No surprise that Borgata remains in a class by itself among Atlantic City resorts. It finished October at 0.0% deviance from last year, as flat as “flat” can be. The lone gainer in the market was Resorts Atlantic City, up 9% and showing positive results for the sixth time in 10 months, an achievement unmatched on the Boardwalk this year. Dennis Gomes‘ fiscal shock therapy and radical image makeover of the dowager have gotten Resorts’ numbers out of the doghouse. It’s a multi-year project to undo the financial damage inflicted by Colony Capital but Gomes should be making believers of everyone by now.
For those who might say that Resorts had nowhere to go but up, look at the Golden Nugget (formerly Trump Marina) where Tilman Fertitta is getting a bruising introduction to A.C. Revenues bottomed out at $9 million (-28%), marking a steady decline in revenue from month to month and three straight months of double-digit negativity, putting the Pépite d’Or on pace to be the city’s lowest-grossing casino for two years straight. Trump Entertainment Resorts can and can’t gloat. Trump Taj Mahal ($30 million, -3%) remains firmly ensconced within the second tier of performers, right up there with the bigger and better Caesars Entertainment casinos (which averaged 7% declines on otherwise respectable grosses). But Trump Plaza went into a dizzying, -30% tailspin, raising yet again the question of how long Marc Lasry can afford to subsidize it.
The Aqueduct Factor is difficult to gauge, Resorts World New York having opened softly in the last week of October. However, it’s been averaging $1.4 million per day, a blistering pace that (if sustained) translates into $42 million a month. Since Genting is opening the racino in stages, the anticipated body blows to Atlantic City will be staggered across the next two months. So far, Resorts World NY is still lagging slightly behind Empire City racino, which is nobody’s idea of a ritzy place to gamble.
Similar questions might be asked of “ACH,” creeping along at $11 million (-16%). And it’s time to officially give up hope that the Tropicana Atlantic City ($21 million, -17%) will ever regain the financial luster of its Aztar Corp. days, before multiple ownership and leadership changes relegated it to the lower echelons of the market.
MGM Grand Detroit execs got that new collective-bargaining agreement out and ratified in the nick of time. The lion led the Motown market yet again (up 3%). The casino-hotel does its owners proud but workers could have made a case for even higher wage increases had MGM waited to deal until after October and 3Q11 results had gone public. Greektown Casino was flat for the month, which for Greektown is a victory of sorts.
Despite exceeding Wall Street’s expectations for 3Q11, Melco Crown Entertainment got pummeled on the stock market, down -12% for reasons having little to do with its own $1.1. billion performance. (Short version: Altira higher than expected, City of Dreams lower, thanks to disappointing slot play.) Debt is a manageable $2.4 billion, there’s plenty of cash on hand and, having picked up comatose Studio City for just $335 million, Melco management is putting the finishing touches on new plans for the site. Studio City won’t open until 2014 — probably later when the glacial pace of project approval in Macao is taken into account.
So why did the stock market spank Melco? In an investor note, J.P. Morgan‘s Joseph Greff offers several theories: 1) Anticipation of softer performance when Las Vegas Sands — which isn’t ready to give up on Sites 7 & 8 either — starts opening Cotai Central circa March 2012; 2) Genting’s Resorts World Sentosa, in Singapore, is reporting “increased bad debt expense related to certain Mainland Chinese VIP patrons — spooking investors and calling into question the health and liquidity of Chinese VIP gamers;” 3) “the ubiquitous nervousness about the Chinese consumer.” Once those VIP deadbeats cross the border, you won’t see your money for dust and there’s no recourse to the legal system … quite unlike Clark County. Also working against Melco in Wall Street‘s eyes, is the perception that U.S.-owned properties — particularly those of Sands and Wynn Resorts — are superior. What’s Lawrence Ho (right) gotta do to get a little love from the Street?
Way to go Gomes! It goes to show how a good owner/trainer/jockey (in this case he is all three) can make a significant difference even with the oldest and ugliest horse in the race!