Quote of the Day

"[Columbia Sussex CEO William J.] Yung showed a callous disregard both for New Jersey casino auditing regulations and for the requirement that any Atlantic City casino be a 'first-class facility of exceptional quality.'

"But if the restructured Tropicana Entertainment can prove it is indeed a new company that meets the state's licensing requirements, that would be the quickest way to get the Trop out of limbo and into the hands of new owners." — from an editorial in The Press of Atlantic City, endorsing TropEnt CEO Scott Butera's push to have the Atlantic City Trop restored to the fold.

Posted in Atlantic City, Columbia Sussex, Regulation, Tropicana Entertainment | Comments Off on Quote of the Day

Another setback for Packer

Several potential owners of Cannery Casino Resorts want to withdraw from the process rather than disclose their identities to Pennsylvania regulators. In addition, Gretel Packer, sister to Crown Ltd. CEO James Packer, has asked to pull back her license application.

This development inspires no end of questions. If Pennsylvania holds its ground and the Crown affiliates who are insisting upon secrecy pull out, does the whole Cannery deal begin to unravel? (Crown says no.) Was a similar identity waiver granted in Nevada? If so, why? Who are these mystery investors and why is their anonymity so important?

Considering that a gaming license is a privileged and highly prized asset (to say nothing of a potentially lucrative one), there's no conceivable justification for the citizens of Pennsylvania to be kept in the dark about who's behind the Crown Ltd. bid. If the Pennsylvania Gaming Control Board accedes to Crown, its already shaky credibility will be shot.

 

Posted in Cannery Casino Resorts, Horseracing, James Packer, Pennsylvania, Regulation | Comments Off on Another setback for Packer

Earth to Colony Capital

"If I had a crystal ball two years ago, I would never have taken on that debt. Never, ever. But looking back, we saw growth. That's why we put up that beautiful new tower, with a plan to do extensive renovations [on the older hotel tower] next door. We're not able to do that now."Resorts Atlantic City CEO Nicholas Ribis

Growth? Two years ago? Would somebody please buy Nick Ribis that crystal ball? By early '07, casinos in Pennsylvania were a done deal. How could anyone have foreseen growth for Atlantic City in that scenario?

Just asking …

Posted in Atlantic City, Colony Capital, Economy, Pennsylvania | Comments Off on Earth to Colony Capital

Gibbons retreats, sorta

Gov. Jim Gibbons has scuttled away from one of his several proposals to jack up taxes on the only segment of Nevada that's carrying its own weight — the casino bidness. He's retreating from a demand that casinos pay taxes on uncollected markers (which, in turn, would be certain to cause a tightening of casino credit). Midnight Jim continues, though, to support raising hotel-room taxes in Clark and Washoe counties, and taxing comped meals. The casino industry's love affair with Gibbons — which helped get him into office — has so far proven a one-way romance.

Worries about Boyd. Here's why I resist the occasional invitation to give stock picks: No sooner have I sung the praises of Boyd Gaming's sound fundamentals, its diversified casino portfolio and its (Echelon excepted) aversion to risk, comes news that analysts have the heebie-jeebies in re Boyd. A slow-ramp-up at Water Club in Atlantic City and weakness in the Las Vegas locals market are the primary worries.

Advertising during the Oscars: Casinos that ran ads during last night's interminable Academy Awards snoozer included M Resort (twice), Encore, the CasaBlanca in Mesquite and Green Valley Ranch, which has suddenly discovered a great lurve for the local clientele. The latter is quite a turnaround for a property that used to tout its high-end cachet. Oh, and Mickey Rourke got totally, utterly and criminally screwed. Which ruined the evening right then and there.

Atlantic City Death Watch, cont. After taking a long gander at the market, Macquarie Securities analyst Joel Simkins had this to say: “In our view, there is a distinct possibility that one to three casinos could be permanently closed in the next few years, particularly when many older locations are barely breaking even and, we believe, cannot be rehabbed to be economically viable.” [emphasis added]

Anybody care to speculate which casinos Simkins has on the "do not resuscitate" list? Resorts Atlantic City is a no-brainer for the "one." As for the "to three," we could toss in the Atlantic City Hilton and Trump Marina, where the news comes in two flavors — Bad and Worse.

The Tropicana might also be on the bubble, partly because it's not performing up to its preponderant size and also on account of interim management's inability to restore the business that was lost during the Columbia Sussex reign of error. A veteran Trump-watcher has another suggestion, writing that"his decision to abandon and bad-mouth the company suggests that this may not be the routine Chapter 11 bankruptcy from which the company eventually emerges. Indeed, I wouldn't be surprised if this is the last gasp for Trump's three Atlantic City casinos."

Posted in Atlantic City, Boulder Strip, Boyd Gaming, Colony Capital, Columbia Sussex, Donald Trump, Downtown, Economy, M Resort, Marketing, Mesquite, Movies, Politics, Station Casinos, Taxes, TV, Wall Street | Comments Off on Gibbons retreats, sorta

Case Bets: Penn in Vegas, Fontainebleau, Fine Cotton R.I.P.

Phil Hevener, the guy who was onto the Imperial Palace sale before anyone else, says Penn National pitched offers for not only The Mirage but also Caesars Palaceat insultingly low EBITDA multiples (see bottom of story). The Strip has seen much better days but it’s not a flea market.

