Question of the Day - 03 March 2021

[This QoD is answered by David McKee.]

We misspoke when we said that Anthony Marnell III was ousted from M Resort by new owners Penn National Gaming. M cost upwards of $1 billion and opened in the teeth of the Great Recession on March 1, 2009. As a consequence of that and a disadvantageous location — gaming reporter Liz Benston had prophetically titled an article on M’s genesis, “Building in the Boondocks” — it suffered during the early going. Reflected Marnell, “On opening night, it was apparent we were opening at the worst possible time to open a casino,” i.e., right around the time that the Dow Jones Industrial Average bottomed out. Plus, M was encumbered with $860 million in debt.

In October 2010, Penn National bought that debt for the knockdown price of $231 million and took the keys to the property the following June. However, in an atypical move, they kept Marnell on as property president. Perhaps they appreciated the same qualities that you do about M. He lasted in that position for at least four years, eventually giving way to Penn executive. But four years is a pretty long time to stay at the helm after your property’s been bought out from under you (Marnell’s ownership stake having been extinguished). Contrast Marnell’s happy fate with that of Planet Hollywood ex-owner Robert Earl. Caesars Entertainment signed him to a pricey and much-ballyhooed retainer, whereupon Earl did a quick vanishing act.

As Marnell explained of the circumstances that brought about the buyout, “From a profitability perspective, it became very challenging to service the debt. But from an operational perspective, the property has always made money. It just hasn’t made enough money to service its debt. There were a lot of rumors about closing and all that and the property’s never been in that position.”

When I interviewed Marnell a month after the Penn takeover, he said that M was benefiting from the turnover, explaining that Penn, “like the property, like being here, like the value and service that the hotel offers, and so far it’s been successful … The effects were felt within thirty days of when they bought our debt, from the standpoint of working with them and their senior leadership, which was a very positive experience for me and for the team here. I don’t see anything but great things coming from them buying the debt and taking ownership.”

From a more general perspective, Marnell said, “There’s definitely certain benefits from being rolled into a conglomerate of companies. There can be downsides to that, because maybe some of the standards across the corporation don’t work in individual markets. But I think corporations try to adjust to those. At the same time, the cost of capital and the balance-sheet strength of stability are usually far greater with a larger company. That’s not always the case in gaming. It’s very difficult today to procure one of these assets at any cost without having a big corporate balance sheet behind you.”

As for the retention of himself and his management team, Marnell said that Penn “thought the property definitely had room for improvement in its performance. We’re all aligned on how to accomplish that. But in larger part, I think they were happy with the management, how the property was being run, the culture, the service standards, the cleanliness, the marketing initiatives in place. They didn’t see the debt-service problem as a function of a bad business plan or management. They saw it as a function of a bad economy.”

Marnell didn’t get some of the amenities he wanted (movie theaters, showrooms), but found Penn’s wallet to be open when it came to refreshing the casino floor. “We have already spent, since they purchased the debt, millions of dollars on slot machines, keeping our slot floor — which I think is one of the best in town — the newest and freshest. But yes, I can tell you without any hesitation the capital is there to keep this building at the same level it has always been kept.”

Since leaving M Resort, Marnell has been busy with his eponymous gaming company, starting with the purchase of the Sparks Nugget in 2016. Outgoing owner Michonne Ascuaga had been caught up in a money-laundering scandal, one that cost her a seat on the Nevada Gaming Commission. Marnell’s immediate plan was to invest $25 million in the casino and revamp its slot product.

Now, to bring the story up to date, Marnell has announced a prospective casino development (no details are available) immediately adjacent to M Resort. With Penn National in full retreat from Las Vegas, having sold the Tropicana, could M be next on the block — and could Marnell return in triumph? We certainly hope so.

And here's your link to the new poll on renaming the Las Vegas airport. Make your voices heard!