Case Bets: MGM Mirage, Harrah's, Wynn, Shuffle Master, Taxes

As we wait for the MGM Mirage earnings report, signs of desperation mount. If the company is willing to cast away a pearl like new, costly and high-yielding MGM Grand Detroit, what isn’t sacred? Not even the corporate jet, provided the buyer doesn’t welsh on the deal. (Guess those high rollers won’t have to fly commercial for a while yet.) Whoever made that offer for MGM Detroit, though … (s)he’s one smart cookie, methinks.

Dumping regional properties at a time when that’s where the strength of the casino industry is just doesn’t make sense — although you could probably make a case for ditching the already written-down Gold Strike in Tunica or the Grand Victoria riverboat in casino-killing Illinois. Actually, getting the hell out of the hellacious Illinois market seems like the best idea since forever.

Congratulations, Gary Loveman! You took home $39.6 million last year, while your company was crashing and burning — not to mention pink-slipping 8% of your workforce. Don’t say Loveman isn’t feeling Harrah’s pain: He’s forfeiting a whole $100K in salary for 2009. There goes the college fund!

The casino giant is one step from the bottom of the Moody’s bond-rating ladder. In a memo to the SEC, Harrah’s Entertainment announced that managers were taking a 5% pay cut and that “it might have to delay expansion, sell assets or restructure debt.” Delay expansion? No! Really? That was off the table the minute the ink was dry on the LBO. Refurbishment is also a low priority, as capex costs will be trimmed by as much as 59%.

Meantime, the guessing game begins over which assets might be on the block. In one of the busier threads over at Hunter HillegasTwo Way Hard Three, fellow blogger Chuck Monster synopsizes the reshuffling of Harrah’s properties between various holding companies, which includes a possible abandonment of the volatile (read: shaky) Lake Tahoe market. Sometimes I think Harrah’s does this jiggery-pokery just to amuse itself watching the blogosphere try to determine What It Really Means.

In a regional update, most Lousiana markets were slightly down last month — except Lake Charles, which Harrah’s pulled out of, leaving Pinnacle Entertainment in possession of the field. Oops.

Pssst! Don’t tell anyone! It’s stashed as the second item of “In Brief” but Wynn Resorts is floating a stock offering to the tune of over nine million shares. (Other sources say seven million.) Wall Street had an understandably adverse reaction — at first blush — to this 7% dilution of Wynn stock, which closed up $1.07 today. Given that it’s a proactive move to retire debt, it’s tough to quarrel with Wynn.

Update: Clarification of the Wynn stock float comes by way of Forbes.

As for the undying speculation that Steve Wynn might want to buy back Bellagio or golden oldie The Mirage, one analyst — Goldman SachsSteven Kent — says he “would be surprised to see Wynn pursue this,” given that Wynn is a builder, not a buyer.

Parenthetically, in the above-mentioned blog thread, Brian Fey makes the following, extremely trenchant observation: “Its pretty bad, that here we are almost 10 years later [following Wynn’s ouster from Mirage Resorts], and Steve’s biggest competition is still Steve’s old properties. Just shows you how far behind everyone else is when it comes to the game.

Shuffle Master wins? Rival company Elixir Gaming settled litigation by selling its Asian shuffler business.  The Las Vegas Review-Journal sees it as a win for Shuffle Master, while the Las Vegas Sun takes the opposite take, implying that Shuffle Master got its pockets picked — which could mean an ignominous curtain for just-departed CEO Mark Yoseloff, if that’s indeed the case. They report, you decide.

More of the Same Dept.: Democratic leadership in the Nevada Lege is going to do exactly what (little) is expected of them — jack up existing taxes to onerous levels as a cop-out solution to our budgetary crisis. Booze and cigarettes are the low-hanging fruit of taxation but Nevada casinos better get ready to bend over and grab their ankles, as they’re probably the next target of opportunity. Oh, and brace yourself for a much bigger beer-and-wine tab at the casinos if this goes through … as though casino booze wasn’t costly enough already!

Never let it be said that S&G didn’t at least once have a kind word for Columbia Sussex. The former Tropicana owner is reducing its carbon footprint. Amen to that.

Posted in Columbia Sussex, Current, Detroit, Economy, Goldman Sachs, Harrah's, Labor, Lake Tahoe, Louisiana, MGM Mirage, Mississippi, Pinnacle Entertainment, Shuffle Master, Steve Wynn, Taxes, Technology, Wall Street | Comments Off on Case Bets: MGM Mirage, Harrah's, Wynn, Shuffle Master, Taxes

A twist of Fator

We took in Saturday night’s opening of Terry Fator and his Cast of Thousands, as did quite a few C- and D-list celebrities, plus several MGM Mirage executives — no doubt enjoying 90 minutes’ respite from worrying about their company’s future. MGM brass weren’t nearly as visible as Harrah’s Entertainment exec-about-town Don Marrandino. He was last seen chatting up a threesome of bottle blondes in matching, skintight, red dresses. Presumably they were the string trio Alizma, although I hope they’re better at fiddling than at finding their seats, a feat which required circumnavigation of the auditorium. (Such are the perils of wearing bright, identical outfits.)