Et tu, F’bleau? It hasn’t even opened and already Fontainebleau‘s viability as a going concern is in doubt. Those thousand condos represent a giant millstone around the resort’s neck; the relationship between Vegas casino operators and the condo business has been akin to that between lemmings and the sea. Already, it’s looking like a rerun of the Harrah’s/Station scenario: Partial recovery for senior debtors and a dime on the dollar for junior ones.

See no evil, speak no evil. A robbery was committed at a casino “in the 4000 block of West Flamingo Road,” an address that just so happens to exactly coincide with the Gold Coast. (The Palms is in the 4300 block.) This is at least the third time that I can recall offhand in which the location of a casino robbery was obfuscated by local law enforcement — nor the first time that Las Vegas Metro has placed a higher priority on protecting casinos’ images than on solving crimes. It might be easier to find witnesses if you told the public where the crime took place, no?

I got a horse right here, his name is not Paul Revere and if you backed this horse you had quite a lot to fear. A quarter-century ago, literal also-ran Fine Cotton wound up at the center of a bizarre racing-fraud scandal involving a — get this — impostor horse. Could Dick Francis have dreamt up a better yarn than this?

Station to the rescue. With Thunder Valley execs given the chop and new managment parachuting in from Station Casinos, work has resumed at the Sacramento-area casino-resort — after some downsizing of the original expansion plans. Kudos, Station.

Posted in Australia, Boyd Gaming, Fontainebleau, Harrah's, Horseracing, MGM Mirage, Penn National, The Strip, Tribal | Comments Off on Case Bets: Penn in Vegas, Fontainebleau, Fine Cotton R.I.P.

Trump: The end

So Trump Entertainment Resorts has such little worth that it’s facing delisting, having become quite literally a penny stock. In a move described as “petulant,” not only is Donald Trump taking his ball and going home, he wants the name of the company changed.

He claims he could have done better, had he simply been allowed to exercise his incomparable casino mojo … but this emperor’s been naked for the better part of a decade. As for the “wasteful spending” he decries, one can only guess he’s referring to the capital improvements at Trump Taj Mahal (the sort of thing Trump himself could rarely be bothered with) which have goosed business there substantially.

The already discounted sale of Trump Marina to Richard Fields (who hasn’t lined up the dough and recently liquidated his Manhattan pied-a-terre) looks shakier than ever — and it was not a deal that inspired confidence to begin with. Trump’s tantrum could easily kill it outright. Fields’ company is hemming and hawing ominously. And if that sale doesn’t come through, one analyst predicts a “death spiral” for TER.

View the video at CNN.com

Bloviation alert: Trump disses own casinos, says they’re not worth beans.

Meanwhile, the Trumpster is engaging in a little revisionist history, complaining that the company hasn’t diversified outside Atlantic City. Oh, its various incarnations have tried. A Trump-branded riverboat in Gary, Ind. (now Don Barden‘s Majestic Star II) enjoyed an early vogue, then went into steep decline. A Trump tribal-casino-management arrangement in California was short-lived. An effort to get in on the Philadelphia market went nowhere, except to court. As always with Trump, when in doubt … sue!

Contrary to Trump’s ever-bombastic contentions, things are not coming up roses for him elsewhere, either. (On a personal note, I balked at purchasing an otherwise appealing necktie at Filene’s Basement because it bore the Trump moniker on the reverse. Would you call that “negative brand equity”?)

About the only good thing that’s come out of Trump’s insufferable TV series, The Apprentice, is that the mainstream media finally began paying attention to the thing of smoke and mirrors that was Trump’s casino kingdom.

Posted in Atlantic City, Don Barden, Donald Trump, Economy, Pennsylvania, Tribal, TV, Wall Street | Comments Off on Trump: The end

Case Bets: Penn in Vegas, Fontainebleau, Fine Cotton R.I.P.

Phil Hevener, the guy who was onto the Imperial Palace sale before anyone else, says Penn National pitched offers for not only The Mirage but also Caesars Palace … at insultingly low EBITDA multiples. The Strip has seen much better days but it’s not a flea market.

Et tu, F’bleau? It hasn’t even opened and already Fontainebleau‘s viability as a going concern is in doubt. Those thousand condos represent a giant millstone around the resort’s neck; the relationship between Vegas casino operators and the condo business has been akin to that between lemmings and the sea. Already, it’s looking like a rerun of the Harrah’s/Station scenario: Partial recovery for senior debtors and a dime on the dollar for junior ones.

See no evil, speak no evil. A robbery was committed at a casino “in the 4000 block of West Flamingo Road,” an address that just so happens to exactly coincide with the Gold Coast. (The Palms is in the 4300 block.) This is at least the third time that I can recall offhand in which the location of a casino robbery was obfuscated by local law enforcement — nor the first time that Las Vegas Metro has placed a higher priority on protecting casinos’ images than on solving crimes. It might be easier to find witnesses if you told the public where the crime took place, no?

I got a horse right here, his name is not Paul Revere and if you backed this horse you had quite a lot to fear. A quarter-century ago, literal also-ran Fine Cotton wound up at the center of a bizarre racing-fraud scandal involving a — get this — impostor horse. Could Dick Francis have dreamt up a better yarn than this?

