As Packer seemingly played Pin the Tail on the Donkey, buying not only Cannery but positions in Fontainebleau, Station Casinos, Harrah's Entertainment and the flaccid Crown Las Vegas 'failsino'-tower, I tried to convince myself that an overarching strategy was at work. In retrospect -- especially after the writedown of the Station and Harrah's investments -- what we were witnessing was James Packer, Shopaholic. (How did he manage to miss out on the Cosmopolitan?) One begins to see why Steve Wynn steered clear of Packer, back when the talk of a Wynn-Packer joint venture was the buzz du jour on the Strip.

Even the Crown Macau cash spigot has been sputtering, although Melco Crown CEO Lawrence Ho keeps insisting that Chinese access to Macao will improve in time for the City of Dreams opening. (Either he's whistling past the graveyard or he knows something for which others would pay a very great number of patacas.) Market share is down at Crown Macau and the Macanese government is predicting a serious diminution of gaming revenue for for the overall market in 2009, placing it somewhere near $10.7 billion.

Plus, the ripple effect doesn't stop there. Aristocrat Leisure, which could really stand to have some good news, had been hoping for a fivefold increase in its installed slot base in Macao over the next two years. Not only is that unlikely, operators are trimming their existing slot inventory.

Underscoring their pessimism regarding reduced visa restrictions, Macanese tourism officials are turning their gaze at least partly away from China. Among the newly coveted markets are Singapore's presumed feeder markets -- India, Indonesia, Malaysia, the Philippines, Thailand, and even Australia and New Zealand -- to say nothing of Singapore itself. It's long been presumed that Singapore's got a tough row to hoe when its casino megaresorts come on line and it just keeps getting tougher.

'Gang' at Encore

Thu, 15 Jan 2009 11:49:00 -0700

Yesterday saw an unusual -- but altogether pleasant -- change in the Vegas Gang routine, as we taped "on location" from a seventh-floor room in Encore, overlooking Echelon and the increasingly ominous Fontainebleau (so disproportionately massive it looms over its neighbors like Godzilla or Gammera over mere mortals). Both David G. Schwartz and Jeff Simpson joined us by speakerphone, giving the conversation a certain Charlie's Angels vibe.

It's Fontainebleau ... coming to stomp us all! Run for your lives!

Spoilers ahead ...

I'm clearly very much in the minority on the likelihood of a Mirage or Bellagio sale. Cash cows they may well be, but there seems to be a strong consensus that their tires are being kicked and serious talks are underway, as well as that The Mirage has become a stodgy property.

Also that MGM Mirage is a Vegas-Vegas-Vegas-obsessed company and would be willing to sacrifice the Gulf Coast and Detroit markets -- the latter of which it utterly dominates -- to keep the CityCenter bucks a-flowin'. (And why would MGM bail on Detroit and not on the sickly Illinois market instead? Or Tunica? Or ... ? If Alex Yemenidjian would pay $435 million for an Illinois license, what might he put down on actual, operational asset?)

Such a strategy would fly in the face, if not of sense, at least of recent casino industry thinking, whereby you try to maintain strong footholds in the second-tier markets and not put all your chips on Vegas (unless you're Steve Wynn and even he tried it once). It would be like Harrah's Entertainment evacuating Atlantic City to raise money for its stalled Octavius Tower.

And you could knock me over with a feather if MGM sells its Macao demi-concession to partner Pansy Ho or back to her father Stanley, especially after all the hoops MGM had to jump through to get into Macao. Bailing on the world's #1 casino town would be an indicator of extreme desperation bordering on insanity.

Unfortunately, we weren't able to get into the provenance of the urban legend that Phil Ruffin's Treasure Island purchase was just a big-ass/short-term loan to MGM, with "T.I." serving as collateral -- and at 55% interest, no less.

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.

Plaza officially in trouble (or not)

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

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

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

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

Deep Red: Encore

Mon, 22 Dec 2008 16:53:00 -0700

As much as casino-watchers have been vexed by the total media clampdown on all but the smallest scintillae of revelation about Steve Wynn's Encore, it was worth the wait. Or, to put it differently, Aria and Fontainebleau have just been given an exceptionally difficult act to follow.

I say that as someone who was disappointed with Wynn Las Vegas when it debuted in 2005. Despite the modernity promised by the exterior, what I found inside was a pastel-colored version of Bellagio -- smaller, muted, rearranged and more than a bit fussy.

Let it not be said that there is anything pastel about Encore, nor anything tentative. For starters, primary colors are back "in" with a vengeance, specifically red. Now, I like red but we're talking RED!!! For relief, the VIP area is dominated by green. But did I mention to utter profusion of RED??? If Dario Argento designed a casino, this would be it.