The evening was more like a corporate cocktail party with intermittent entertainment by special guest Terry Fator, as audience members couldn’t be bothered to take their seats for a full 20 minutes, kibbitzing away interminably. This meant that people who were actually prompt (Quaint notion!) were treated to tape loop upon loop — I lost count — of Fator having his portrait painted. At least it gave one plenty of time to appreciate the skill and energy of DJ Ben Harris, as good a warm-up act as you could have.

Although the crowd seemed extraordinarily reluctant to actually sit down and watch the show, once it started, they ate it up. Some Red State-friendly material was red meat to the opening-night audience, but the biggest laugh had to be when Fator took a jab at Believe divo Criss Angel. You had to wonder how the MGM execs felt, listening to the roar of savage glee directed at their failed, $80 million wonder boy. (Looking on the bright side, never has Lance Burton gotten such good reviews as he did right after Believe exploded on the launch pad.)

With the exception of Norm(!) Clarke, local press reaction to Fator has been pretty ‘meh,’ the consensus being that it’s mostly tame, old-school fare (or, “cloyingly cute, reactionary and regressive“) that will play well to a broad audience. Sounds like a can’t-miss box office formula to me.

Perhaps it’s because I have low expectations where ventriloquism is concerned or don’t find Strip entertainment very cutting-edge anyway, but I thought Fator exceptionally good. Singing is in and of itself very difficult — doing it well while also throwing your voice and manipulating a puppet takes an inconceivable level of skill, to say nothing of stamina. And, save for a brief costume change, Fator is onstage for the entire show. In fact, it’s so densely packed with material that it risks overload. It’s like walking that tightrope between being sated or outright stuffed at the buffet.

Fator has a snazzy-looking set and a crisp, seven-piece backup ensemble. The CGI imagery that accompanies most of the songs is beautiful and state of the art. The video montages for “Home” and “What a Wonderful World” aren’t just corny, though, but are so literal-minded they stray into parody.

The vast majority of Fator’s songs and pop-culture references are contemporary, with Patsy Cline and Roy Orbison impersonations are throwback-y as he gets. James Blunt, Gnarls Barkley, Amy W(h)inehouse and several other current artists get their due, so I’m perplexed by the critical consensus that Fator’s material is tepid and dated. By contrast, Danny F. Gans adds two or three adult-contemporary numbers into his mix and it’s treated like a massive reinvention.

OK, so maybe ridiculing Michael Jackson is like tripping a dwarf but this is a Jackson-obsessed town. Our dailies keep tabs on Jacko’s whereabouts and speculation about if or where he’ll headline in Vegas is neverending. So Fator is hardly off-base here. His sudden swerves into political japery, though, are so unexpected that they can throw you right out of the rhythm of the show. They contrast jarringly with the prevailing soft-and-cuddly vibe, sounding more like sudden irruptions from Fator’s id. Most of the other laugh lines are ribald enough for Vegas but not so raw that a parental advisory is required.

The giant, flanking-video-screen setup is de rigeur for almost any showroom these days but give Fator props: He’s in closeup much of the time, so any technical sloppiness on his part will be writ large. As for his occasional confusion as to which voice should be emanating from which mouth or his tendency to “corpse” in mid-routine, dissolving in laughter … well, that’s part of the fun and keeps the evening from feeling too slick.

At first, I thought The Mirage was taking a huge risk by awarding a long-term contract to a ventriloquist. But Fator is no ordinary ventriloquist and the gambit appears certain to pay off. The Mirage looks like it’s got a huge hit on its hands — maybe not Donny & Marie huge, but not too far behind either.

As though to put Fator in perspective, the truly awful Gordie Brown returns to the Golden Nugget on March 27. (Given former owner Steve Wynn‘s affinity for things French, I always think of that place as Le Nugget d’Or … but I digress.) At least Brown won’t be contractually obligated to sing that craptastic “Golden Nugget” theme song with which Rich Little opened his shows — we think.

I won’t get to find out, as we have an insuperable conflict with Trent Carlini‘s Elvolution that night. Aw shooty!

Update: Darn it all but they’ve gone and pushed the Trent Carlini opening media night back to April 24. Guess I’ll just pass on Gordie B. in favor of watching DVDs of Space: 1999.

Coming attractions: You’ll get Anthony Curtis‘ take on Terry Fator when the next issue of Las Vegas Advisor makes print.

Posted in Cirque du Soleil, Current, Entertainment, Harrah's, MGM Mirage, The Strip, TV | Comments Off on A twist of Fator

Packer gets a discount; solving the I-15 problem

Though it can't seem to settle on a dollar figure for James Packer's renegotiated Cannery Casino Resorts purchase, this story makes one salient point: A $1.7 billion-plus acquisition could be converted into a 25% stake for $370 million-$390 million. That effectively reprices 100% of Cannery at $1.48 billion-$1.56 billion. Which enables Packer to save face on what is described as an "increasingly onerous deal." Or it could be a graceful way of bowing out of further U.S. casino adventures in favor of a renewed Down Under focus.

