No trouble in River City; Phasing out Trump

Breaking out of its recent abundance of caution, Pinnacle Entertainment has announced $82 million in upgrades for River City. The expansion will incorporate 1,700 new parking spaces, a hotel tower (200 rooms) and 10,000 square feet of meeting space. Shovels are expected to go into the ground by next March, with completion envisioned for the latter half of 2013. The announcement played to a favorable review from J.P. Morgan‘s Joseph Greff, who noted that River City should have had covered parking from the get-go and that adding a hotel could transform into a destination property from a day-tripper spot.

Since its opening, River City has been eating the lunch of all its St. Louis-area competitors — including Pinnacle’s own Lumiere Place. The two properties represent 28% of Pinnacle’s cash flow and River City has driven a 14.5% revenue growth for the company’s St. Louis casinos this year, making the wisdom of Pinnacle’s investment obvious.

Excluding Trump Taj Mahal, the new owners of Trump Entertainment Resorts are dismantling the company one property at a time. Marc Lasry and pinchpenny CEO Robert Griffin (right) are still a long way from recovering the $305 million acquisition price. Donald Trump gives his approval to Lasry’s strategy but, as a compensated spokesblowhard for the company, he hasn’t much choice. Although the mingy revenues generated by Trump Plaza (excellent location notwithstanding) don’t seem to warrant a mega-million renovation, that’s one alternative Lasry is mulling. However, the price tag might include the removal of the worthless Trump moniker, the better to lure a brand-name joint-venture partner. Once the proceeds from unloading Trump Marina, the Steel Pier, a warehouse and an office building are tallied, TER will have raked in slightly over $50 million … $25 million less than it hopes to fetch for Trump Plaza alone. So let’s say Lasry gets $125 million from asset sales. That still leaves him $180 million (plus operating losses) shy of amortizing his Trump buy-in, raising the question of precisely how heintends to break even by 2016, never mind extend the Trump brand westward via those oft-mooted purchases of “distressed casinos.” But less Trump in Atlantic City is definitely a good thing at this point.

Even the casino-hating Philadelphia Inquirer is giving its thumbs-up to the appointment of William H. Ryan Jr. to head the Pennsylvania Gaming Control Board. Ryan has a mandate to clean house, following a scathing grand jury report. The PGCB has long been notorious as a repository for laziness, cronyism and political patronage. Here’s hoping Ryan whips it into shape.