Stalemate with Straub; MGM’s new bauble

Glenn Straub is sticking it to Stockton University but good. While the school tries to find a new buyer for the old Showboat, he’s refusing to let the university out of its purchase agreement with his KK Ventures. So far, the court system has been unable to resolve whether Caesars Entertainment‘s removal of the Showboat’s gaming entitlement superseded the same company’s covenant with Trump Entertainment Resorts to operate “a first-class casino” on the site.

Straub’s intransigence — refusing to consummate a purchase of the Showboat even though he’s put $26 million in escrow — not only ties up that sale but impedes Stockton from finding other buyers. It also means that Stockton is running up a $16,000/day tab maintaining the property. The school is threatening to abandon the property, removing security personnel and shutting off utilities. Enter mold, fire hazards, thieves … Straub still wants the Showboat but not enough to get his hands dirty with the covenant. It’s high time he put his mouth where his money is.

*Just when you think MGM Resorts International is about to get serious about reducing its $13 billion in long-term debt, CEO Jim Murren goes and purchases a new trinket. In this case, it’s a $100 million, 5,000-seat theater for Monte Carlo. In case you fear that this will become home to Las Vegas‘ ninth Cirque du Soleil show, MGM President William Hornbuckle says the “new theater will enable us to host performers in Las Vegas who we previously haven’t had a home for, broadening our entertainment offerings and providing the opportunity to expand those relationships to our properties around the globe.”

I’m not sure what this last part means (Clarification: It means leveraging the same acts to MGM’s Maryland and Cotai casinos) but the venue would enable MGM to present artists in concert in friendlier confines than caverns like the MGM Grand Garden Arena or Mandalay Bay Event Center. (Seeing The Eagles at the Garden was like looking through the wrong end of a telescope.) It would also create supply/demand dynamics that would enable MGM to charge higher price points for “a robust calendar featuring special engagements by many of the music industry’s most-celebrated performers.”

My best guess is that this is a counterthrust to Caesars’ Colosseum and that, when completed, we’ll see the new MGM concert hall hosting some high-profile residencies, aka “performers in Las Vegas who we previously haven’t had a home for.” Creation of this new mega-theater is going create a game of musical chairs for several of MGM’s current acts. Blue Man Group will be bumped over to Luxor, ousting Jabbawockeez, who will bunk with Beacher’s Madhouse at MGM Grand. Alas, Criss Angel isn’t going anywhere.

* J.P. Morgan analyst Joseph Greff predicts, in re Wynn Resorts, “the recent transit visa relaxation as well as what appears to us to be a softened government stance on a full-smoking ban (i.e., potential permission for smoking lounges) could signal the end of a nasty policy bear-cycle and, to some degree, imply that both Macau and Beijing governments see current demand levels as a baseline to keep social harmony and economic stability. This should have the effect of limiting (dare we say) more meaningful downside risk to gross gaming revenues.” My only caveat is, how will the Macanese government feel about new megaresorts missing their completion deadlines?