Station to the rescue. With Thunder Valley execs given the chop and new managment parachuting in from Station Casinos, work has resumed at the Sacramento-area casino-resort — after some downsizing of the original expansion plans. Kudos, Station.

Posted in Australia, Boyd Gaming, Fontainebleau, Harrah's, Horseracing, MGM Mirage, Penn National, The Strip, Tribal | Comments Off on Case Bets: Penn in Vegas, Fontainebleau, Fine Cotton R.I.P.

In defense of Reid's largesse; Cosmo craziness

My take on Sen. Harry Reid (D-NV) and his "casino bailout," as one reader has described it, drew the following response from MGM Mirage spokesman Alan Feldman, which is reprinted below with his kind permission. I note only that my objection has to do with the principle of the Reid-sponsored deferral — which I called "skanky" — and not whatever dollar savings are realized thereby.

By the way, saw your well-written piece slamming Harry Reid for his support of the tax deferral portion of the Stimulus bill. I must respectfully disagree with the opinion you presented. This is a tax deferral, not a give-away. And it is only possible if we purchase our debt at reduced prices because of the collapse in the markets. Besides, the fact is that the amount of these tax deferrals is relatively small taken in context. By way of example, we are in the midst of a $9 billion investment in CityCenter and the entire benefit of the deferred taxes … is only several million dollars.  We will use this cash flow benefit this year to further invest in the project and, once open, pay the deferred taxes from the cash flow the project generates.

In any event, we will pay several tens of millions in Federal taxes this year, far more than the amount this benefit defers.

There may well have been some things to complain about in the Stimulus bill.  I simply don’t think this was one of them.

P.S.: In case anybody didn't see it, there's a crazy-sounding item that made Debtwire this week, saying that Deutsche Bank was poised to hand the Cosmopolitan over to MGM Mirage, along with a loan of $1.2 billion to finish CityCenter. There seems to be general agreement that this is about as far-fetched a scenario as they get, but I also hear that something like it is the only way Deutsche Bank is going to be shot of that white elephant. If the bank were to, in essence, pay someone to take the $2.8 billion Cosmo off its hands, it would be an act of desperation the scale of which we've never seen.

Posted in Cosmopolitan, Economy, MGM Mirage, Politics | Comments Off on In defense of Reid's largesse; Cosmo craziness

Joint 2.0

Yesterday, a large gaggle of local media traipsed through the Hard Rock Hotel & Casino's in-progress new version of The Joint (or Joint 2.0, if you will). Those on hand included Mike Weatherford and Jason Bracelin from the Las Vegas Review-Journal, City Life's Mike Prevatt and Dave Surratt, as well as a gushy, gung-ho reporter from KLAS-TV, among many others (but not "the Hindenburg," thankfully).

As is the case with many a hard-hat tour it bordered on pointlessness, in that you're looking at an empty concrete shell much of the time. Only the stage (40 feet deep, with a 69-foot proscenium) actually resembled what it will eventually become. The stage's dimensions, we were informed, match those of the Aladdin Theater for the Performing Arts … site of ABBA's only Las Vegas appearance, by the way.

Why these preview tours aren't given when the facility is in some semblance of finality is one of the enduring mysteries of Las Vegas. Hence, computer-generated renderings will have to provide an idea of the finished product, which ought to look very much like this:

All those seats can be stored beneath the stage on a series of beds that roll out at the touch of a button, yielding this look:

As you'll see, the sound-and-lighting booth has been moved to smack-dab in the middle of the main floor. Not only will the stage be flanked by giant video screens, a third, even larger one (18' X 24') will hang at the rear of the set. Other technical specs include:

A 96-channel mixing board • 12 subwoofers, distributed in clusters of three apiece • 23 "delay" loudspeakers (presumably to simulate the resonance that is being soaked by the acoustical-absorption material that will cover many of the surfaces) • 38 small-ish flat-screen TVs • four video projectors • 28 moveable lights • a live-blogging station for media coverage • WiFi access throughout.

As big as it looks, the furthest seat is 155 feet from the stage and I can report that the sightlines are excellent (something that could not always be said of Ye Olde Joint, with its flat main floor). If your taste runs to blood sports, Joint 2.0 can be rejiggered to host wrestling, boxing and mixed martial arts, like so:

HRH exec Paul Davis said the goal of the new facility was to cosset "arena-sized productions in a small-capacity [4,000-seat] venue." Why upsize the old Joint? The market has changed, particularly in terms of the size of the shows — and the guarantees demanded by the artists themselves. ("We're doing our best to keep ticket prices in check," Davis promises.)

Aforesaid artists shan't have to mingle with regular people, as they can go straight from a loading dock that accommodates three buses or trucks to a four-dressing-room backstage area, augmented with a luxurious green room. The latter is connected via a spiral staircase to Wasted Space, if the artist feels like a late-night jam session.

Keeping with the current Vegas spirit of pointedly sequestering the haves from the have-nots, the second floor of Joint 2.0 is all-VIP. The side balconies will be outfitted with highboy tables (it's standing-room only one floor up) and the middle of the tier is given over to seven luxury suites, approximately 430 square feet apiece. Some can be made even larger still, thanks to retractable walls. There is seating for 12 or …

… an ottoman-laden lounging area, if you can't be bothered with watching the concert. Back on the main floor …

… the foyer and back-bar area are spacious indeed. The style of the railings (not shown) is carried over from the previous Joint. The walls are done in the style of a guitar fretboard, one which we were assured is musicologically correct.

