Trop's agony soon to end?

Posted on February 18, 2009 by David McKee

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

Posted on February 18, 2009 by David McKee

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

Posted on February 12, 2009 by David McKee

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

Posted on February 12, 2009 by David McKee

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!"

Posted on February 11, 2009 by David McKee

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

Posted on February 10, 2009 by David McKee

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

Posted on February 9, 2009 by David McKee

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

Posted on February 9, 2009 by David McKee

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?

Posted on February 6, 2009 by David McKee

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?

Mixed message from Penn

Posted on February 6, 2009 by David McKee

Having pulled the plug on his latest Atlantic City venture, Penn National CEO Peter Carlino served the city a heaping plate of gloom with a side dish of pessimism. In fact, he pretty much slammed the door on the besieged metropolis, although his spokesman reopened it a wee bit.

Quoth Carlino: "I think as we've watched New Jersey, sadly, that's a market at the moment that is significantly less appealing to us, and that shouldn't be a surprise. There is much more bad news coming … [Pennsylvania slot parlors are] nothing but bad, bad, bad news for Atlantic City. It's going to be a while, and maybe a long while, before the picture changes in Atlantic City. It's not a pretty picture."

In other words, he didn't just plunge a dagger into the heart of Atlantic City, he twisted it around a bit for good measure. Also, Penn's legal representative on the Boardwalk is a co-owner of A.C. nemesis Harrah's Chester. Coincidence perhaps, but the symbolism is painful.

Then again … a Penn representative says the company will "evaluate the opportunity" as Bader Field continues to be shopped around. So Penn isn't really giving up on Atlantic City after all and Carlino's verbal barrage begins to sound like a "softening up" bombardment, preperatory to pushing for a better deal on Bader Field.

Carlino is right to wary of the potential threat from Philadelphia but anybody contemplating an Atlantic City investment is going to find themselves between that rock and the hard place that is the realization that new (or significantly refreshed) product and nothing else will suffice in A.C. Unfortunately opportunity — the gnarled casino-development process in Philly — and crisis, in the form of an economic deep-freeze — have coincided, leaving the status quo drifting along.

There's a variety of low-hanging fruit in Atlantic City: the 14 acres MGM Mirage is peddling; Pinnacle Entertainment's stalled Sands site; the Tropicana; perhaps even Bally's Atlantic City or a management contract at Resorts Atlantic City, if the foreclosure goes through. Not to mention the Trump Marina sale, which seems to have devolved into slow-fizzle mode. But if Penn is sending a signal, it's translating as "Bader or Bust!"

Posted in Atlantic City, Colony Capital, Donald Trump, Economy, Harrah's, MGM Mirage, Penn National, Pennsylvania, Pinnacle Entertainment, Tropicana Entertainment | Comments Off on Mixed message from Penn

Tamares' good deed

Posted on February 4, 2009 by David McKee

Lichtenstein-based Tamares Group bought a gaggle of downtown Las Vegas casinos from Jackie Gaughan five years ago and hasn't seemed to know what to do with them since. However, one unpublicized kindness by Tamares — brought to our notice by an LVA reader — deserves mention and praise:

"I'm writing to bring to your attention a kind deed that the management of the Plaza Hotel (Mr. Freddie Maatook and staff) do for the Veterans living at the VA home in Boulder [City].

"Every Thursday morning they treat the vets to free all-inclusive breakfast. For years, it was at the Las Vegas Club but now it has been moved to the buffet at the Plaza. We happen to be friends with one of the WWII vets (91 years old) and it is the highlight of his week.

"In this time of cutbacks, it is an especially generous contribution that goes unnoticed except to the vets. They go to other casinos BUT this is the only one that 'treats' them."

My thanks — and those of LVA — go out to Tamares for taking care of the "Greatest Generation" and its successors. This European company does itself proud — and makes you wonder if any U.S.-based casino companies are setting a similar example.

Posted in Charity, Downtown, Tamares Group | Comments Off on Tamares' good deed

Black Tuesday: Station Casinos

Posted on February 4, 2009 by David McKee

Yesterday’s Chapter 11 proposal by Station Casinos was paradoxically both inevitable and premature. From the day Station drew on its revolving line of credit to fund operational expenses, the handwriting was on the wall. However, Station chose to precipitate a crisis by opting not to make an interest payment … even with $350 million in the bank.

