Isle of Capri is back

While I was taking a cat to the vet, Isle of Capri was throwing a spanner into the Boyd Gaming works. Its bold move complicates Boyd’s proposed takeover of Station Casinos … or does it? Should Boyd succeed, it will find itself with such an oligopoly on the Vegas locals market, it will be obliged to spin off several properties (unless Nevada regulators employ some creative math to dilute Boyd’s market share). If Isle doesn’t succeed in obtaining management contracts at Red Rock Resort, Sunset Station, Boulder Station and Palace Station (three “trophy assets” and one fixer-upper), it has decisively shown an interest in re-entering the Vegas market.

So perhaps Boyd and Isle ultimately divide the spoils. Whatever happens, Isle CEO James Perry has found a way to put his company in the spotlight again. And the proposed stewardship of four leading Station properties is a low-risk/high-reward scenario, especially given the talent Perry and his team of Argosy Gaming veterans have shown at maximizing the bottom line and attracting new business.

As for the lease-back arrangement whereby Station Casinos pays itself rent on its own property, that’s having a hard time passing the smell test. Overtopping that casino quartet with $2.5 billion in debt always looked like a way of thwarting an asset sale — which is why they were excluded from Boyd’s original offer for parts of the Station empire.

If one accepts the proposition that Station CEO Frank Fertitta III and his Colony Capital dupes have to go, it’s difficult to know for whom to root in this new Boyd vs. Isle scenario. Boyd would end up with so much on its plate — and the Las Vegas locals market has been its Achilles Heel in recent quarters — that Isle’s creative yet prudent bid to become a Vegas player once again would be the more interesting storyline of the two. It would also shake up the competitive dynamics in this town and that’s never a bad thing.