The HRH was able to obtain Paul McCartney as its first superstar act because — as Davis put it — "He wanted a down-and-dirty, old-fashioned rock 'n roll show," where he could see "the fans right down in his grille" The fact that the Joint's opening coincides with McCartner's Coachella gig didn't hurt either. General Manager Yale Rowe said "all the stars aligned" to land McCartney in the HRH's lap. "We were quite conscious of having multiple styles [of music]. We wanted to have a mega-concert that was going to open The Joint."

Open the doors and see all the computer-generated people!

Back when Ed Scheetz was still calling the shots at HRH minority owner Morgans Hotel Group, he identified Priority One as raising ADRs at the property. Rowe says that goal met with "great success" initially, when the Vegas market was at its zenith. "The consumer is almost dictating what the price points are going to be [now]," he added, noting that the Hard Rock's room rates aren't as resilient as those for most Morgans properties, though not as depressed as those of Vegas in general.

The Joint represents $60 million of a $750 million expansion, stacked atop the $770 million Morgans (or rather, its bank) paid to acquire the HRH. Much of that money is also going toward 60K square feet of convention and meeting space. Hence the 860 additional hotel rooms, in two towers, that are coming on line in August and December, respectively.

Another reason for the more-than-doubling of the property's room capacity is that, according to Rowe, the HRH has been doing spectacularly well with high-end play, save one respect: "We haven't had the room space that satisfies their discerning requests." And anyone who's followed the "Omar" Siddiqui* scandal knows just how unpleasant a dissatisfied high roller can be — sort of like unfed infants, only more hysteria-prone.

(* — Turns out Siddiqui's luck wasn't entirely bad. It seems he cleaned the clocks of Tim Poster and Tom Breitling back when they owned the Golden Nugget.)

HRH officialdom keeps voicing the refrain that their project has been "fully financed" since Homer was a pup. In light of this, a question was irresistible: Why didn't Morgans finance its pre-existing commitment to Echelon instead of channeling all that dough into the Hard Rock? How did the latter jump to the head of the financing queue? (It was Morgans' terminal fecklessness that helped send Echelon into cold storage, though that may yet prove a blessing in disguise.) Morgans says they'll get back to me on that but I'm not holding my breath.

While gambling still represents but a third of the HRH's cash flow, Rowe adds that he "always gave Hard Rock the credit for debunking the theory that all the revenue had to come through the casino." He also praises Peter Morton's regime for proving that the pool could be a major source of lucre. As for the current decline, he says it's consistent across all departments of the property. Allowing that it's "tough not to clamor up and play defense all the time," Rowe says, "We still succeed in getting volumes of people" into the place … although the casino floor was utterly dead on Thursday. It can't help that construction has rendered the HRH damn near inaccessible.

The only bad news regarding The Joint is that, from the outside, it looks like somebody has flung a big-ass, off-white warehouse on the Paradise Road side of the HRH. Between that and a new parking garage and hotel tower on Harmon Avenue, Morton's original boutique hotel is almost completely masked from the street. A couple of Hard Rock neon icons on the exterior of Joint 2.0 will provide scant relief from what can only be described as a ghastly design miscalculation.

At least this will remove any ambiguity from giving directions to the HRH in the future: "It's the huge, fugly jumble of stuff down there; you can't miss it."

Posted in Architecture, Boyd Gaming, Current, Economy, Entertainment, Morgans Hotel Group, Technology | Comments Off on Joint 2.0

Packer steps in it again

Now aren’t you glad that the Nevada Gaming Control Board and Gaming Commission were so quick to give James Packer the green light to own Cannery Casino Resorts? Not only is he facing an unfolding scandal in Australia, two casinos he co-owns in Macao have been tied into a high-profile bribery case. Whoops.

When asked for comment, Packer’s Crown Ltd. passed the buck ($1AU) to Melco Crown Entertainment, in effect dumping the matter in the lap of Packer partner Lawrence Ho. Considering that Packer/Ho’s City of Dreams was built on land earmarked for an institution of higher learning — without even waiting for formal rezoning approval — this could stir serious backlash in Macao. Foreign-born casino owners are the villain of choice this season, perceived to have their thumbs on the scales of justice.

Who knows? Maybe the younger Ho or one of his associates did grease somebody’s palm. However, the casino career of the Packer scion continues to be a catalogue of missteps and misfortunes. Vegas will make short work of him … if he’s still allowed to set up shop here.

Posted in Australia, Cannery Casino Resorts, Macau, Melco Crown Entertainment, Regulation | Comments Off on Packer steps in it again

How desperate is Scott Butera?

Perhaps sensing that the Tropicana Atlantic City is slipping irretrievably from his grasp, Tropicana Entertainment CEO Scott Butera has taken his case to the media — seeking an audience with the editorial board of The Press of Atlantic City, no less. Butera has a persuasive manner, as you'll hear in the attached audio excerpts. Repositioning the Trop as a smoke-free property seems a bit out there but it has the virtue of novelty, so let's give it the benefit of the doubt. (There is a serious disconnect, though, between what Butera thinks the Trop to be worth and what the market is telling him.)

