It was “unfortunate” for Sheldon Adelson that he wore the uniform of the United States of America, the country that made him rich? Seriously?
Not many of us would use our spouses as human shields. But then again,
not many of us are Sheldon Adelson, who’s been ducking the media for weeks, and who did just that. Somebody, somewhere at Las Vegas Sands must have dialed up Fortune and let it be known that Dr. Miriam Adelson would be happy to take some of the heat off of her suddenly bashful husband. How else to explain this fawning profile of ‘Miri’ by bedazzled Duff McDonald. The central thread of piece is to downplay the extent of the Adelsons’ current electoral largesse (counting in-laws, it’s nearing the $20 million threshold), painting it as pocket change compared to their philanthropic endeavors. McDonald betrays himself with a sniffy line about ‘Miri’ putting her hubby’s “casino lucre to good use.” But he generally stays on message.
It’s the heartwarming saga of a power couple who went from riches to rags (i.e., a net worth of “a mere $400 million” — shocking penury!) and to riches again … thanks to that naughty “casino lucre,” one might add. McDonald politely defers from asking obvious questions. For instance, if one believes that “Saving a drug addict is the equivalent of saving about 20 people. Treating one drug addict reduces his criminal activity, reduces his arrests, reduces his appearances in court, reduces his time sitting in prison, reduces his injecting drugs, reduces him being infected with HIV & Hepatitis C while sharing needles, and reduces his infecting others,” then why aren’t you out there opposing the War on Drugs, which prioritizes incarceration over treatment? Or how about the time your CEO husband got so strung out on painkillers that you had to put him on Methadone? No mention of that either. The Adelsons’ history of political contributions is carefully cherry-picked to highlight the relatively few winners he’s backed and minimize the number of losers he’s unwittingly helped send to political perdition.
There’s also some carefully crafted PR spin whereby the opening of the Venetian “fueled the overall renaissance of Las Vegas itself.” Nice try at rewriting history, Shel. Had Duff spent more time on research and less on gush, he just might have noticed that the Venetian’s opening followed those of The Mirage, Treasure Island and Bellagio, among others. But when you’re helping spin the myth that Sheldon Adelson is the One True Visionary of the modern Las Vegas Strip and never mind that Steve Wynn guy, one musn’t let untidy facts get underfoot.
Elsewhere in Fortune, Senior Editor Dan Primack assesses the Caesars Entertainment IPO 2.0 and is as underwhelmed as was S&G (“a whimper,” it’s called). “The only reason Caesars managed to price this time around was that it lowered its expectations to comical bottoms,” Primack opines, ” … more akin to a pre-revenue biotech startup than a gaming behemoth that generates more than $6 billion each year” and whose revenues for last year are on pace to undershoot its 2010 haul. (And one doesn’t tend to think of 2010 as a halcyon year for gaming.) He also notes that the company might sell another 28% of its shares (belonging to minority investors like Credit Suisse Citi and Paulson & Co., as well as — believe it or not — Michael J. Fox) , but the fact that they’re being held in reserve implies a lack of confidence in the initial float. Trading started with a bang and, as of this very moment, CZR shares appear to have spiked and then settled into place, trading around $15 $14.39 $15.49 — or 67% 60% 72% above the offering price.
Breakout‘s Jeff Macke has one word for the IPO: “Beware!” He’s even less forgiving than Primack or myself, declaring CZR shares to have “no value whatsoever … Hopelessly levered, shrinking revenues, no growth prospects, it’s an IPO squeeze that stinks like Mobster-era Vegas.” He points to the company’s overexposure in Atlantic City (20% of company revenues) and its having missed the boat to China — and Singapore, I might add. Yes, yes, there’s that $470 million, non-gaming, luxury resort (Caesars Palace Longmu Bay, right) on distant Hainan but — to paraphrase a line from Black Hawk Down — Hainan is not Macao. CFO Jonathan Halkyard is trying punt at least some of $ billion in 2014-15 debt payments into 2017-18 and Moodys Investors Service “cannot rule out” the prospect of Chapter 11 as a solution. Even though Moodys doesn’t “see Caesars’ earnings growing significantly” and there’s $10.37 billion in debt coming due in 2015 the bond market is fairly sanguine about Caesars’ latest ‘delay, don’t repay’ move, perhaps because it was as inevitable as tomorrow’s sunrise.
Getting back to Primack, he notes that majority owners Apollo Management and Texas Pacific Group have been skimming off cream to the tune of $30 million in management fees, “a greedster travesty.” Yeah, like Caesars can’t manage itself? Seriously, a couple of private-equity were so gaming-savvy that they overpaid to get into a market when it had no place to go but down, yet somehow they’ve got managerial wisdom to impart to casino veterans? Are they having a laugh? Caesars could free itself of this slush fund — by dint of a $195 million, one-time payout. But no, Apollo and TPG are keeping that $30 million/year skim in place.
Caesars didn’t escape a weak January in Indiana (-5.5% statewide), where its Horseshoe Hammond boat was down 2% — the 12th month of negative comparisons out of the last 13 — and revenues at Horseshoe Southern Indiana fell 15.5%, continuing a five-month tailspin. Penn National Gaming got off relatively light, down 3% at Hollywood Lawrenceburg. Business is slow at the tracks, with Cordish Gaming‘s racino and Hoosier Park both off 14%, while the two Majestic Star-branded riverboats were 11% and 13% lower in the water, respectively. Ameristar Casinos‘ comeback in East Chicago also hit a snag, with a 4% drop in January winnings. Grand Victoria continues to chase a losing streak, down 9%.
Bright spots included Pinnacle Entertainment‘s Belterra, up 7% and Tropicana Entertainment‘s plucky little Casino Aztar, +5% French Lick, which I once wrote off for dead, continues its comeback, up 6%, while Boyd Gaming had a winning month aboard Blue Chip, which gained 2%. Wall Street analysts were disappointed by Ameristar but pleasantly surprised by Pinnacle. And, even in disappointing month, Indiana casinos still grossed $204 million, dwarfing their brethren in Illinois, struggling to catch a break.