Already one is hearing grumbles that Station ownership is trying to bust the balls of its bondholders, who balked at the last refinancing plan, to put it kindly. In return for an accelerated redemption date, senior debtors are being asked to take 50 cents on the dollar (mostly in the form of more paper), while junior debtors will have to settle for 10 cents on the buck — a considerable premium to the current value, one must in fairness note. Or they could call Station’s bluff and send the whole kit ‘n kaboodle into bankruptcy court.

The Fertitta clan, Colony Capital (co-owners of Station) and the secured lenders have all signed off on this … of course. They’re the ones with the least to lose, should it go through. Colony and the Fertittae are sweetening their previous offer with a promised $244 million cash infusion. It would be cricket if Frank III and Lorenzo Fertitta ponied up $60 million — if said contribution is proportional to ownership stake — considering that they’ve taken considerably more than that out of the company in recent years. Together with their sister and brother-in-law, the boys toted home nearly $495 million from the buyout alone.

What’s not on the table are asset sales, even though Station has more undeveloped real estate in the Vegas Valley — plus the Reno area — than you can shake a stickman at. (Not to mention that expansion is currently pointless in a market that has lost its elasticity for the time being and is, in fact, constricting). Evidently call-center employees and 401(k) contributions are expendable but pipe dreams like Viva are sacrosanct.

Investment service Moody’s estimates that as many as 17 casino companies are at risk of default right now. (Scary!) Should Harrah’s Entertainment fall, the enormity of ensuing “SPLASH!” will drown out the Station fiasco — but it shouldn’t. In effect, if not in intention, private equity buyouts of casino companies have become a sham whereby management gets its company back for pennies while leaving bondholders holding the bag, too. That’s disgraceful.

Speaking of Moody’s, the Las Vegas Review Journal‘s “Inside Business” blog has an amusing Wall Street-into-English translation of a Moody’s investor note on Landry’s (owner of the Golden Nuggets) that’s a dense thicket of cover-your-ass verbiage. I was going to say Moody’s “waffled all over the place,” but I don’t care to insult waffles.

As for Landry’s CEO Tilman Fertitta, he has more reason than most to delve into today’s coverage of the calamity at Station. After all, the Fertitta brothers helped Tim Poster and Tom Breitling “play” him during his bid for the Nuggets. So, no love lost there. In fact, I’m sure that Tilman is sitting down for an extra-large schadenfreude supper tonight.

Posted in Colony Capital, Economy, Reno, Station Casinos, Tilman Fertitta, Wall Street | Comments Off on Black Tuesday: Station Casinos

Case Bets: Seminoles, Tropicana, Shuffle Master, Stanley Ho

Posted on February 3, 2009 by David McKee

Seminoles offer to lay $288 million and 12,000 new jobs on the table, for starters. Sunshine State Republicans blow them a raspberry. Constitutional or not, Gov. Charlie Crist‘s compact put a good deal in place for both sides. (It wasn’t so good if you were a non-tribal casinos, but they’d been underperforming even before Crist gave the Seminoles table games.) Unfortunately, Florida solons seem bent on pissing it away for a variety of reasons, spite — mainly toward Crist — not least among them.

Good news at Trop(s). It’s a rare and welcome day for Tropicana Entertainment when it can announce not one but two pieces of good news in the same day. At the Tropicana Las Vegas, a marketing firm has been retained to try and reposition the LV Trop as a service-and-value-oriented property. TropEnt promises “to elevate its service and value standards,” in a slap at Columbia Sussex, its nominal parent company.

Out East, you can stick a fork in Continue reading →

Posted in Aristocrat, Atlantic City, Australia, Columbia Sussex, Florida, Politics, Regulation, Shuffle Master, Stanley Ho, The Strip, Tribal, Tropicana Entertainment | Comments Off on Case Bets: Seminoles, Tropicana, Shuffle Master, Stanley Ho

Head-scratcher at Shuffle Master

Posted on February 2, 2009 by David McKee

Come March 15, Shuffle Master CEO Mark Yoseloff finally gets to leave the company — something he’s wanted to do for a while but which has been stymied by the difficulty of replacing him. Just how difficult was it? So much so that Shuffle Master’s board settled on a relative lightweight: Timothy Parott, who was Aristocrat Technologies‘ CEO of American operations for 2006-08. Prior to that, Parrott — a newcomer to the manufacturing side — had been out of day-to-day casino operations for eight years. To make a bad slot-machine pun, it was a move from well outside “the box.”