Butera's real sales job is going to be with the hard-to-convince New Jersey Casino Control Commission, of course … a task not made any easier when TropEnt sole shareholder William J. Yung III popped up at a New Jersey Supreme Court hearing on the Trop's fate, about as welcome a sight as Banquo's Ghost. Short of drawing and quartering Yung in front of the assembled NJCCC, I'm not sure what Butera can do that will guarantee him a fair hearing.

He might have one ace left to play by throwing his support to Carl Icahn's mooted stalking-horse bid. Even if Icahn doesn't really want the Trop, the mere possibility that he could throw all or most of $1.4 billion in secured debt onto the table should force rival bidder Cordish Co. to either pony up some real money (instead of incessantly haggling) or drop out. Of course, Butera needs Icahn more than Icahn needs him; the old corporate raider could always rustle up Richard Brown and the rest of the old ACEP band and run the Trop himself.

Still no word on whether Colony Capital will be run out of Resorts Atlantic City or not. The NJCCC is playing this close to the vest. From a logical standpoint, Colony's argument that Column Financial can't be allowed to take over because the latter doesn't have a gaming license (and never mind that Colony is three months in arrears on its mortgage) is silly. It's like saying your banker can't repossess your car because he doesn't have a driver's license.

However, the law is something else again and Colony appears to be on firm ground there unless Column can make the case for a state-run trusteeship. Not that such an arrangement worked out entirely well in the case of the Trop.

Posted in Atlantic City, Carl Icahn, Colony Capital, Marketing, Regulation, Tropicana Entertainment | Comments Off on How desperate is Scott Butera?

Trop's agony soon to end?

The bad news is that the New Jersey Casino Control Commission has voted to grant yet another extension on the interminable sale of the Tropicana Atlantic City. The good news that it’s merely been pushed out another month, not the three that butterfingered trustee Justice Gary Stein wanted. The NJCCC finally seems to have run out of patience with this comedy of errors and past time, too.

Then again, the prospect of a Carl Icahn purchase concentrates the mind wonderfully. Since it’s a credit bid, neither the State of New Jersey or former owner Columbia Sussex will see the payday they’ve been envisioning. But if Icahn can get his affiliated creditors to put their whole $1.4 billion in secured debt on the table, it’d crush anything Cordish Co. has offered or is likely to. The mere specter of Icahn has to be very bad news for Tropicana Entertainment CEO Scott Butera. Since the Trop is the engine that drives (or drove, before ColSux CEO William J. Yung III crashed it) his company’s bottom line, Butera has been tireless in his quest to re-obtain the property. If he succeeded, it would also allow him to return victoriously to the market where he made his name as Trump Entertainment Resorts‘ boss. But, through no fault of his, TropEnt is in far worse standing in the Garden State than is Icahn.

If Icahn is primed to re-enter the casino industry that he left not so long ago, it’s a positive augury both for Atlantic City and the business as a whole. It would also enable him to cock a snook at Pinnacle Entertainment, which purchased the old A.C. Sands from Icahn, quickly demolished it, then has been high and dry ever since. Under Icahn’s ownership, the Stratosphere went from being a joke to a successful casino property. His taste in casinos isn’t always pretty (Arizona Charlie’s, anyone?) but it’s proven smart and successful.

Posted in Atlantic City, Boulder Strip, Carl Icahn, Columbia Sussex, Donald Trump, Pinnacle Entertainment, Regulation, Tropicana Entertainment, Wall Street | Comments Off on Trop's agony soon to end?

Sludge Report

Kudos to the Las Vegas Review-Journal‘s Howard Stutz for keeping an eye on an especially skanky provision of the economic-stimulus package, a sweetheart provision engineered by Sen. Harry Reid (D-NV). It awards companies — like vocal supporter MGM Mirage — a tax deferral, followed by a drawn-out payback of taxes on gains recognized from buying back distressed debt. (At least in contains a measure to incentivize capital improvements and technological upgrades.)

Don’t you wish the IRS was this understanding when your tax bill is due? There is an argument to be made that this encourages companies to at least make partially good on their debt instead of just walking away. However, there’s a much stronger case that Reid’s Rescue rewards the sort of foolhardly borrowing that now sees Las Vegas Sands, Station Casinos and Harrah’s Entertainment, all wheezing from overextended bank covenants or paying the light bill from revolving lines of credit, trying to buy out bondholders at a pittance and fending off investor lawsuits. The lesson learnt, if any, will be that it doesn’t matter what train wreck you get your company into, Washington will gladly step over the bloodied bodies of your debtors so that it can grace you with a tax incentive.

This is a disgrace and it rewards the very companies who were the prime architects of our current mess. But it’s great for Harry Reid: Now when potential GOP challengers seek casino industry support in 2010, the Majority Leader can simply remind the normally rightward-leaning casino CEOs just who crossed their palms with silver when times were bad.

Final score: Reid 1, Investors 0.

Stutz is certainly smarter than his boss, who brays anachronistic nonsense about a much-needed rail link to Orange County. (Reid giveth … then giveth again.) While auto traffic to Las Vegas from SoCal hasn’t suffered notably (yet), some forward thinking would be welcome, instead of putting most of the city’s eggs in the already congested I-15 basket. The convenience appeal of a high-speed link to the greater Los Angeles area is (or should be) obvious and this is a field in which other nations have made far greater advances than have we. (It would also facilitate my access to Los Angeles Angels of Anaheim games but I don’t think that’s clouding my judgment. Not much, anyway.)

