Durango deal done; Apollo snows NV regulators (again)

Making good on a promise and a plan, Station Casinos offloaded 21 acres next to Durango Station (ab0ve) last week for $24 million. Not a bad score. The buyer is Ovation Development Corp., which will help seed Durango’s customer base by building residential properties on the adjoinging site, just as Station hoped. Ovation, an offshoot of the Molasky family of companies, is also building senior-friendly housing right behind Sunset Station. In the now-distant past, Station would try to shop vast tracts of land at one great gulp but didn’t find takers. Its new, more-selective, bite-size strategy is working, as seen at Wildfire Fremont, Durango and Sunset. Next up, Cactus Lane, where Station has much more land than it needs, having doubled down on its real estate position there recently. We still think it’s quixotic to go up against South Point but it will be very interesting to watch.

Having sacked and pillaged Caesars Entertainment infamously, Apollo Management told Nevada regulators it had learned its lesson and would be a better steward of Venelazzo. Has the Apollo leopard really changed its spots? Seems not. We haven’t heard anything untoward coming out of Sheldon Adelson‘s old place (yet) but Apollo’s attempt to merge the Kroger and Albertsons supermarket chains is turning out to be classic private equity rapine. You think grocery prices are bad now? Wait til this deal goes through. It hasn’t even closed yet and Apollo is strip-mining both companies. Albertsons announced a $4 billion “special dividend” on Nov. 7—a sum 57 times larger than the regular quarterly dividend, depleting the chain’s $2.5 billion cash on hand and saddling it with $1.5 billion in additional debt. Moody’s Investor Service accordingly downgraded Albertsons credit rating. There goes one-third of Albertsons’ market cap—along with the ability to “meaningfully compete” with Kroger and others.

Sounds like the Apollo we have learned to know and despise. Oh, and did we mention that Albertsons is already groaning under $6.5 billion in existing debt. Plus there’s a $4.7 billion pension-fund shortfall. Sounds a lot like Caesars when Apollo came along to help engineer a disastrous LBO that sent the Roman Empire into Chapter 11 and Gary Loveman into lasting infamy. One might argue that this is apples and oranges, but had the Nevada Gaming Commission taken more than a cursory look at Apollo, it would have seen that it is still engaging in the kind of disastrous business practices that brought Caesars to its knees. Venelazzo is riding high at the moment (barring cost overruns and delays on the MSG Sphere) but that might be all the more reason for Apollo to strip it for a quick buck. Private equity’s track record in gaming has been catastrophic and the NGC clearly has left the fox in charge of the hen house. Oh, did we mention that Apollo’s partner in the Kroger/Albertsons caper is Cerberus Capital Management, named after the three-headed dog that guarded the entrance to Hades. Talk about an appropriate metaphor!

Speaking of Nevada’s captive, see-no-evil regulators, don’t expect any hard questions of Hard Rock International (and the Seminole Tribe of Florida) when it goes before the Nevada Gaming Control Board tomorrow. Wall Street boffins are already warbling praises for Hard Rock’s purchase of The Mirage and never you mind that the company flagrantly defied a federal court order to shut down its sports-betting operations in Florida when the new Seminole compact didn’t pass the judicial smell test. What happens if the Seminoles decide to flout Nevada regulations? We’ll have to wait until it happens to find out, most likely, as it is improbable that either the NGCB or NGC will ask the tough questions. Expect a lot of mewling, lapdog sycophancy or, as Buck Wargo puts it, “No issues are expected that would hold up the transaction.” Yup, you can thumb your nose at the Justice Department with impunity and the Silver State will welcome you with open arms.

We left the Las Vegas Raiders for dead after they bellyflopped before the miserable Indianapolis Colts to fall to 2-7. Since then the Silver & Black has been on a sudden hot streak, finally living up to preseason hype. Indeed, they could tiptoe into the playoffs with a 9-8 record, based on that creampuff schedule the NFL gave them. Of their five remaining opponents, only the Kansas City Chiefs seem insurmountable. The other four either have losing records already or are eminently beatable (as anybody who saw what passes for New England Patriots football lately would agree). We’re not saying this is going to happen but we are exceptionally loath to bet against the Raiders at this point.

Finally for today, we got a tremendously nice shout-out from veteran casino marketer Dennis Conrad. We’ve always been fans of Conrad’s simple marketing mantra—”Find out what your customers want. Give it to them.”—and he returns the compliment:

• DAVID McKEE (Editor, Casino Life, Creator “Stiffs and Georges” Blog) – NO ONE in the casino industry press knows more about more aspects of the casino world (and will talk more candidly about them) than David. Whether it’s politics, finance, development, breaking news, even gossip, David gives you the straight scoop. Since some consider him a too-harsh critic and others view him a little like an industry apologist, I’m thinking he speaks the truth just about right. Put Stiffs and Georges (Las Vegas Advisor) on your daily must-read list!”

Aw, shucks.