Hard times for Atlantic City; Murren’s big payday

Atlantic City casinos have pink-slipped 6,000 workers as a gaming shutdown goes on indefinitely. Said Ocean Casino Resort CEO Terry Glebocki, “This is truly an unprecedented time not only for Ocean, but for everyone.” Unemployment claims in the Garden State jumped sixfold, to 155,000. Severance pay and health benefits for idled casino workers are set to expire today. In a “george” move, Eldorado Resorts extended unemployment compensation at Tropicana Atlantic City by a further fortnight. Borgata was the speediest to lay off workers, notifying them on March 17. Resorts Atlantic City followed last Tuesday, Hard Rock Atlantic City on Wednesday, while Ocean and the Caesars Entertainment trio brought up the rear on Thursday. Hard Rock may be able to avoid unemployment claims until May by giving employees two weeks of “borrowed” paid time off, in addition to exercising their existing two weeks of PTO. “We plan to reinstate your employment as soon as we have the business needs and are permitted to operate,” Glebocki told employees, who have until Friday to hit the bricks. Hard Rock workers have to hit the pavement today, followed by Caesars ones tomorrow.

* Eldorado Resorts’ inability to close the Caesars Entertainment deal on time is making the latter $2 million richer by the day. That’s the “ticking fee” imposed on Eldorado for not meeting its own deadline. Those $2 million/day fees should buy a lot of salve for stockholders burned by the downfall in CZR share prices.

* The hits just keep coming for Boyd Gaming. While its home market, Las Vegas, is nominally shuttered until April 17, it’s having to cope with extended closures in regional markets. Valley Forge Casino Resort is on “indefinite” status, Illinois has pushed opening date back to April 8 and Louisiana to April 12. The company still hopes to reopen its two Indiana casinos on April 6, while the annual shareholder meeting will now be held in online-only format.

* More evidence that ex-MGM Resorts International CEO Jim Murren didn’t jump but was pushed: His employment contract entitled him to zero dollars and cents if he left voluntarily. However, Murren received a lovely parting gift of $32 million, at the same time he was poor-mouthing MGM in our nation’s capital. Wouldn’t we love to ask the board how they justified that $32 million outlay. Would they say it was cheap to get rid of Murren at twice the price?

Top execs of MGM Growth Properties, meanwhile, huddled with JP Morgan analysts today. The conclusion? MGM Resorts has more than enough liquidity to ride out an extended Coronavirus pandemic. Wrote analyst Joseph Greff, “MGM has ~$3.9b of cash right now, which is equal to ~4 years of net rent payments inclusive of the ~$400m in dividends it receives back from MGP … MGM also can sell $1.4b of its OP Units to MGP in exchange for cash, and in a draconian scenario, could also liquidate part of its stake in MGP (its current 61% stake is worth ~$4.8b) or some of its 55.95% stake in MGM China … which is currently worth $2.1b.” Sell MGM China? That would be “draconian” indeed. Cost cuts (aka “rationalizing additional expenses”) are also not off the table. Incidentally, Howard Stutz of CDC Gaming pegs the body count at Penn National Gaming at 26,000. At 41 casinos, that’s 634 employees per casino. Don’t expect good customer service from Penn when(ever) normality returns.

* Sports betting is now the law of Washington State, Gov. Jay Inslee (D) having inked the enabling legislation. He even signed off on a controversial “emergency” clause that shelters the bill from having to be ratified in a statewide referendum. Of course there’s nothing to be on now but that’s immaterial as it is expected to take months for the state’s Native American tribes—who have exclusivity—to hammer out regulations with the state. (Tribes have been “george” donors to the state’s Democratic Party.) Acknowledging that “we’ve got bigger problems than sports betting,” Washington Indian Gaming Association Executive Director Rebecca Kaldor said, “As we recover from this crisis, the addition of this amenity will help tribal governments fund the essential services their members will need to get back up on their feet.” Left out in the cold were card rooms and horse tracks, even though card-room mogul Erik Persson interceded personally with Inslee. Is Persson donating to the right politicians? We’ll find out in November, when he vows to strike back.