My tour group, which included fellow Vegas Gang-sters David G. Schwartz, Chuck Monster and Robert Earl's favorite writer, Hunter Hillegas, had the good fortune of being in the tour group led by Wynn Resorts design guru Roger Thomas. For the latter, Encore represents his Vegas swan song and it closes the circle in other way: As Thomas put it, when Wynn and he remade the downtown Golden Nugget, it was the death knell of that Vegas staple, "the red casino." Not another would be built after that. "We killed [the red casino], we get to bring it back," Thomas says by way of explaining the riot of scarlet luxuriating throughout Encore.

Above and beyond its coloristic impact, Encore is the most tactile casino on the Strip and probably in the U.S. You'll be wanting to "cop a feel" many times over, whether it's of the wood finishes, the wall coverings or the sculpted textures like the "wall of bodies" that ushers you into nightclub XS. (Once you get in -- if you get in -- the view across the dance floor and the "European" [read: topless] pool to the al fresco bar opposite is one of the bigger "wow" effects at Encore.)

They mix a mean sangria there, too. The color scheme is as gilded as the casino is reddish and Thomas confesses, "I'm certain Goldfinger had a little to do with it." Whatever the case, it's like Christian Audigier -- The Nightclub (right down to the fashion boutique) but for people with taste.

There will be other articles and blogs appraising the aesthetic and functionality of Encore, so I'll leave the assessment to experts and confine myself to various jottings made while trying to walk and scribble simultaneously.

Thomas, who's been with Wynn since 1981, describes himself as the "partial author" of The Mirage, the seminal property of contemporary Las Vegas, and "full author" of Treasure Island. He's not necessarily patting himself on the back, as he says that one of the lessons learned at the Island was not to fully theme a casino (a lesson that several non-Wynn casinos failed to heed) and not to have one designer do the entire hotel. His subsequent approach has been to assemble teams he knows and admires, who hit it off with Wynn himself, and who have the reputation of being on time and on budget.

Despite those last criterion, not every last light fixture or handrail was in place (some uninstalled fixtures, left carelessly in the middle of a hallway, nearly cost posterity the future writings of Dr. Schwartz). Nor did we get more than the teensiest peek at the Encore Theater, which has been redone -- again -- for Danny F. Gans. The proscenium has been moved back but that's the only specific we were given.

Flocked with butterflies. Other than the ocean of RED, the design element likeliest to be mentioned are the omnipresent butterflies. They're in the moldings, the tiling, the wall coverings ... in short, everywhere. Not only do they "represent an abudance of good luck," they provide Thomas with a metaphor for the transformative process he and Wynn enjoy: turning the unromantic elements of cement and steel into an escapist paradise. There are no Strip views at ground level because, Thomas says, "When you're cocooned at Wynn, everything is beautiful." (He did not, however, croon" ... in its own little way.")

The third design element, less obvious to the eye, is a running motif of garlands of laurels. These were inspired by the most famous tale of metamorphosis (no, not Franz Kafka's), the myth of Daphne, depicted in a statue in the Lobby Bar & Café. Yet another reinvention is Switch, the restaurant whose decor changes every 20 minutes. It sounds godawfully corny but, in actuality, it's wondrous to behold -- like a dining experience by way of Cirque du Soleil. The revelation of multiple 18-foot chandeliers is a particular coup de theatre. "Steve can't help himself," Thomas explains. "He's a lover of theatre."

Encore's Esplanade mall has less natural light, more space than its opposite number at Wynn LV, which was one of the areas where it was most obviously "Bellagio II." The decision to mix design styles is evident in the amalgam of sharp angles and wave forms in the conjoined Rolex/Wynn & Co. boutiques. It provides relief from the overall aesthetic -- as intended -- without making a violently contrasting statement.

(My favorite design element, in truth, was the chair in Wynn & Co.; pure Heaven to anyone with an aching back. I want one, dammit!)

If natural light is somewhat lacking in the mall, Encore's atrium more than compensates. This vaulted, latticed space is Wynn's biggest "You have arrived" statement to date. Its conservatory-writ-large style manages paradoxically to be both grandiose and subdued. It's crowned with a pair of huge sconces salvaged from a demolished hotel in Cap d'Antibes.

Path of Excess = Palace of Wisdom? In the mall and, in fact, throughout the property, Thomas' preference for layering details sometimes induces sensory overload. The stated intention was to create a property that would require several visits to fully appreciate and one can report: Mission Accomplished. For instance, if there's a spa in town more ornate and in-your-face indulgent than the mere lobby of the Encore spa, well, I've not seen it. Several in my group agreed that Wynn could charge people for audio tours of Encore, and rightly so. It feels less like you're being shown through a resort and more like being given a walk-through of a working palace.

A good thing, though, that Wynn's attempts to buy up and demolish the nearby Guardian Angel Cathedral were rebuffed, though. Not only could Wynn use some guardian angels in the current economy, Encore's beauty parlor overlooks the cathedral and, were it not there, you'd have an all-too-clear view of some genuinely craptastic buildings on Covention Center Drive. The Catholic diocese did Wynn a favor by turning him down.

