Aztar sale flops

Posted on November 7, 2008 by David McKee

Tropicana Entertainment President Scott Butera had a $225 million deal to sell Casino Aztar in hand. Not good enough, he said. Thus, a second round of bids was solicited. The grand total number of offers received: one.

This lays the groundwork for Butera to do what I think he’s been meaning to do all along: Declare the lone bid inadequate (maybe even a “fire sale”), much like the previous Eldorado Resorts deal he’s trying to vacate. The next step would be to petition the State of Indiana to be allowed to resume control of Casino Aztar.

Whether the state plays ball is another matter. Evansville‘s mayor, Jonathan Weinzapfel told WEHT-TV he “looks forward to a new owner.” Maybe my English is rusty, but that sure sounds like he wants no part of TropEnt, even in its post-William J. Yung III incarnation. Having been singed aplenty ever since the Aztar Corp. sale went through, Weinzapfel’s “once burned, twice shy” frostiness is quite understandable. Butera’s persuasive skills are going to be tested in the weeks ahead.

Having also scuttled the sale of Horizon Vicksburg, Butera’s plan is obviously to reconstitute TropEnt at full strength (including the Atlantic City Tropicana). Not only would this increase the potential for cross-marketing the merged Columbia Sussex/Aztar portfolio to consumers, it’s undoubtedly crossed Butera’s mind that TropEnt is a much better resale proposition if kept intact … not peddled off piece by little piece, as Yung was doing.

Posted in Columbia Sussex, Indiana, Mississippi, Tropicana Entertainment | Comments Off on Aztar sale flops

Sanguine in Singapore

Posted on November 7, 2008 by David McKee

Marina Bay Sands: proceeding on schedule.

Las Vegas Sands executives huddled with Singapore officials yesterday earlier this week to, as JP Morgan puts it, “discuss topics … including the pace of construction.” In other words, they were bracing Singaporean leaders for yesterday’s SEC bombshell.

As far as discussing “the pace of construction,” normally I’d take that to mean that a delay in the schedule was about to be announced. But the tea leaves indicate the message was that Marina Bay Sands is still Project Numero Uno for the company.

It’s unclear whether Venetian doge Sheldon Adelson was at the aforesaid meeting (the wording is fuzzy but implies he wasn’t there). However, he did release a statement in which he characterized work on MBS as “rapid.” He also heard the good news that Singaporean regulators have deemed the MBS slot floor up to snuff. Already Sands is talking about going from 600 to 1,000 slot machines, so they must be pretty sanguine about their prospects along the Johore Strait.

At least Boyd Gaming execs can take some solace from Adelson’s plight. Sands has raised the prospect of putting its unfinished “St. Reggie’s” condo literally and figuratively under wraps for the time being. That’d be a broken front tooth on the Strip possibly even harder to ignore than the partial skeleton that is Echelon.

Posted in Boyd Gaming, Sheldon Adelson, Singapore, The Strip | Comments Off on Sanguine in Singapore

Five years ago today …

Posted on November 6, 2008 by David McKee

 … Columbia Sussex came to town. Considering that CEO William J. Yung III purchased a dead, disreputable hotel-casino and put $90 million into reworking it into an attractive property (people whose judgment I trust swear by the comfiness of its beds), he got off on the right foot here. Later, he would venture out of his niche and try to be a Strip operator, and … let's just say it didn't go so well. Turn the page in your textbooks to Chapter 11.

Speaking of ColSux, comes shocking news today that Las Vegas Sands is in danger of bankruptcy. The company's debt-to-earnings ratios are out of kilter (or, in proper financial parlance, gone all skeewumpus). That's an event which, like ColSux's loss of the Atlantic City Tropicana, will set in event a cascade of other defaults, should it come to pass.

In the short term, this means Sheldon Adelson needs to find some loose change in his sock drawer, pronto, and will have to apply the brakes to several developments. According to Liz Benston, both the Marina Bay megaresort in Singapore and what's left of Sands Bethlehem will be finished. Everything else … not so much.

