Don’t get your hopes up for better video poker paytables: Caesars Entertainment isn’t really parting with any assets. The sale in question involves the transfer of assets from one Caesars subsidiary to another. The Cromwell and Bally’s, along with Harrah’s New Orleans and The Quad (formerly Imperial Palace) are being spun off from Caesars Entertainment Operating Co. to Caesars Growth Partners, itself a publicly traded spinoff of Caesars Entertainment. The operating company (Big Caesars, if you will) gets at least $1.8 billion in much-needed cash from Caesars Growth Partners (which, for the purposes of this answer, we'll refer to as Little Caesars, at the risk of causing any unwanted confusion with the long-defunct diminutive Strip property or the pizza chain), while the latter improves its asset portfolio. It also assumes $185 million of Big Caesars’ debt and $223 million in property improvements. The parent company has said it will use some of the sale proceeds – maybe – to help retire its $21 billion debt.
Big Caesars will continue to manage Little Caesars' assets (which also include Planet Hollywood and its online division, which includes the WSOP brand) and pay itself a management fee. Less encumbered with debt than Papa, Little Caesars will also have an easier time borrowing money to pay for construction costs at the properties now under its banner, none of which can be sold for five years. It also has $3.2 billion in cash on hand.
It’s actually even more complicated than that, however. For instance, via an increasingly complicated series of contingencies, Big Caesars can buy up Little Caesars after another two years. Four to seven-and-a-half years out, Little Caesars is available on the open market, after which the assets revert to the parent company.
Confusing? It certainly is although unsurprisingly so, considering all the moving parts of the transaction. The bottom line for players is that The Cromwell and Bally’s aren’t going anywhere and your Total Rewards points are as good as ever at those properties. You could say the properties were sold in name only and not be too far from the truth. But we can’t promise you a better game of video poker at either one.
