History repeats itself, this time as farce

Caesars Entertainment is now Eldorado Resorts‘ bitch and, as Scott Roeben reports, there’s already reason to be concerned, starting with layoffs at Caesars Palace. New CEO Tom Reeg is apparently wasting no time sending employees to the firing squad. He promised $500 million in “synergies” which, as Roeben says, rarely bodes well for the workplace (or customer) experience. Of course, Reeg gave those synergies right back to Louisiana when he promised $500 million in improvements to Belle of Baton Rouge and other Caesars properties. He also committed anywhere from $400 million to $550 million to Atlantic City improvements, money that’s sure to come out of Caesars’ hide somewhere else. Fixing something that wasn’t broken, Reeg actually spent money to create this woozy new logo for the Roman Empire:

Reeg is now committed to pulling $7.2 billion out of his sock drawer as a cash payout to shareholders. Where that money’s really going to come from is anybody’s guess, as super-acquisitive Eldorado is leveraged to its eyeteeth, as Roeben points out, and this is hardly a period in which the casino industry is exactly throwing off free cash flow. Besides, Caesars has extensive rent commitments to Vici Properties and Gaming & Leisure Properties. Perhaps Reeg can recoup a few billion by selling Planet Hollywood (does he have Hard Rock International on speed dial?), maybe a few hundred million for The Cromwell, once Caesars’ pride and joy but now evidently surplus inventory. So much for the boutique experiment. Nor can those regional asset sales come through fast enough. If the economy doesn’t rebound by this time next year, Caesars may be headed for a date with an old flame: bankruptcy court.