As for the notion that high-speed rail to Las Vegas is “unproven at best,” so was the concept of the casino megaresort 20 years ago, the Las Vegas Strip 60 years ago and the automobile itself … well, you get the idea. Heck, the printing press was an “unproven” concept once upon a time, as R-J editors may recall from the carefree days of their youth.

Posted in California, Economy, Harrah's, MGM Mirage, Politics, Sheldon Adelson, Station Casinos | Comments Off on Sludge Report

Looking for good news in Vegas

If I wanted to drive myself to strong drink, I could write about depressing, atrocious numbers coming out of Nevada casinos in December. But as that great philosopher, Linus in Peanuts, would remind me, it's better to light a single candle than to curse the darkness. (Next panel: Lucy hollering, "You stupid darkness!") Let's just say that December revenues hew to my saw that when Wendover sneezes, Nevada catches pneumonia and move on.

Two Sundays ago, the Review-Journal ran a pair of stories that warranted mention here at the time but got lost in the shuffle. Time to give credit where it's due, especially as these articles highlight some of silver linings inside the present-day storm front.

Boyd Gaming's is the least-sexy brand among the major casino operators … but sexiness can be overrated. (See: Station Casinos) Unlike a certain crosstown rival which put all its eggs in the Vegas basket, Boyd has always rejoiced in a diversified portfolio. With Wall Street falling in love with the regional casino market, Boyd is likely to experience newfound appreciation on the Street.

Echelon: Stopped in the nick of time.

No wonder CFO Josh Hirsberg strikes such a sanguine tone. He also fesses up to a number of uncertainties, which is a refreshing change of pace. True, the company has halved its 401(k) matches but it hasn't deep-sixed them altogether, unlike several competitors. Also, it stopped Echelon while it still had the ability to alter the scale of the project, whereas Caesar Palace's Octavius Tower had crossed that Rubicon. It certainly doesn't rank anywhere near as high on the Mortification Meter as MGM Mirage's forced truncation of The Harmon (now to be an ungainly stump) or Las Vegas Sands' abrupt cessation of its St. Regis tower. Boyd's ongoing infatuation with fickle Morgans Hotel Group remains a major puzzlement but let's not belabor that now.

Boyd's chances of coming out the economic tsunami intact look good. Besides, the company has surprised people before. Who would have picked it to be the one that would shake up the Atlantic City market and force everyone else to keep pace?

A project that has the makings of a comparable success story in Las Vegas is M Resort, brainchild of the Marnell family. (You know, the folks who gave The Rio its cachet — before Harrah's Entertainment took over and "geriatrified" the place.) Admittedly, $1 billion for a 390-room hotel/casino doesn't sound anything like optimal bang for the buck, but M Resort has three things going for it that Station's Red Rock Resort and Aliante Station don't: location, location, location.

Strategically, M's site is killer. It sits just north of the pass through which I-15 flows into the Vegas Valley, as you head in from California. In fact, you see the M tower even before you reach the pass, stunningly framed between the canyon walls. The vista from the north side of M ought to give it must-visit cachet when it opens in two weeks (March 1). The relative paucity of hotel rooms may bespeak caution over whether the stay-off-Strip/commute-to-Strip business model has worked yet. As they say on Wall Street, "visibility is limited" because like-minded Green Valley Ranch and South Point have gone private.

Also, by limiting their exposure on the hotel side — where so much of the rest of the market is overexposed — the Marnells should have supply/demand dynamics in their favor. A place like Morgans' Hard Rock Hotel, which only drew a third of its cash flow from gambling before Morgans went on a frenzied expansion binge, is super-exposed in the area that's most sensitive to price fluctuations — hotel rooms — and soon to become even more so. (The HRH puts a brave spin on it but it's no secret why the project is fully funded: It's 85% owned by the bank which, like the pig in the ham-and-egg-breakfast analogy, is committed while Morgans [i.e., the chicken] has but an interest.)

One also has to laud CEO Anthony Marnell III's incremental preparation for the Vegas market: a stint managing a tribal casino (giving him experience in the drive-in market), followed by acquisition of the Saddle West in Pahrump (ditto the locals market), then Laughlin. So his $1 billion dice-throw was approached via a circumspect route. George Maloof has already shown that a steady locals/hipsters mix can work as a business model. M Resort is the first project since The Palms to wholeheartedly go that route.

With nearby Olympia Gaming and Station (Inspirada) casino developments on indefinite hiatus, Marnell should be firmly entrenched before anyone else in the area gets a shovel in the ground. It's a serendipitous combination of preparation and circumstance.  Of course, M could be either a succes d'estime or an outright bust, but the buzz I've been hearing is strong.

Tamares Group giveth (booking a new magic show into the Las Vegas Club) and Tamares taketh away, pulling back on a planned art museum (above). So if this is no time to invest $12 million in an art museum, maybe Tamares might want to invest it in its casinos. Comic relief is supplied by Mayor Oscar Goodman, who's been exceptionally obtuse this week. (See: President Obama, Silly Feud with)

Casinos in Texas are one of the longest of long shots but Galveston's name keeps coming up. The whole thing screams "Tilman Fertitta!", especially since we know he's wanted a casino there and was even rather colorfully accused of surreptitiously installing casino infrastructure in his Galveston convention center. He got a good chuckle out of that one, as I recall.