A reader writes …

I know that you are a big fan of a high-speed rail system to Vegas, and I do see the need to increase the traffic flow from SoCal to Vegas.

But I wonder if anyone has run the numbers to compare adding an additional highway lane or two (and even expanding any bridges) from the north edge of the LA area to Vegas? And how that figure compares to the cost of a high-speed rail.

Again, I'm not an opponent of rail lines (in fact, my wife comes from a long-line of train-employed relatives), but I wonder where the best "bang for the buck" would come from.

From some VERY basic numbers on the web, I'm getting estimates of about $1 million per mile per lane for highway building in the desert. Even with adding a lane in each direction, that's about $2 million per mile, or around $400 million for the approx. 200 miles from the north edge of metro LA to Vegas. Even if you more than double that figure for bridge expansions, etc., you still only end up with a cost of $1 billion. Compare that to the $8 billion in the stimulus package for high-speed rail (although I'm not sure how much of that $8 billion goes to the Vegas rail, or what the total cost of that project would be).

As you can tell, I am NO expert on this, but it might be interesting to hear from some experts (and who don't have a dog in the hunt).

You make good points, Kemosabe.

Posted in Australia, California, Cannery Casino Resorts, James Packer, Technology | Comments Off on Packer gets a discount; solving the I-15 problem

Station vs. Boyd IV: This time it's spite

Inside the wacky world that is Station Casinos' executive suite, business judgment is evidently trumped by getting even with your main adversary. How else to explain Station's eight-month push to get zoning approval for Losee Casino Station? The company is sitting on a 58-acre non-gaming parcel at the northeast corner of Craig and Losee roads.

In addition to needing a zoning variance, Station must also contend with North Las Vegas Mayor Michael Montandon's stated opposition (which has softened a mite of late) to creating new gaming enterprise districts in NLV while several existing ones remain unexploited. Then again, Montandon is running for the GOP gubernatorial nod in 2010 and the Fertitta family are george Republican donors, so a change of heart may be in the offing.

As for this "Losee Casino Station," it's a project Station pulled out of its ass (and rather stealthily, at that). It has every appearance of being done to checkmate Boyd Gaming's adjoining Park Highlands project (the former "North Coast"), which Boyd obtained by agreeing to surrender the gaming entitlement on land it owned further south. As a business move, it makes scant sense.

Architect Ed Vance's design for Station Casinos' quickly forgotten Castaways site.

Surely major casino companies don't act out of pettiness and spite, I hear you say. Consider this: Durango Station remains in decade-long limbo and previously announced projects for Inspirada (in Henderson) and Cactus Lane, near South Point, are in a holding pattern — as are redevelopments of the Palace Station and Wild Wild West areas. And don't forget the long-mooted, long-deferred Castaways Station (or whatever that promised casino-restaurant will be called). Or that, just a short drive down Craig Road, new $662 million Aliante Station is trying to make its nut.

No, defying all logic, Losee Station has somehow risen to Priority #1 status. I wish I could put it more politely but Station is throwing a "cock block" on Boyd. The company's appetite for brinksmanship knows no bounds.

Posted in Architecture, Boyd Gaming, Politics, Station Casinos | 1 Comment

'M' is for 'mobbed'

Local naysayers have been gleefully predicting the swift demise of M Resort for weeks now. And I’ll admit I even entertained a few doubts as we drove out there yesterday morning. I mean, unless you live well south of Vegas proper, you have to drive all to hell and gone to reach M. Was that initial fortnight of frenzied business just a novelty phase?

Boy, were my doubts misplaced. M was crawling with players and other customers at 10 a.m. on a Sunday, with lines soon forming for just about every restaurant on the property. That’s to say nothing of the number of people queuing up to join the players’ club. That was about a half-hour wait, followed by what must have an even longer one for the buffet, although my bad back was flaring up so fiercely that A) it played hob with my sense of time and B) I was sure I’d be leaving M on a gurney.

That buffet is no doubt one of the main drivers of M’s early success. (Savvy marketing is another.) Both in breadth and quality, it rivals the two buffets at The Rio, thereby putting it in the top three among off-Strip buffets. M manages the not-inconsiderable feat of putting Station Casinos‘ Feast buffets in the shade and the respectable Sam’s Town one is left completely in the dust.

Leaving M, you’ll pass the once (and future?) site of Gary Goett‘s Olympia Gaming casino-resort (above, as originally conceived), now retitled Legends at Southern Highlands. One billboard vows an April 2010 opening, which is preposterous, while another — right next to it — only promises 2011. As of this writing, not so much as a spadeful of earth has been turned. This project was announced before M but has slipped into the “believe it when it happens” category.

Donald Trump likes to sue but this time he’s on the receiving end. Depositors in insolvent Trump Ocean Resort Baja are claiming “fraud, negligence, unjust enrichment and violating federal disclosure laws” after the project blew through $31.5 million worth of deposits with nothing to show for it but a hole in the ground. As is quickly becoming the case whenever a Trump-branded product goes belly-up, the orange-haired TV star is claiming he had nothing to do with it.

