Ameristar goes East; Colony’s secret formula revealed

Yesterday morning, Wall Street was advised by Ameristar Casinos that the latter had forked over $16 million for land in Springfield, Massachusetts. Given that Ameristar has been in extreme-caution mode since the death of founder Craig H. Neilsen and the ouster of CEO John Boushy, this is significant news. For a company as risk-averse as Ameristar to be willing to wager $585 million in total investment (land + $85 million licensing fee + $484 million construction budget) is the biggest vote of confidence that market’s gotten yet. It also says that Ameristar’s no longer remaining passive, waiting for somebody to come along and buy it.

In a nearly anticlimactic development, Bay State lawmakers sent the final casino-legalization to Gov. Deval Patrick for his stamp of approval. There was a bit of last-minute hanky-panky when solons slipped some extra money for the horsey set into the law but Patrick managed to claw some — but not all — of that equine slush fund back. (One of the rejected ideas would have been to raise the tax rate on the lone slot parlor to 54%.) Penn National Gaming had been sniffing around the old Westinghouse site that Ameristar is purchasing, but where it hesitated Ameristar pounced, netting 41 contiguous acres. Hopefully the few picturesque vestiges of the old plant can be integrated into the eventual design, much as happened at Detroit‘s MotorCity Casino and at Sands Bethlehem.

How good are Ameristar’s chances?  It has a relative handful of casino properties, most of which tend to perform very well. Unlike Penn, it’s not a brand that’s already preponderant on the East Coast, which means it won’t be accused of “protecting its flank” (see below). Penn already has quite a development pipeline going and, with its obsessive pursuit of a second Maryland slot house, could be seen as too thinly spread, insufficiently focused on Massachusetts. The Hard Rock brand has grown by leaps and bounds (most recently into Atlantic City) and should not be taken lightly.

I’m downgrading Mohegan Sun‘s prospects, especially now the CEO Mitchell Etess is talking about the Mohegans’ Palmer, Mass., proposal mainly as a way of recapturing revenue that his flagship property will lose. Using Palmer to scoop up dollars and send them back to Connecticut doesn’t like an idea that will sit well with the licensing board.

House Cleaning. It was a dark day, however, for 69 housekeeping and laundry workers at Ameristar East Chicago, which outsourced their jobs to Florida-based Southeast Cleaning. Ironically, the purge comes at a time when Ameristar revenues had been finally leveled off after months of declines related to the closure of the crucial Cline Ave. bridge.

Hot Flash. “Wall Street likes dumb investors” according to one newsletter. No sh!t. I mean, is this news? Besides, I thought that was the keystone of Colony Capital‘s casino-business plan: “Find dumb investors. Make dumb investments. Lose shirt. Repeat ad infinitum.” Since there’s a new Twilight movie opening this weekend, at least CEO Tom Barrack probably won’t be back in the office until next week, blissed out on the interminably continuing non-adventures of Edward and Bella, and their totally emo pals.