Posted in Atlantic City, Boulder Strip, Boyd Gaming, Downtown, Economy, Gary Goett, George Maloof, Harrah's, Laughlin, MGM Mirage, Michael Gaughan, Morgans Hotel Group, Station Casinos, Tamares Group, Texas, The Strip, Tilman Fertitta, Tribal, Wall Street | Comments Off on Looking for good news in Vegas

Bally does something really cool

While I'm not much of one for flagging press releases, here's one that's much too noteworthy not to mention. Bally Technologies is making a dollar-for-dollar match of employee contributions to the Nevada Cancer Institute. In return, Bally staffers get early detection and cancer-prevention assistance from NVCI.

Philanthropy has been taking it on the chin during the recession, which makes Bally's initiative doubly important. On a personal note, having had a loved one go through breast cancer (including multiple surgeries), I cannot stress heavily enough the importance of early vigilance, nor that of having a good support system in place if you're unfortunate enough to be a cancer sufferer.

Bravo, Bally.

Posted in Bally Technologies, Charity | Comments Off on Bally does something really cool

Missouri: Dough and "D'oh!"

Silly me. I had the Missouri numbers sitting in my "Inbox" all day yesterday and simply overlooked them amidst a typically frenetic day. A big "thank you" though to reader Bob Bradley, who provided the short and long versions (click on the "January 2009" link for a PDF). The mitigating factors cited in the sixth paragraph of the Post-Dispatch story (such as holidays and number of weekend days) should be taken into account when reading what follows.

The market was up 10% on the nose for January, validating not only Wall Street's renewed faith in regional gaming markets but also eradicating any remaining doubts that the state of Illinois is toxic to casinos. I admire Neil Bluhm's confidence in pursuing that 10th license but can't imagine why anyone would want to be in Illinois right now.

Pinnacle Entertainment's President riverboat has been a floating corpse for sometime now, so -43% comes as no surprise. An ever-so-slight decline at Harrah's Entertainment's Maryland Heights property is an unaccountable disappointment, though, given the liberalized rules that are driving revenue increases across the Show-Me State. Pinnacle's Lumiere Place, a distant third in St. Louis, still has a lot of catching up to do, even with Illinois practically shooing customers into its arms. Penn National, though, leapfrogged Harrah's in Kansas City, moving into the #2 spot. All three Isle of Capri boats posted gains, in a long-overdue piece of good news for that company.

Ameristar Casinos wasn't the biggest percentage gainer in either the St. Louis or Kansas City markets (that would be Lumiere Place — which saw a 25% higher influx of foot traffic — and Penn's Argosy Riverside, respectively). But in terms of sheer dollar amount, Ameristar remains the dominant operator in both. The future course of this company may be hazy but you have to admire how well they're maintaining the status quo.

Posted in Ameristar, Harrah's, Isle of Capri, Missouri, Penn National, Pinnacle Entertainment, Wall Street | Comments Off on Missouri: Dough and "D'oh!"

Boardwalk bummer

In short, January's Atlantic City revenue numbers are -9% at the tables and -10% in slots. The glass-half-empty spin is that this is the third straight year of decline. The glass-half-full perspective would be, yes, but it's -9% the fifth-highest January in Atlantic City history (with '06 being the high-water mark). And if you were at Trump Taj Mahal, you had no complaints whatsoever.

In sheer dollar volume, Bally's Atlantic City got hammered, down from $45 million to $37.6 million. Only the newly revamped Taj  posted an increase in revenue, going from $38 million a year ago to $42 million this year. The in-flux Trump Marina (-8%) has at least temporarily bottomed out — at last place in dollar volume, behind even insolvent Resorts Atlantic City. (Because of disparities of scale, this can be a deceptive metric, though.)

Aside from the Taj's non-aberrant 10% gain, the closest thing to victory could be declared by Harrah's Marina, only -2%. Both properties cleaned up at the tables (+22% and +19%, respectively), while Borgata did so at the slots (+16%) — a good thing in the latter case, because the Boyd Gaming property got slaughtered in table play, -26%. However, it could take cold comfort in the fact that Trump Plaza (-29%), the Atlantic City Hilton (-32%) and Resorts (-36%) all fared worse. Luck just isn't with Resorts/Hilton owner Colony Capital these days.

The second-best showing in slot win was the Taj (+2%), with the Tropicana Atlantic City in third place with -6%. The worst clobberings were absorbed by Resorts again (-22%), Bally's (-23%) and Showboat (-24%). Overall, the Taj edged Caesars Atlantic City (-8%) out of the top tier, back toward the Trop (ditto). Thanks to the Taj makeover, Atlantic City has four "haves," four "have-nots" and a couple of Harrah's Entertainment properties that could go either way. Plus the ever-mystifying Trop, of course.