Posted in Boyd Gaming, Dining, Donald Trump, Gary Goett, Harrah's, M Resort, Station Casinos | Comments Off on 'M' is for 'mobbed'

Nationalize the casinos?

Some news stories are too far-out crazy to ignore. This week, it’s XinhauNet‘s prognostication that Uncle Sam will go into the casino business any day now. Or, as the over-imaginative reporter puts it, “some people are talking about the possibility that the U.S. government will bail out, own and operate the casinos to get huge revenues the government badly needs.”

The rationale is: The guvmint is about to nationalize the banks; the banks own the casinos; ergo, Washington will own the casinos. Even as a syllogism that fails, since you’d have to have a lot more casino defaults for its premise to be even half-true. Undeterred by reality, XinhauNet dredges up a “Washington economist” who suggests that the feds skip the intermediate step and just take over the casinos themselves, thereby reaping a predictable supply of cash flow.

If nothing else, this bizarro take on the current economy gives an excellent idea of how screwed up our worldview would be if we all grew up in Communist China.

Speaking of which … massive and overwhelming federal economic intervention is a good thing, quoth Sheldon Adelson (at least when China does it), who also disses the democratic process in his latest serenade to the ChiComms.

Earth to MGM Mirage … last week’s Las Vegas Weekly carried a junior-page ad (p. 18) for CityCenterCareers.com. Its affect is somewhat disassociative, as the accompanying picture shows The Harmon at its intended full height, not the 27-story stump for which MGM will have to settle, thanks to inept construction work. If this ad keeps running as is, MGM is going to look like it’s severely in denial, promoting a version of CityCenter that will exist only on VegasTodayAndTomorrow.com‘s “Dreams” page.

Posted in Architecture, Economy, MGM Mirage, Sheldon Adelson, The Strip | Comments Off on Nationalize the casinos?

Case Bets: Fasolt, etc.

A reader has asked how Fasolt got his name. I'm to blame for that, because he was called "Marble" when I met him. He was living in a foster home in Minneapolis, after a woman had thrown out her boyfriend and his cat, but not before her bratty kids has smeared bubble gum in his (the cat's, that is) fur. "Marble" was a logical reference to his coloration but it's also cold, smooth and impersonal … in short, nothing like the friendly and gently inquisitive — albeit huge — cat to whom I was introduced.

Fifty bucks later (the best $50 I ever spent), the mega-kitty was mine but the name had to go. Casting about for inspiration, my mind fell upon Fasolt, the soft-hearted giant from Richard Wagner's opera Das Rheingold. In it, Fasolt has a surly brother, Fafner, who clubs him to death in an argument over some gold. Fasolt, to his credit, only had eyes for the goddess of spring, Freia, but once the brothers are persuaded to take mere money instead, they're at each other's throats in nothing flat. (Allegory much?)

Fasolt, the giant, as portrayed in the Bayreuth Festival's 1980 revival of Das Rheingold.

Since Fasolt is the only character in the Ring of the Nibelung whose morality doesn't come into question at some point, he made a perfect namesake for my new feline friend. It's been the despair of veterinarians, who always misprononounce his name "fasOLT," but they've come to love him so much, I no longer mind. He lives with two Norwegian Forest Cats, Shadow and Mr. Bit, so that's a lot of plus-sized felines lumbering around my little pied-a-terre.

Magic's a Drag: I was persuaded to see it last night and, yes, it is indeed a drag. How anyone can justify $50 a ticket for such a cheaptastic show is beyond me — especially when you can now get into Cirque du Soleil's Love for as little as $60.

Dix Nix Snix: Some gay-bar hanky-panky (third item) will cost Snick's $50K and a sex-, er, six-month loss of its slot route, unless the Nevada Gaming Commission overrules an already lenient settlement. Moral: Sex and slots don't mix.

Actually … I can think of some off-color variants of that lesson, but I'll spare you.

Posted in Cirque du Soleil, Entertainment, Pets, Planet Hollywood, Regulation, The Strip | Comments Off on Case Bets: Fasolt, etc.

More M Resort pix

Armed with my first digital camera (which the Significant Other won during the brief run of "The Real Deal" at the Venetian), we scoped out M Resort on opening night. If Encore marked the return of "the red casino," M responds with what might be called "the resinous casino." If you grew up in a region thick with sap-laden trees, the look will be familiar:

This pillar motif runs throughout the resort …

… as here, over the slot floor.

Fixtures like these …

… also make nifty places of concealment for the domes that mask the PTZ surveillance cameras.

This lovely canopy in the grand foyer …

… is but a stone's throw from the check-in desk.

The sports book. Obviously.

The requisite wild-and-crazy casino carpet, for those who dig that jazz.