Industry scuttlebutt had it that subsequently discredited Aristocrat Leisure CEO Paul Oneile wanted to exert more direct control of Aristocrat’s North American operations and that the Parrott appointment furthered that brief. (Parrott’s exit from Aristocrat Technologies roughly coincides with the appointment of Jamie Odell to succeed Oneile.) It looks like the power behind the Shuffle Master throne will be board chairman and former Greenspun Corp. President Phil Peckman, who steered the Greenspuns into the casino business but subsequently fell from favor.

You’ve been served. Can a casino be held responsible for being in receipt of (allegedly) ill-gotten gains? The Venetian gets to be a guinea pig. Lucky them.

“An instructive example of Murphy’s Law.” That’s the verdict from Liz Benston on the botched, bungled and increasingly beleagured Tropicana Atlantic City sale process. If anything has gone right in that snipe hunt, it’s escaped my notice.

Posted in Aristocrat, Atlantic City, Australia, Regulation, Technology, Tropicana Entertainment | Comments Off on Head-scratcher at Shuffle Master

Sign of the times II

Posted on February 2, 2009 by David McKee

This image, taken Saturday at the Plaza Hotel & Casino downtown, pretty much speaks for itself. Auction holders Real Estate Disposition Corp. were scheduled to hold another auction today. The choice of the down-on-her-luck Plaza as venue is apt … although if the REDC had a sense of black humor, it’d hold its foreclosure auction at the in-Chapter 11 Tropicana Las Vegas.

Photo: © Erik Kabik/RETNA

The best thing that could happen to the Plaza would be if this Forest City casino project went through, just behind the Plaza on a portion of Oscar Goodman‘s famous 66 acres. The potential foot-traffic benefits are obvious and brand-new competition downtown might finally force owner Tamares Group to get off its duff and reinvest in the Plaza — assuming it hasn’t flipped its misguided real estate play and fled town by then.

Another Benny Binion descendant dies before his biblical allotment of three score and 10 years has run its course.

It’s a trend! The prime minister of China is the latest shoe-throwing victim. If this continues to catch on, it could really liven up shareholder meetings — especially those of Las Vegas Sands.

Posted in Downtown, Economy, Sheldon Adelson, Tamares Group, Tropicana Entertainment | Comments Off on Sign of the times II

Stanley Ho's comeback

Posted on February 2, 2009 by David McKee

Citing the Lusa news agency, J.P. Morgan says that Macao casino revenues for January came in higher than expected, at $1.1 billion. The shocker, though, is the revision of market-share figures, which previously had shown Stanley Ho and Sheldon Adelson each holding a quarter of the market. Lusa’s revised numbers show Ho thrusting Adelson firmly into second place — 28% to 22%. This is a sobering setback for Las Vegas Sands, whose CEO had forecast the demise, at least a dramatic downsizing, of Ho’s casino empire.

Let this also be a lesson to those us (present company included) who thought Vegas swankiness would trump customer loyalty to Ho’s older — some would say seedier — product. The “B” plotline is that Wynn Macau‘s market share is 17%, only five points behind Sands Macao and Venetian Macao despite far less capacity. Galaxy Entertainment (13%), Melco Crown Entertainment (11%) and MGM Mirage (9%) divvy up the remainder, with the latter paying the price for being last into the market and a reportedly disadvantageous location. This is one race where those who bet on the tortoise over the hare will be chagrined.

Speaking of Stanley Ho, he and an associate have dropped $284,000 into the coffers of the New South Wales branch of Australian Liberal Party. This is significant because Ho made a run at a New South Wales casino years ago but was deemed “unsuitable.” Don’t be surprised if the Liberals suddenly discover him to be cleaner than a hound’s tooth.

Shakeup at Sands. With its Macao and Singapore projects lagging badly, Las Vegas Sands has tasked a new executive team for its Asian portfolio. Senior Vice President Leonard DeAngelo comes by way of Penn National and, before that, a different kind of Sands — the vanished Sands Hotel & Casino in Atlantic City. Former Langham Hotels & Resorts executive Nigel Roberts has been named president of behind-schedule Marina Bay Sands.

Executive VP Brad Stone has been promoted to the newly created role of president of global operations and construction, which puts him in charge of design and building for all Sands projects worldwide. It’s a thankless task but expectations for Sands have fallen so low that if Stone effects even a modest improvement it will seem a triumph.