Of the many iterations of "suite" at Encore, we were shown two: a Tower Suite that makes up in comfort what it lacks in size (it's generous to call it a "suite," though it may make you feel better about what you're paying to stay there) and a Salon Suite in which you could land a helicopter. Something very intense and Asian was going down in what appeared to be an even larger suite at the end of the hall -- a huddle with the CEO of Tagruato Corp. perhaps?

Even the elevators are differentiated in their decor. One had a red alligator-skin motif while another was clad in butterflies rampant on a field of purple. I mean, we're talking spare no expense here, folks. The fabric for the drapes in the VIP room was purchased three years ago and kept under wraps until now.

The Sinatra restaurant is dominated by gargantuan, larger-than-life-size portraits of the Chairman of the Board himself. Is it a restaurant or a shrine? I felt I ought to genuflect or at least make the Sign of the Cross. But the real conversation-starters here are two hefty obelisks which flank the bar, while overhead sails a bejeweled galleon. Thomas rescued these from the shipwreck that was a failed New York City restaurant.

Society will be, for want of a better term, Encore's bread-and-butter restaurant, as well as a must-visit for chocoholics. Thomas' goal here was, "A room that Oscar Wilde would like."

Now stop for a moment. Can you imagine Thomas saying that to William Weidner and getting anything more than a basilisk stare? Or having a conversation with Gary Loveman about the metaphorical significance of butterflies? The Harrah's Entertainment CEO would probably just want to know what the return on invested capital from butterflies was going to be.

Which goes to the heart of what makes a Wynn property different from anything else in the marketplace: His willingness to invest monetary and artistic capital in things which don't translate to the bottom line in a quantifiable way but which create a "must-see" factor. I have no idea what the ROI of the Bellagio fountain is but it's -- and not arguably, I'll contend -- the fulcrum of the Strip, the icon off of which everything else plays. Wynn is an anomaly: a casino industry CEO with the temperament of an artist ... but an artist who's chosen a very unusual art form by which to express himself.

To have come all this way and not have spoken of the Encore casino floor itself is not to imply that it's an afterthought (the way the Venetian's casino floor feels like a waystation between the super-grandiose lobby and the Grand Canal Shoppes, for when you simply must shoppe 'til you droppe). Actually, quite a bit of thought has clearly gone into the casino, the part of Encore in which Wynn's experience with Macao is most prevalent.

Even more than Wynn LV, it's dominated by semi-secluded areas. But unlike the serpentine traffic patterns of its sister property, Encore's casino is neat and orderly, laid out in a street-and-block system, with superior lines of sight. Bucking the "more is more" trend, Encore has only 850 slots, which we're told are on an infrastructure ready for server-based-gaming when (or if) it takes off.

The innate conservatism of Wynn's approach here is the sort of thing that stands him in good stead with the banks. (Server-based Aria could be a triumph of gaming technology but it's a helluva ski jump.) In the mass-market area, each '21' table is flanked by a pair of table lamps, providing an appealingly homey (or "very residential," in Thomas-ese) vibe to the table game pit.

Steve Wynn looks suspiciously like he's been Photoshopped into his own atrium at Encore, but at least it gives you a sense of scale.

It's difficult to rank Encore in the pantheon of recent Las Vegas megaresorts because Wynn's most serious competion in the last decade has been ... Steve Wynn. Even had Palazzo's rollout not been a near-total botch, it still has that expensive-shopping-mall-that's-doomed-to-fail look about it. Planet Hollywood, had it all reopened simultaneously, would have flung some serious "Wow!" at its audience, but Robert Earl's had to relaunch it incrementally and progress of late has been agonizingly slow. Other than the Criss Angel bomb Believe, it may be the Strip's most expensive work in progress.

So ... will Encore create excitement unto itself? I believe so. Does it represent not only a leap forward for Wynn but an even bigger one than expected? Yes and yes. But ...

Will it drive business? If I owned WYNN stock (which I don't), I would sleep very well tonight.

Buddy, can you spare six billion?

Tue, 07 Oct 2008 13:02:00 -0700

Chuck Monster of VegasTripping.com is a man of few words, but he doesn't miss much (and his Dodgers are four wins shy of the World Series). He's run the numbers on Dubai World's purchase of MGM Mirage stock and found that the sovereign fund's $8.15 billion stake had lost $6,012,496,598 of its value by Oct. 3. To illustrate his point, he's whipped up a graph that puts it in terms that are, well, pretty graphic.

Is this going to end up as yet another saga of overseas investors coming to Vegas and getting taken to the cleaners (Swiss Casinos, London Clubs, Tamares Group, El-Ad Properties, etc.)?

What's in a name? A big headache, possibly. Chuck has also been compiling "Trippy" award nominations and Glenn Schaeffer may want to rethink that Fontainebleau moniker. Chuck's readers have written in with at least nine different spellings, not counting the only-too-inevitable "Fountain-blow." Boyd Gaming's in-abeyance Echelon doesn't prove very spelling-friendly, either. Six different spellings were offered, my favorite being "Echolon." Lord knows, Boyd's found the project to be no small pain in the butt.