On and off, over a four-year period, Harrah’s Entertainment teased journalists (and, by extension, the public) with hints of a really big project to be announced really soon … whenever they got around to it, that is. Well, the Harrah’s mountain hath labored and produced … a mouse.
“Project Link” isn’t without virtues, even if they’re largely negative ones. It isn’t another high-end, multi-billion-dollar megaresort. It’s not a budget-buster, period. It’s not über-expensive food and retail. And it does entail giving modest facelifts to a couple of Harrah’s tattier Strip properties: O’Shea’s would lose its faux-Dublin façade and the Imperial Palace‘s Strip frontage (and pagoda roof) would be supplanted with what appear to be enormous LED screens.
It also acknowledges what’s long been one of the problems of Harrah’s consolidation of the east side of the Strip into one ginormous province. Namely, that to redevelop it in any significant way would involve taking one or more of a string of multi-story cash registers out of business. True, you could start from the back, maybe knock down the IP first, but at some point push comes to shove and a major cash-flow-producing Strip casino (most likely Harrah’s Las Vegas) would have to give way. In a sense, the real estate was already too lucrative to be redeveloped.
Arrival at this plan involved acknowledging certain factors that should have been obvious long before CEO Gary Loveman went on a buying spree. For instance, that MGM Mirage/Wynn Resorts-scale megaresorts are a low-ROI proposition. Or that such a creation might impinge on business at ever-growing Caesars Palace. (It never ceases to amaze me that Harrah’s spends hundreds of thousands of dollars to determine what, say, Hunter Hillegas could tell them for free.)
Of course, any new resort built in Lovemanville wouldn’t have to be high-end/low-return. That’s just the industry group-think of our day; that you “justify” the land’s cost by superimposing a hella expensive megaresort atop it, then justify that outlay by charging prices that relatively few can afford.
The notion of luring pedestrians off the Strip and down a multi-dogleg side street is an untested notion. Give Harrah’s points for thinking outside the box here. It’ll mean getting Vegas visitors to break ingrained habits but it could eventually stimulate further off-Strip development.
For all I know, it could be Gary Loveman’s longstanding fantasy to own a 600-foot Ferris wheel with an (at least) 200-foot “HARRAH’S” logo lighting up the night sky. But do I believe this is what he had in mind when he supervised the purchase of vast tracts of Koval Lane real estate at top dollar? Not for a moment. Especially not when you consider he’s been sweeping it clean of low-rise housing developments that might otherwise have been of income-producing use.
Now, like Gershwin’s Porgy, he’s got plenty of nuhtin’ and nuthin’s plenty for him. His projected Ferris wheel will be sitting (as you can see from the rendering) smack in the middle of a wasteland, a void, a whole lotta nowhere. At least the circus can pitch its tents there the next time it comes to town.
It’s harder still to believe that this (mini-)master plan was concocted two years ago and kept under wraps until now … unless it was a before-the-fact, low-budget, “Well, we’ve got to do something” concession to the development-crippling effect of the LBO. Even so, secrets just aren’t that well kept in this town.
Then again, it often seems if Loveman himself does not know what Loveman has in mind. Take for instance, his recent contention that building a Strip megaresort was too big a risk for Harrah’s. Not compared to taking on $24 billion in LBO debt it wasn’t. And you could build a megaresort and a half for the $5 billion in company value Loveman recently wrote off.
The biggest threat to Project Link may be Loveman — or rather his short-attention-span style of leadership. While some cunning master plan may be apparent to his inner circle, the leitmotif of Loveman’s tenure as CEO has been to jitterbug spastically from one short-lived initiative to another.
Having gotten right up to the threshhold of having to decide what to do with Lovemanville, his trigger finger grew weak. He pulled a U-turn and flung Harrah’s into the arms of Texas Pacific Group and Apollo Management, a move with disastrous consequences. (Especially for the consumer, as TPG/Apollo’s plan was to gut the company all along.) At least it had the short-term benefit of sparing beloved local institution Battista’s Hole in the Wall from Loveman’s bulldozers. As with his jihad against revenue-participation games like Wheel of Fortune, Loveman often seems oblivious or (far more likely) indifferent to what customers like or want.
In the two years or so it will require for Project Link to obtain startup capital, the odds are considerably better than 50-50 that Loveman will have lost interest and moved on to something else. If he doesn’t, it would be a very pleasant surprise.
Berzon: caped crusader