Blown-glass ornaments in the VIP players' lounge, where the TV (not shown) …

… was set to Family Guy, in a gesture of impeccable taste. Other teevees throughout the property were tuned to either ESPN or Fox Noise, er, News. The lounge was also home to …

… this floral arrangement. (Like, duh.)

Sample table setting (out of several) in one of the smaller meeting rooms.

Just add conventioneers and stir. (Groovy carpet, huh?)

Lastly …

… your humble blogger comes to grips with one of M's self-service beverage stations. As you can see, I'm partial to the Real Thing. And, yes, I often look similarly vexed. All this and we still got home in time for United States of Tara. (Toni Colette can play damn near anything.)

Enjoy!

Posted in Architecture, Encore, M Resort, Technology, TV | Comments Off on More M Resort pix

Quote of the Day

"If only Boyd had thought of this! They could have had tourists PAYING to help them complete Echelon. The only thing I don't get is the air-conditioned cabs. That hardly seems like a realistic adventure." — Steve Friess on the newest Vegas attraction, "Play with our Cats," in which you pay for the privilege of tooling around in construction vehicles.

Posted in Boyd Gaming, Entertainment | Comments Off on Quote of the Day

Nevada Lege sticks it to you

Although a few Democrats in the state Senate toyed with the idea of growing a spine and opposing raising the hotel-room tax, all of them — plus several Republicans — did the easy thing and opted for Plan A: Soak the tourists. Again. So the new top rate in Las Vegas will be 13%. Pardon us while we put this cigar butt out in your face, too.

All the rationale you need can be found in the final line of Ed Vogel‘s story, where he’s told this “may be more palatable than other tax increases because the tax would be paid by tourists.” The disdainful tone expressed toward tourists by KVVU-TV talking heads on this morning’s 7 a.m. newscast simply drove the point home: Tax that schmuck behind the tree.

Of course, the tax increase was popular with two-thirds of Clark County voters. Wouldn’t you love any tax that somebody else has to pay? Despite having booked the revenue already, Gov. Jim Gibbons will take the coward’s way out and let the new impost become law sans signature. That hardly befits a decorated military veteran. (Proving yet again that irony is dead, Gibbons reiterated his now-is-not-the-time-to-raise-taxes mantra the very same day.)

The solons’ fecklessness is pithily summarized by an understandably exasperated Jon Ralston:

The session is nearly a third over and a pervasive sense of deja vu is settling in. Governor presents controversial idea(s). Legislature declares them DOA. Partisan sniping ensues between lawmakers and governor and among legislators. Final budget/revenue plans are an abomination, some kind of Frankensteinian creation that has no policy underpinnings but fills a budget hole with cobbled together revenue Band-Aids.

While Gibbons’ budgetary ‘solution’ might be dubbed the Nevada Chainsaw Massacre, the Dems’ non-response is equally deplorable, consisting as it does of socking it (among others) to the casino industry even more than ever. This approach would simply amplify existing inequities in Nevada’s structure, as Hugh Jackson tried to explain to the Lege, throwing in some charts that even a legislator could understand. They neatly highlight the disparity between the enormous revenue contribution made by casinos — hundreds of millions of bucks — and the measly input from the mining industry.

Silver Lining Dept.: Amid all those beyond-horrid numbers from the Nevada Gaming Control Board, note that slot hold is down almost a full percentage point. Hopefully the example of M Resort, trading off loose slots for longer play (the old Cactus Jack’s philosophy) will find more adherents. Oh, and Washoe County was up. We’ll take any good news we can get and this was pretty unexpected.

A reader enlightens me. Among the possible reasons for the increased smoke infestation at formerly respectable joints like Sunset Station (and Eastside Cannery), a California visitor suggests another: The ban on smoking in Nevada restaurants has driven the cigarette-and-cigar crowd to the casinos more than ever, since the latter represent one of the few safe havens remaining. He’s noticed a gradual increase in the smokiness of Red Rock Resort and comparable places that provide a one-stop-shop for dinner, video poker and a smokin’ them while you’ve got ’em.

Can’t argue with that … although the rapid declivity of both Sunset and E-Can into mega-ashtrays suggests to me a confluence of factors, all of them untoward.

Posted in Cannery Casino Resorts, Economy, M Resort, Politics, Station Casinos, Taxes | Comments Off on Nevada Lege sticks it to you

Boyd cuts through the crap

There’s no longer any pretense whatsoever that Boyd Gaming‘s takeover offer for Station Casinos is being pitched to Station management. In its reply to Station CEO Frank Fertitta III‘s trash-talking refusal of Boyd’s offer, the latter posits that “the proposal outlined in its February 23, 2009 letter offers a superior recovery to creditors when compared to the current restructuring offer Station has proposed.”

Boyd’s target audience, the Station bondholders, find themselves in the catbird seat. Even if they don’t like the color of Boyd’s money, the onus is on gambling’s best-paid CEO to come up with something better. Responding to Fertitta’s jab at Boyd’s financial status, the company “reiterates that it has sufficient liquidity under its credit facility to finance a cash transaction, and contemplates that no amendment to its credit facility would be required under the proposed transaction structure.”

