We associate Sega with video games but once upon a time, it was in the slot business. Those old machines do look awfully quaint unless …
… you juxtapose a Sega one-armed bandit with über-mega-hot European sex goddess Edwige Fenech (who gets named-checked in Quentin Tarantino‘s Inglourious Basterds and had a cameo in Hostel 2). The lines, the elegance, the Continental suavity — and the “fruit machine” suddenly doesn’t look so bad, either. Some unrecognized marketing genius at Sega definitely knew a “cool factor” when he saw one.
Fall of the House of Sussex. Also once upon a time, Columbia Sussex launched a two-pronged, ultra-megabuck assault on the hospitality industry. One half of this pincer movement was the pricey acquisition of Aztar Corp. and most of its casinos. The other was the $1.4 billion purchase of 14 Wyndham-branded hotels. Those same hotels (not all of them still flying the Wyndham flag) may shortly be repossessed to satisfy a $539 million mortgage. Three-fifths of that note is held by Blackstone Group, which is the same firm that took ColSux CEO William J. Yung to the cleaners for those hotels four years ago. Blackstone and its fellow noteholders are poised to realize a 61% discount. To sum up, ColSux has forfeited all its Aztar properties, all but two of its previously acquired casinos (now rolled into Carl Icahn‘s takeover of Tropicana Entertainment) and will soon have nothing to show for its $1.4 billion Wyndham buy. As gaming-and-hospitality debacles go, this is one for the history books.
Amidst the euphoria that gripped Wall Street and the casino industry at the time of the Aztar sale, certain remarks by the ColSux CEO should have sounded much louder alarm bells that the company was perilously out of its depth. $54 bucks a share for Aztar? “I thought I got a bargain.” Competitive threats to Atlantic City from Pennsylvania? “We might take a little hit but I think we’re OK.” Increasing Tropicana Las Vegas cash flow from 2006’s $62 million to $160 million-$200 million. Yeah, they really thought they could do that (mostly through cost-cutting). Were it not such a spendthrift in its acquisitions, ColSux might still be a player. But this Humpty Dumpty‘s had one heckuva fall.