Posted in Australia, James Packer, Macau, Melco Crown Entertainment, MGM Mirage, Penn National, Politics, Sheldon Adelson, Singapore, Stanley Ho, Steve Wynn, The Mob | Comments Off on Stanley Ho's comeback

Who are they kidding?

Posted on February 2, 2009 by David McKee

Mesquite casino oligopolist Randy Black bought himself some TV ad time during the Super Bowl to tout his latest value proposition (starring one Randy Black). His opening gambit: "Everybody's cutting back." Uh no, not if you're Randy Black and just served yourself a nice pay increase while skipping loan payments and sacking the help. But we digress …

What's Randy's big value message? A midweek rate of $99/night, which gets you either a free spa treatment or a round of golf. The prospect of a $99 golf game or spa visit had better be pretty strong, because there's certainly no point in hauling ass out to Mesquite for a $99 hotel room, not when you can stay at Planet Hollywood this week for that little — or for even less at The Rio or the Flamingo, to name two of the nicer propositions. (If your standards are more flexible, you can stay on or very, very near the Strip for $20.)

Columbia Sussex continues to live in a dream world, demanding $249/night midweek for the Westin Casuarina. Heck, you could stay at Trump International for less than half that amount. Donald Trump and Phil Ruffin really let both the condo market and the budget get away from them on the latter, whose budget quadrupled to a final $1.2 billion. But it's not one of those properties (I'm looking at you, Aladdin) where you walk around and wonder, "Where did the money go?"

The recent discounting binge on the Strip may have done its job. J.P. Morgan reports "we are finding that casino operators are reducing the number of promotions that are available by and large" and theorizes, "operators have built up a book of occupancy that enables them to not have to rely on a promotional environment." If that's the case and promotional-rate offers continue to dwindle, it's a classic case of gather ye rosebuds while ye may.

Posted in Columbia Sussex, Current, Donald Trump, Economy, Harrah's, Marketing, Mesquite, Phil Ruffin, The Strip, TV | Comments Off on Who are they kidding?

Atlantic City: Two strikes, no balls

Posted on January 29, 2009 by David McKee

This was originally going to be “Death Watch VI” but three of those in a week is positively ghoulish. So, on to the latest disheartening developments from Atlantic City, the casino market that just can’t catch a break.

Cease the revels! Taking a page from the Harrah’s Entertainment playbook, Revel is calling a halt to interior work and will concentrate on finishing the exterior of the $2 billion resort. It had weathered the loss of several key executives in a plane crash and an attempted shakedown by Unite-HERE, but now it’s basically running out of money. The possibility of a joint venture has now been floated. (Hey, Penn National, here’s your chance to get onto the Boardwalk without having to buy the land or even put up most of the construction cost.) Starting a multi-billion-dollar resort project without all of one’s financing in place may be standard practice, but it’s caused project after project to go begging as Wall Street’s purses snap shut.

It seems disingenuous, though, for Pinnacle Entertainment to cite Pennsylvania casinos as a potential reason not to move forward in Atlantic City. True, Columbia Sussex CEO William J. Yung III completely “misunderestimated” the Pennsylvania threat, but he wasn’t the sharpest knife in the drawer when it came to running casinos and evidently never familiarized himself with the A.C. market. Pinnacle, they’re supposed to be the smart guys, so they had to know full well what they’d be up against when they took a wrecking ball to the Sands back in ’07. One would expect no less of them.

The cruel irony to all of this is that, during a time when casino development in Philadelphia has been deadlocked and ineffectual, buying precious time for Atlantic City, the economic crunch has sent project after project either into paralysis or onto the slag heap.

Trop the madness! If such a thing were possible, the Tropicana Atlantic City has even fewer slot technicians now than during the slash-and-burn ColSux days. And the techs have voted to strike, which may trip a rolling series of walkouts. Table game dealers would be the next ones out the door.

There’s a mixed message coming from Trop HQ. President Mark Giannantonio insists he’s been bargaining in good faith. But his hands may be tied by slowpoke trustee Justice Gary Stein, whose public posture has been that it would be unfair to the next owner of the Trop to be saddled with a labor contract negotiated by state-appointed interim management.

I agree, in principle. But in practice that admirable restraint has resulted in Trop employees being strung along while Stein takes his own sweet time getting a sale into place. A picket line would be yet another unfunny act in the farce caused by the New Jersey Casino Control Commission‘s lack of testicular fortitude when dealing with its dawdling surrogate. It should have told Stein to get the most viable deal and get the hell on with it 10 months ago.