Translation: There’s as much as $2 billion on the table for you … but not a penny more. Whether or not it’s prudent for Boyd to be pushing all its chips into a Station bid (as opposed to finishing Echelon), putting a hard cap on the deal is a wise move, signaling that the company won’t be drawn into more than a finite bidding war.

Frank Fertitta III: superfluous?

In Boyd’s defense, while Station’s cash flow hasn’t been what management cracked it up to be, it would still provide Boyd with a means of paying down the acquisition from Day One. In addition to reducing the potential leverage ratio, Boyd would get an immediate return on its $2 billion — something that can’t be said for the project that has been dubbed “Inch-along.” Boyd can also make the argument that those returns will look even better once it starts making economies of scale and eliminating redundancies … starting with the Fertitta brothers and working downward.

Oh … and if you’re wondering who’d get the “Station” name (and the brand equity attendant thereupon), I’m told the answer is: Nobody knows. At least not yet.

Posted in Boyd Gaming, Station Casinos | Comments Off on Boyd cuts through the crap

Big bounce in Pennsylvania

Casino revenues in the Keystone State leapt 14% from February of Leap Year to this year, at least at six of the state's seven casinos. (Hollywood Casino at Penn National Race Course is excluded; it wasn't open a year ago.) That's $126 million against $110 million, even with one less day in the month, which is divided 55/45 between the state and operators. A 1,578-machine increase in slots, mostly at Mohegan Sun at Pocono Downs really helped, too, as you'll see.

The comparisons of gross-revenue (not to be confused with cash flow, which can be considerably less) are as follows …

Mohegan Sun @ Pocono Downs: $12.4 million/$17.8 million (44%)

Philadelphia Park: $28.5 million/$30.3 million (6%)

Harrah's Chester: $28.5 million/$27.9 million (-2%)

Presque Isle Downs: $12.1 million/$13.9 million (15%)

The Meadows [Cannery Casino Resorts]: $17 million/$20.6 million (20%)

Mount Airy Resort: $11.6 million/$15.3 million (32%)

Plus another $19.7 million realized at Penn National. Once expansions are completed at The Meadows and Philadelphia Park (more bad news for Harrah's Chester), and Sands Bethlehem and Rivers Casino in Pittsburgh open, the state expects the annual take to swell to $2.25 billion, with industry employment growing to 8,500 souls.

Three-fourths of the value of the troubled, $1.7 billion Cannery/Crown Ltd. deal now rests on The Meadows. Crown says it expects an annual cash flow contribution to be $115 million versus only $35 million from the two Canneries in Las Vegas. If New Yorkers really are willing to drive an hour and 50 minutes to pull the slot handles in Bethlehem, then Sheldon Adelson's 17% projected ROI won't be as zany as it appeared at first blush.

Posted in Cannery Casino Resorts, Harrah's, James Packer, Neil Bluhm, Penn National, Pennsylvania, Sheldon Adelson, Taxes, Tribal | Comments Off on Big bounce in Pennsylvania

Scant love for Boyd, big love for M

I guess Fitch Ratings doesn’t have the stomach for Boyd Gaming‘s attempt to take over Station Casinos either. It’s downgraded Boyd, whose bonds sank “further into junk status.”

Locals love M Resort, it would appear. The Anthony Marnell III property has been open less than a week and is already hiring an additional 250 staffers — after being swamped by early busness. Instead of the projected 5,000 covers per day, M’s restaurants have been doing closer to 10,000. Also, the number of sign-up stations for the players club will be increased to 20, the casino having realized 80% of its goal of having 25,000 enrollments in March. (This may explain why furniture was being removed from parts of the main floor.)

Another 100 slots will be added and there will be more sightings of the gambler’s best friend: the ATM machine. Obviously, some of the “honeymoon” hubbub will wear off once the curiosity factor has subsided (which is what happened to Red Rock Resort). But good news is at a premium these days, so we shan’t look this gift horse too closely in the mouth. That surely goes double over at MGM Mirage, whose minority stake in M looks more and more like one of that company’s savviest investments — not to mention likely to yield the most bang for the buck.

Posted in Boyd Gaming, M Resort, MGM Mirage, Station Casinos | Comments Off on Scant love for Boyd, big love for M

Wall Street swoons for Sands

That must have been some mighty tasty Kool-Aid that Las Vegas Sands CEO Sheldon Adelson was ladling out at the Reuters Travel & Leisure Summit yesterday. Had we not been hearing it from other news sources, one wouldn't put much credence in Adelson's prediction of wider access to Macao from mainland China, mainly because his recent forecasts of what Peking would and wouldn't do have tended to be dead wrong.

Marina Bay Sands: A 28% return on investment? Sheldon says that's a lowball figure.

