According to an S&G source, Harrah’s Entertainment — soon to be Caesars Entertainment — is supposedly laying the groundwork for a purchase of L’Auberge du Lac from Pinnacle Entertainment. Harrah’s CEO Gary Loveman was supposedly on-property last month and L’Auberge’s latest general manager is Geno M. Iafrate, an old Harrah’s hand. While Pinnacle CEO Anthony Sanfilippo would have been familiar with Iafrate from his own tenure with Harrah’s, my source says Iafrate was chosen to help smooth the transition to a new corporate regime.
Harrah’s bailed out of Lake Charles four years ago, its operations shattered by Hurricane Rita. The grand strategy was to trade its assets there with Pinnacle’s ones in Biloxi, thereby facilitating the expansion of Grand Casino Biloxi into a Margaritaville-branded megaresort. Then Loveman went all LBO-crazy, poof went the Margaritaville budget and Harrah’s finds itself having sacrificed the lucrative Lake Charles market for a mess of pottage. Pinnacle, after sacking CEO Dan Lee, has been throwing projects overboard like crazy and, as somebody else put it, finds itself “owning a very expensively procured parking lot” in Atlantic City. L’Auberge is an enormous contributor to the Pinnacle bottom line so you’d think the company would either have to be A) more cash-desperate than previously thought or B) stood to make a killing by unloading it.
With Harrah’s shares set to hit NASDAQ at a lowly $15-$17 apiece, Loveman could still have $610 million in “mad money,” though he’s got so many projects on his wish list that he’d blow through that and then some if he pursued them all. However, coming off a third quarter in which revenues were flat, it’s understandable that the CEO might be feeling some “seller’s remorse” over having forfeited the Lake Charles spigot to Pinnacle. Also, given its overexposure to both Atlantic City and Las Vegas, a Louisiana purchase would fit hand-in-glove with the geographic diversification Harrah’s is currently pursuing. To the extent that Loveman’s knee-jerk business strategies make sense, this one certainly does.
This might seem like a silly question, but shouldn’t stockholders and investor banks be asking what is the cost of these will-nilly corporate name changes?
Seems to me that millions of dollars worth of stationary, signage, business cards, etc. will be thrown away; then more millions spent to replace them (including labor and material); then more $$ to lawyers to make sure all the legal paperwork is updated.
Oh, then they have to spend $$$ on advertising to say that “We’re not XXX anymore. We’re now XXX! You’re gonna love the new XXX because it has a new logo. But don’t fret, we’re still the old XXX that you know and love, just with an improved name.
XXX OOO XXX!
I would be extremely surprised if Harrah’s went after L’Auberge. I do understand that they want geographic diversity, but if they specifically wanted Lake Charles, I would think that they would have filed for the final Louisiana license and proposed to locate it in that market like the three other canidates. But then again, Harrah’s has been much more of an acquirer than builder in its history. I can see how L’Auberge would fit well into their Horseshoe brand, but then again, why change an already market-leading brand? Lastly, I was floored in the past when Jim Murran made a comment on how he does not visit most of his competitors properties. It is my belief that to really run a business well, a CEO should visit some of their competitors and see what they might be doing well or better than them. With all do respect to Mr Murran, my guess is that Mr Loveman and Mr Wynn are proactive CEO’s. They tour competitors properties and when they do, they often ignite a fire storm of take over speculation. Wynn touring Revel etc. It is a very large industry controlled by a small group of CEO’s. The good ones should be doing a good job of exploring what works and what does not. I am just assuming, without any knowledge beyond this, that Mr Loveman is doing just that.