It’s all over — until 2012, anyway — for Sheldon Adelson‘s heavy-handed push to ram a set of “destination resorts” through the Florida Legislature. A poison-pill amendment, attached at the behest of parimutuels, would let existing slot houses go to full Vegas-style casinos. (Under the Indian Gaming Regulatory Act, the same courtesy would have to be extended to Florida’s tribal casinos.) It would also further reduce the rate at which Sunshine State parimutuels are taxed. This was more than casino proponents (heavily lobbied by Wynn Resorts as well as Las Vegas Sands) were prepared to stomach.
Other forms of casino-enabling legislation are on life-support in the bestiality-friendly Lege but even Sands is conceding that its attempt to juice itself into Florida’s first megaresort could take years. Since the Adelson-backed bill would have “sprinkled” five casinos across the state, it meant that projects would also have to be approved at the county level by popular vote (hardly a shoo-in). Also, anti-free market “exclusivity zones” would have severely crimped where rival casinos could be placed. Then there was the question of how casino megaresorts might dry up the revenue streams the State of Florida currently enjoys from not only the parimutuels but the Seminole Tribe. S&G is all for revisiting this issue … provided it’s done in such a manner as to create a level playing field, rather than making existing operators second-class corporate citizens.
It’s a rough week in Adelsonia. Just as concerns over an SEC probe of the company were easing, the Hong Kong Securities & Futures Commission is taking an interest in the inner workings of Sands China. The news, understandably, put a dent in Sands China’s standing on the Hong Kong bourse. Meanwhile, ejected Sands executive Steven Jacobs‘ wrongful-termination suit — containing various incendiary allegations — continues to move forward through the Clark County court system, guaranteeing that top LVS execs will be keeping an extra-large supply of Tums on hand. Sheldon has been shrugging off the SEC probe — even as his jabs at Jacobs edge closer and closer to defamation — but the investigations of Sands are starting to pile up. LVS tends to sail close to the wind, even at the risk of a regulatory squall like the one currently buffeting the S.S. Adelson.
It’s a much happier story for the Cosmopolitan of Las Vegas, which trotted briskly out of the gate in December, its early occupancy and revenue numbers compare extremely favorably to those of frigid Aria exactly one year previous. But one songbird doesn’t make a springtime and a couple of weeks of revenue — diluted by one-time items like pre-opening expenses — don’t afford much of a look-see. Also, owner Deutsche Bank, in an accounting stunt, has shaved $756 million off the “cost” of the resort through a writedown, moving the break-even point from $4 billion and change to a “mere” $3.3 billion. (Don’t you wish you could make liabilities just vanish like that?)
However, let’s not pop the champagne cork until we have at least one full quarter of cash flow to examine and from which we can extrapolate ROI. Dr. David G. Schwartz, for one, has run the numbers and concludes the Cosmo’s “got a lot of heavy lifting to do.” With the exception of F&B (+42%), Cosmo revenues were below daily Strip averages in gambling (-55%), rooms (-27%) and “other” (-86%; Marquee didn’t open until New Year’s Day). As far as the casino’s underperformance, there may be extenuating circumstances. As long he doesn’t get sacked by Deutsche Bank, CEO John Unwin looks to be a winner. If the Cosmo is sold or shut down (pretty unlikely, that), he glides to safety on a $4.5 million golden parachute. Nice work if you can get it.
Take a chill pill, Frank. It’s difficult to imagine a pissant casino with 15 slots or so causing Sunset Station or Fiesta Henderson to quake in their boots. However, the latest salvo fired by Station Casinos is like deploying a howitzer to kill a gnat. The long-defunct Roadhouse has been nothing more than a “Trailer Station” for years. Even after the refurbishment planned by owner Robert McMackin, it was still be a modest casino in a relatively isolated location. There’s a good reason why nobody’s ever been able to make much of a go of it there. But even if the persistent McMackin is on a fool’s errand, Station’s choleric response has supposedly put a number of job prospects on indefinite hold, which would be a modest “in-kind” contribution to Las Vegas‘ job crisis.
Then again, the Roadhouse is a notorious “failsino” of long standing. There’s been no shortage of bad blood between McMackin and Station over the years. (The Las Vegas Business Press‘ coverage of the saga landed Valerie Miller a well-earned Nevada Press Association award. Yet the Review-Journal continues to pass Miller over in favor of less-talented reporters.) But the crux of the issue is whether the City of Henderson will sanction a loophole that would “grandfather” the Roadhouse, exempting it from the 200-room hotel that is now mandatory for all new Nevada casinos. One former objection to the project — that it would compete with a planned Landwell-built casino on a nearby, former hazmat site — is long since moot. That Landwell project isn’t going to be built anytime soon, probably never. Of course, if Station’s argument prevails and McMackin has to build a hotel, that puts paid to the feasibility of resurrecting the Roadhouse.
Even if McMackin wins, he’s lumbered with a long string of failed attempts to reboot the Roadhouse, not to mention the considerable unlikelihood that his current business plan will succeed if it’s approved. Station, a company with not-inconsiderable financial concerns of its own, is wasting perfectly good money trying to squash a third- or fourth-tier project that’s all but certain to die unassisted … and poses no serious threat to Station if it actually ekes out a profit. But prolonging its grudge match with the octogenarian McMackin, Station looks petty and paranoid: an elephant cornered by a mouse. Station CEO Frank Fertitta III should call off his dogs and put those legal fees to better use, like redeeming distressed debt on beleaguered Aliante Station, for instance.