But what really staggered the imagination were the ROI projections Wall Street's making for Marina Bay Sands, in Singapore. Putting cash flow anywhere between a half-billion and $900 million is a scattershot figure, to say the least. But even those seemingly giddy estimates are "somewhat low," according to Sands' grand vizier. Depending on which of three reported Marina Bay budgets is the correct one, here's how the ROI range would shake out …

$3.2 billion (original): 16%-28%

$4.5 billion (interim): 11%-20%

$5.4 budget (alleged final budget): 9%-17%

Those are some extraordinarily optimistic projections for the most expensive casino megaresort in history (unless you count CityCenter as one property). But it gets better. The $743 million Sands Bethlehem project, in Pennsylvania, is going to do a 17% return on investment, according to Adelson.

Let's hope he's right, because that'll mean we're busting out of this recession something fierce. Of course, Sands saved itself a pile of money in Pennsylvania by simply deferring its contracted retail mall and hotel until an unspecified future date. But if $743 million represents not the total cost of the project but what Sands has spent on the casino alone, that $800 million Don Barden/Neil Bluhm behemoth in Pittsburgh may start to look like a paragon of frugality.

Posted in Don Barden, Macau, Neil Bluhm, Pennsylvania, Sheldon Adelson, Singapore, Wall Street | Comments Off on Wall Street swoons for Sands

Casino commercial of the year

Although Sheldon Adelson‘s taunting of the president may have seemed very clever at the time, the joke might be on the mogul. Check out this inspired TV spot, dreamt up for the grand opening of the permanent racino at Indiana Downs:

A tip of the sombrero to the reader who clued me into this brilliant ad, which has supposedly stirred a ruckus in the Hoosier State. It’s the brainchild of Cordish Gaming CEO Dennis Gomes (the once and would-be future boss of the Tropicana Atlantic City), who is also credited with instituting the greatest casino promotion of all time, the Trop’s tic tac toe-playing chicken.

I hear the chicken had been given its walking papers long before Columbia Sussex got ahold of the Trop. A good thing, too. Knowing ColSux, CEO William J. Yung III probably would have had the chicken killed, fried and served for lunch.

Posted in Atlantic City, Columbia Sussex, Economy, Indiana, Marketing, Sheldon Adelson | Comments Off on Casino commercial of the year

Case Bets: Bank shot, Sin City Express

In today's Movable Buffet, Richard Abowitz speculates on the possible evolution (devolution?) of Las Vegas from a boomtown built on junk bonds to critical-care patient who's a ward of the banks. To Abowitz's mention of the bank-owned Cosmopolitan, I would add the Hard Rock Hotel, Stratosphere, two Arizona Charlie's and the Las Vegas Hilton. The first is owned by DLJ Merchant Partners, most of the others by Goldman Sachs.

Goldman has but a minority stake in Colony Capital's LVH. However, it enjoys veto power over any capital expenditures. Which is as good an excuse as any (or none) to mention that on my last visit to the Hilton the volume on the slot machines had "gone to 11." If it was a clever ploy to create the subliminal impression that the casino was busier than it actually was, it worked.

"Sin City Express": That mag-lev train that's causing Gov. Bobby Jindal (R-LA) and others of his ilk to lose sleep is a real juggernaut, consisting of one unpaid retiree living on the west side of Vegas. (For the record, LV lifeline I-15 has undergone regular midweek closings this winter, to facilitate blasting, as well as one snow-induced shutdown.) At least Jindal's a smart guy just pretending to be dumb, not an out-and-moron like Rep. Trent Franks (R-AZ), who fantasizes high-speed rail from Disneyland to a Carson City brothel. Whatever turns you on, Congressman.

Posted in Colony Capital, Goldman Sachs, Morgans Hotel Group, Politics, Technology, Wall Street | Comments Off on Case Bets: Bank shot, Sin City Express

Harrah's new Atlantic City pitch

Two minutes of Asian American-oriented marketing messages, all of which boil down to, “Atlantic City: It’s not just for gambling anymore.” Lots of Total Rewards pluggery, as you’d expect, but oddly no mention of the new ACES train, of which Harrah’s Entertainment is a co-sponsor (with Borgata).

Posted in Atlantic City, Boyd Gaming, Harrah's, Marketing | Comments Off on Harrah's new Atlantic City pitch

Station vs. Boyd III: This time it's personal

You really have to hand it to Station Casinos CEO Frank Fertitta III. This dude has more lives than a cat. Every time you think his luck has run out, he slips the noose yet again.

So it was Tuesday. FF3 proved that his time at the gym hasn’t been wasted, as he applied a one-two punch to Boyd Gaming. While studiously ignoring Boyd’s $950 million offer for most of Station, FF3 was persuading his creditors to give him a forbearance that will extend until Tax Day. When it comes to sweet-talking bondholders, this guy is sheer Sheherazade … especially when you consider that Boyd’s offer made the Fertitta family’s proposed $244 million cash infusion look like chump change.

Forbearance in hand, FF3 then unveiled a Continue reading

Posted in Boulder Strip, Boyd Gaming, Colony Capital, Current, Economy, Station Casinos, The Strip, Wall Street | Comments Off on Station vs. Boyd III: This time it's personal

This is your industry on crack

Finally, someone (in this case, Liz Benston) has written the definitive user-friendly analysis of how the casino industry crashed and burned. To try and quote the salient points would require little short of reprinting the entire article (to say nothing of its copious charts).

