Those last few remnants of Columbia Sussex CEO William J. Yung‘s former casino empire continue to topple about him. The Kentucky-based oligarch, whose properties are notorious for their poor working conditions and even worse maintenance, has been reaping a gargantuan load of karma ever since he over-leveraged his hotel company to buy Aztar Corp., the single most disastrous acquisition in the history of casino gambling. Yung hit town full of bluster about his superior operating methods (derived from his years supervising the Jergens Soap assembly line), demanding special dispensations from the Culinary Union and attempting to bully local journos who didn’t toady to him.
Years later, the thermonuclear fallout of Yung’s monetary overreach continues to claim non-Aztar properties as the parent company is characterized by lenders as “in financial peril.” Like a Vegas homeowner who’s underwater on his mortage, ColSux is skipping town, abandoning the Westin Casuarina Las Vegas Hotel Casino & Spa, a year after it was served papers. (Given that the WesCas has a 2.1X ratio of hotel rooms to employees, I’d to think what the service culture must be like there.) Interestingly, the property won’t lose its Westin flag. Boston-based Pyramid Hotel Group is the probable new manager. It’s not a newcomer to the area: Pyramid runs Loews Lake Las Vegas, whose virtues include being the pet-friendliest hotel in town.
ColSux got off on the right foot in 2002, reopening the dead Maxim after handsomely reskinning the building’s exterior. However, it stubbornly maintained some of the highest room rates on the Strip in the teeth of the Great Recession (thereby driving down occupancy) and they’re still staggeringly high, at least if booked through Starwood Resorts ($159 midweek). Leasing out its casino to a third-party operator may have also hastened the demise, outsourcing cash flow that might have otherwise helped pay the mortgage. Now ColSux’s presence in Nevada is reduced to a grind joint (above) on Lake Tahoe, operated on a lease that owner Park Cattle has indicated will not be renewed. So long, schmucks.
Peace in Detroit. Narrowly averting a city-wide strike, owners of MGM Grand Detroit, Motor City Casino, Greektown Casino (right) and a consortium of labor unions have reached a “tentative” agreement. For employees’ sake, one hopes rumors of a three-year pay freeze don’t bear fruit. Although the unions’ bargaining position appears considerably stronger than that of their brethren in Atlantic City, details of the labor accord could yet give the lie to that supposition.
Christie saves? In deference to federal policy, New Jersey Gov. Chris Christie (R) has turned a deaf ear to the sports-betting-legalization efforts of state Sen. Raymond Lesniak (D). There are three good reasons for him to change his mind. One, it’s Atlantic City’s best hope for improving its fortunes. Two, sports betting continues to gain support among voters — especially GOP ones, getting ever closer to a supermajority. Third, attempting to force the issue in federal courts (even if the outcome is adverse) has greater potential efficacy than simply sitting by and doing nothing. It would be a pity were New Jersey to repeat its 1993 mistake, especially when the stakes are so much higher now.
Speaking of Atlantic City … S&G totally called this one. The phenomenon of “free-range casinos” in A.C. is quickly spreading from the Tropicana Atlantic City to Harrah’s Resort (right) in the Marina District. Swim-up blackjack is such old news in Las Vegas that it must seem curious that it’s a revolutionary idea on the Boardwalk. The present crisis has spurred ingenuity, with both old-timers like Trump Entertainment Resorts CEO Robert Griffin and maverick Caesars Entertainment viceroy Don Marrandino thinking literally outside the box that is the casino floor. It also gives some of the participants a new marketing angle, since both the Harrah’s and Trop extensions would be smoke-free areas.
In a 90-degree pivot from the overseas-looking strategy he laid out at Global Gaming Expo, the newest gambit of MGM Resorts International CEO Jim Murren takes the company to … Louisiana. Earlier today, MGM joined forces with Dan Lee‘s Creative Casinos to bankroll and manage the latter’s Mojito Pointe Casino project, on Lake Charles. While the dollar amount and equity percentage of MGM’s involvement are presently undisclosed, this “makes the financing process far smoother,” as Deutsche Bank analyst Carlo Santarelli pointed out, while noting that the pact is “not necessarily a needle mover for MGM.”
But it does get the company into a new jurisdiction and a lucrative market, picking up a nice little management-fee stream into the bargain (and saving Lee [left] the trouble of having to assemble his own property team). It also couples Mojito Pointe to the M Life pipeline — and vice versa. Nearby rival Pinnacle Entertainment suddenly becomes a smaller fish in its own pond. The 1,500-slot/50-table casino is projected for a summer 2013 opening. Texas casinos and racinos continue to look like a distant pipe dream, so credit MGM for taking the quickest route to tapping that Lone Star State player base.