Posted in Atlantic City, Boyd Gaming, Colony Capital, Donald Trump, Economy, Harrah's, Tropicana Entertainment | Comments Off on Boardwalk bummer

Case Bets: James Packer, Isle of Capri

Geez, maybe the Nevada Gaming Control Board shouldn’t have been in such a hurry to green-light James Packer‘s purchase of Cannery Casino Resorts. (In a bow to noblesse oblige, Packer wasn’t even required to put in an appearance at the Nevada Gaming Commission‘s vote on the matter.) At least the NGCB might have wanted to see how the Harry Kakavas scandal plays out, especially when Kakavas purports to have Crown Ltd. execs committing improprieties on tape. And since one of the people in the hot seat is Crown CEO Rowen Craigie — with whom Nevada regulators have become quite familiar — close attention is warranted.

Regulators from Pennsylvania — a state not heretofore known for the thoroughness of its casino due diligence — are taking this matter a little more seriously. In fact, they’re sending a deputy Down Under to hear Kakavas’ sub rosa recordings in person. Having dropped the ball on Don Barden and Louis DeNaples, the Pennsylvania Gaming Control Board clearly doesn’t want a third botched background investigation on its ledger.

Packer, money soon parted: A $300 million writedown of other stateside Packer casino investments is on the way. Reuters’ dispatch implies that some of Packer’s Fontainebleau stake may be written off. That’s neither a vote of confidence for Packer or F’bleau, which looks more and more like the wrong project in the wrong place at the wrong time. At the time Packer bought in, it’d looked like he’d found a “steal” — and that F’bleau had been hard up for investors. Well, the second part may still be accurate.

Update: Then again … maybe both still hold water. All though all of Packer’s U.S. casino holdings (exclusive of Cannery) may be only worth $65 million combined, getting 20% of F’bleau for 65 mil still qualifies as a steal.

Isle bags U.K. venture: Even had it stuck to its knitting (U.S. regional casinos), Isle of Capri Casinos would still be in the doldrums — its revenues weren’t growing on a same-store basis. A duff casino project in the bowels of Coventry’s Ricoh Arena just made things worse and now its end is nigh. Perhaps, as Isle contends, Britain’s regulatory regime is partly to blame, but that’s an excuse which suggests Isle didn’t quite know what it was getting into — nor would a strong performance in Coventry have cured the company’s underlying malaise. Couple this with a ‘debacular’ Bahamas venture and Isle can’t come home soon enough.

Dancing Tsar? No, not he: Normally admitting to be an ABBA fan wouldn’t be a problem … unless you happen to be Vladmir Putin, that is. Bjorn Again probably never imagined they were onto the publicity coup of their careers.

Posted in Australia, Cannery Casino Resorts, Don Barden, Entertainment, Fontainebleau, International, Isle of Capri, James Packer, Pennsylvania, Regulation, Wall Street | Comments Off on Case Bets: James Packer, Isle of Capri

False economies

In today's edition of "You Know What Really Grinds My Gears?" …

As counterintuitive as it seems, one of the first things to take it in the neck during the present recession is customer service; cleanliness is the other. (Jean Scott has some thoughts on this today). Two examples should suffice.

Can't-See-the-Sunset-for-the-Cigarette-Smoke Station

Last Tuesday, the Significant Other and I decided to take advantage of a bingo promotion at Sunset Station. Now, if you're running a promotion for which you've barraged the area with coupons, you'd be prepared for a big turnout, right? Not Station Casinos. There were but two people manning the booth and the parade of would-be customers stretched well across the room even after the session had started. We left.

On Friday, I went for lunch to the neighborhood Quiznos. One person was manning the entire counter as the conga line backed up. Even after seeing a man about a horse, I found that the queue had not budged appreciably. I took my business — and my $10 — next door. We ran into a similar phenomenon yesterday at Best Buy, so fewer employees/longer lines looks like the trend du jour.

In the first two cases, we have businesses that saw money walk off the premises because of mingy, corner-cutting thrift moves. At Sunset Station, the down-at-heels impression was amplified by a casino floor that reeked of cigarette smoke to a degree that might make Arizona Charlie's blush. At least the latter is a grind joint that knows it's a grind joint. Ten years ago, Sunset Station was the flagship of the Station fleet. Now it's just another Boulder Strip casino. Even the older Boulder Station is holding up better.

Posted in Boulder Strip, Election, Station Casinos | Comments Off on False economies

What's the sound of stale?

It'd probably be very much like the dulcet tones of Danny F. Gans (pictured), who reassures prospective attendees to his Encore show not to worry: It'll be the same old same-old. Or, as he rationalizes it, "I'm trying to give [audiences] exactly what they want." (Which seems to be the problem with most Hollywood movies, too, but I digress.)

I'm only slightly younger than Gans and if a graying head like mine thinks that, say, doing a George Burns impression marks you as badly out of touch, what are the 35-45-somethings Gans claims to be targeting going to think? Heck, the recent Cirque du Soleil fiasco, Believe, didn't tank because it was too new, too risky but because — by an overwhelming consensus — it was too derivative, too Cirque de Yesterday.

"I feel like I'm kind of the Rocky of this town," Gans declares. Given that Sylvester Stallone looks ossified and does the same thing over and over, that analogy may be unwittingly apt. Gans' reputation is that of a performer whose act fossilized somewhere back in the Clinton administration and he seems determined to validate the perception. But Steve Wynn is wagering that there's money to be made off predictable mediocrity and he's likely to be proven right.

Posted in Cirque du Soleil, Encore, Entertainment, Steve Wynn, The Strip | Comments Off on What's the sound of stale?