Which is one more argument for taking a chance on Tropicana Entertainment CEO Scott Butera (a dice-throw that seems like less and less of a gamble by the day). When ColSux brinksmanship seemed to have the Tropicana Las Vegas headed for a strike, Butera brought the crisis to a swift and statesmanlike conclusion. He’d probably do the same thing in Atlantic City. It’s a situation that calls for decisiveness, a quality not greatly in evidence right now.

Posted in Atlantic City, Columbia Sussex, Economy, Harrah's, Penn National, Pennsylvania, Pinnacle Entertainment, Regulation, Tropicana Entertainment, Wall Street | Comments Off on Atlantic City: Two strikes, no balls

Bargain$ tonight in Vega$

Posted on January 27, 2009 by David McKee

Suppose that you got a sudden urge to visit Vegas on a Tuesday night … tonight, to be specific. You’d find that the customer is king, at least as far as pricing goes. A few minutes spent browsing Travel.Ian.com yielded the following revelations.

The exception that proves the rule is Red Rock Resort, which is advertising rooms at $160/night. Better you should drive the extra couple of miles to Suncoast, where they’re charging half as much.

• Downtown, believe it or not, is commanding a slightly higher price point that some well-regarded off-Strip and near-Strip locals casinos. Rooms at Boyd Gaming‘s California Hotel and Fremont are going for $40 while The Orleans is fetching but $34.67. The “Off-Strip Bargain” award has to go to Boyd, which can put you up at Sam’s Town for $21. True, you can stay at Fitzgeralds for $22 … but it’s Fitzgeralds. ‘Nuff said.

• Honorable mention goes to Palace Station, where $29.99 gets you a room, just a walk (admittedly a rather hazardous walk) from Rat Pack hangout The Golden Steer.

• Conversely, the “Don’t They Know There’s a Recession?” award goes to Continue reading →

Posted in Boulder Strip, Boyd Gaming, Columbia Sussex, Current, Don Barden, Donald Trump, Downtown, Economy, Harrah's, Marketing, MGM Mirage, Sheldon Adelson, Station Casinos, Steve Wynn, The Strip | Comments Off on Bargain$ tonight in Vega$

Atlantic City Death Watch V

Posted on January 26, 2009 by David McKee

Joys, Shakespeare famously wrote, come as solitary spies while griefs arrive by the battalion. So it is with Atlantic City, where the bad news washes up along the Boardwalk in bunches. If you picked Resorts Atlantic City as the Casino Likeliest to Be Seized, you've just won the office pool.

In what would be an historic first, Resorts' mortgage holder wants Colony Capital — which has missed three straight payments — to surrender title to the property. Failing that, the New Jersey Casino Control Commission has been asked to sanction the seizure of the casino. And if Plan B doesn't work, Column Financial threatens to dispatch its agents on "cash sweeps" across the property. That's right, money could be commandeered straight from the casino floor in a forcible attempt to hold Colony to account.

If that seems harsh, imagine what might happen to you or I if we skipped 90 days' worth of house or car payments. Having snagged Resorts for a bargain-basement $140 million, Colony Capital proceeded to lumber it with 2.6X debt. It's the classic American story of our decade: mortgaged to the hilt, maxed out on the credit card and with no way to pay.

Should Column be successful in either of its first two proposed scenarios, it won't mean the end of Atlantic City's oldest casino. Colony's loss would become a nice little management contract for somebody else. (Maybe thrift-consicous soon-to-be-ex-Cannery Casino Resorts owners William Paulos and William Wortman should volunteer for the gig.)

With insolvency literally at Resorts' doorstep, the Tropicana in Chapter 11 and three Trump Entertainment Resorts casinos headed that way, Atlantic City faces a depressing prospect: Five of its 11 casinos could easily be in either bankruptcy or foreclosure by the end of next month. The market has boiled down to the Haves (Boyd Gaming,  Harrah's Entertainment) and the Have-Nots (everybody else). As David Schwartz points out, while Pinnacle Entertainment may not have done itself a favor by tearing down the Sands, it probably kept the other small fry afloat that much longer. 

Posted in Atlantic City, Boyd Gaming, Cannery Casino Resorts, Colony Capital, Donald Trump, Economy, Harrah's, Pinnacle Entertainment | Comments Off on Atlantic City Death Watch V