In essence — as run through the S&G juicer — we're dealing with an industry that could be said to have lost its marbles four to five years ago. As I've contended on the Vegas Gang podcasts, captains of the casino industry, borne aloft on a bubble of illusory "wealth," mistook a bubble for a baseline. Instead of paying down debt on acquisitions, they doubled down on extra-super-megaresorts and wholly unncessary LBOs.

And now that the party's ended, the resultant hangover is shaking out the business like a case of the DTs. The irony is that Strip revenues have reverted to 2005 levels … back when business was pretty darn 'phat,' and MGM Mirage and Harrah's Entertainment were so flush they were able to devour Mandalay Resort Group and Park Place Entertainment, respectively, with scarcely a burp.

One of the few things now standing between insolvent casino companies — a group that may soon include both Harrah's and MGM — and outright disaster is that gaming has become "too big to fail." In an otherwise normal economy, collapsing companies like Herbst Gaming, Black Gaming, Colony Capital and even big shots like Station Casinos would probably be staring receivership in the face. But extraordinary forbearance — in more than one sense of the term — by lenders is keeping the lights on and the doors open. The bankers and bond markets have obviously decided it's better to keep their wobbly dance partners upright than let gravity take its course. Lord knows, the seismic impact of a cascading series of casino bankruptcies beggars the imagination and not in a good way.

Into this maelstrom, is flung the news that two companies are going to miss their scheduled 10-K filings. In the case of Pinnacle Entertainment, they need some extra time to perform mark-to-market ledger-demain, writing down $275 million-$330 million. J.P. Morgan analysts are sanguine, though, partly because of an 18% increase in fourth-quarter revenue. Also, although Pinnacle's net loss may be as high as $308 million, other results "should be above expectations, reflective of PNK’s strong Louisiana performance at Lake Charles, stable New Orleans trends, and a ramp at Lumiere [Place] in St. Louis. Trends that, generally, should continue."

Also playing for time is MGM Mirage. According to the Sun, last week's draw-down of credit has tapped out the company's liquidity, a statement confirmed in a J.P. Morgan note. Contrarily, the Review-Journal implies there's plenty left.

(Update: MGM tells me, no, there isn't and I was wrong to have concluded otherwise last week. Error duly noted. Self-flagellation in progress.)

Whatever the case, Wall Street is sounding like it's accepted that Chapter 11 is all but inevitable. Slightly less apocalyptic scenarios still include potential defaults, debt-for-equity swaps that would surely cost Kirk Kerkorian his majority ownership, asset sales, a restructured balance sheet and a $7 billion note that's less of a balloon payment than an incoming Hindenberg.

Or, as Morgan analysts write, per their wait-and-see strategy: "We expect to hear from MGM over the next few weeks, and suspect it is or shortly will be working with its banks on amending its bank covenants (leverage covenants now likely tripped after drawing down debt last week and hoarding cash) and looking to restructure its bank debt, among the other options MGM is considering (asset sales, amending CityCenter, etc.)."

Emendations to CityCenter? That would be an extremely bitter pill for MGM to swallow. First the Harmon truncation, now this prospect. In a totally unscientific measurement, page views of our online image gallery of Aria and Vdara were barely a ripple compared to the levels of interest manifested in Encore, M Resort and, good golly, even the Cabana Suites at the El Cortez — all of which have vastly outpaced Aria/Vdara in viewership. Like I said, unscientific but who'da thunk we'd see an El Cortez ≥ CityCenter equation?

And we still haven't touched upon today's earnings report from Isle of Capri (half good, half bad) or the latest round in the Station-vs.-Boyd catfight, chock full of hissing and spitting. We live in interesting times, to be sure, regardless of whether that's a blessing or a curse.

Posted in Boyd Gaming, Colony Capital, Downtown, Economy, Harrah's, Herbst Gaming, Isle of Capri, Louisiana, MGM Mirage, Missouri, Station Casinos, The Strip, Wall Street | Comments Off on This is your industry on crack

Harrah's enjoys bailout

Critics argue that the tax-law change rewards companies that took on too much leverage during the credit bubble, such as those that were bought by private-equity firms.”

Sound like anybody we know? How about Harrah’s Entertainment, which played Russian roulette with the bond market and got its brains spattered all over the wall. Lucky for them, Senate Majority Leader Harry Reid (D-NV) was there with a “Get Out of Jail Free” card — or at least a tax break that, in effect, rewards morally hazardous borrowing. Thanks to Harry’s largesse, it’ll be a full decade before Harrah’s pays off the gains it’s about to realize from buying back part of its $23 billion (!) debt at a discount.

That is, assuming that the crafty Reid hasn’t Continue reading

Posted in Colony Capital, Economy, Harrah's, James Packer, Macau, Melco Crown Entertainment, MGM Mirage, Politics, Sheldon Adelson, Station Casinos, Taxes, Wall Street | Comments Off on Harrah's enjoys bailout