Adelson: Little about which to smile.

This is bad news for the Cotai Strip™, unless you're of the persuasion that Sands expanded in Macao far past what the market would bear. So a forced slowdown is a blessing in disguise. I should add that the Motley Fool warned of this very scenario last June, when it pegged Sands as a "deathbed stock.

Elsewhere in Adelsonia, the candidate for whom Freedom's Watch stumped the hardest, Sen. Gordon Smith (R-OR) waved the surrender flag.

All in all, this is one shitty day to Sheldon Adelson.

Posted in Columbia Sussex, Economy, Election, Macau, Politics, Sheldon Adelson, Singapore, The Strip | Comments Off on Five years ago today …

McCain's destination revealed

Posted on November 6, 2008 by David McKee

Maybe you saw that B-roll of Sen. John McCain hitting the road in an emerald SUV yesterday, with Sen. Lindsey Graham riding shotgun, ostensibly en route to planning “legislative initiatives.” (I couldn’t find the footage in that “series of tubes” that Alaska’s most famous felon otherwise knows as “the Internet”; sorry about that.)

Uh-huh.

An S&G listening device had been implanted in the aforesaid emerald-colored car. Now, since S&G is a no-frills operation, our bug quickly fritzed out. But the following fragments of conversation were salvaged via a painstaking process Wayne Brady would call “making #%it up.” Here’s what we were able to piece together:

“Craps … legalized … Colorado … new casino in Cripple Creek … where the [inaudible] is that? … Move over, Stanley “Golden Arm” Fujitake: It’s game on!“

Posted in Colorado, TV | Comments Off on McCain's destination revealed

Winners! We've got winners!

Posted on November 6, 2008 by David McKee

Yesterday’s Columbia Sussex contest produced an unprecedented flurry of responses — and I learned a lot about the bond market, too. Our S&G readership is a veritable V-8 engine of knowledge. As you’ll recall, the question concerned the “defeasance” of a $967 million Columbia Sussex bond.

The first reader across the finish line with an answer to this abstruse question is Tom De Martini of Phillipsburg, N.J., who wins hard-copy and e-book versions of Bill Zender‘s Casino-ology, our newest Huntington Press title. But four other readers submitted correct answers.

What to do? A solomonic solution has been devised by our own Bethany Coffey. To wit: Runners-up will receive e-book copies of Casino-ology, thereby allowing you to enjoy the latest in cutting-edge LVA technology. (I’m reminded of the line in the 1987 Dragnet movie, in which Dan Aykroyd‘s Sgt. Joe Friday relates, in a hilariously uninflected voice-over, “After losing the two previous vehicles we had been issued, the only car the department was willing to release to us at this point was an unmarked 1987 Yugo, a Yugoslavian import donated to the department as a test vehicle by the government of that country and reflecting the cutting edge of Serbo-Croatian technology.”

Whatever happened to the Yugo? (No, you don’t get a prize for answering that.)

And now the winner(s):

8:52 P.M. EST, 11/5/08

Defeasance allows an issuer (the company) to collateralize outstanding debt with a portfolio of risk-free government securities (usually U.S. Treasuries) which ostenibly removes the debt from the balance sheet. It can also be accomplished with cash.

So, in this case, the Columbia Sussex bond has already gone through this process, reducing the outstanding value by 90%.

I covered the bond market for eight years … I knew it would evenutally come in handy.

1:42 A.M. EST, 11/6/08

A defeased bond is a bond that is rendered void by a party by pledging a security or cash in order to pay the tems of the bond.  In addition, all covenants and contract provisions are removed from the bond.  Simply put, Columbia Sussex pledged  cash or some other asset in order to defease (make payments) on  the roughly $890 million principal balance and was released from the covenants and provisions which may have triggered a default on Columbia’s part.

4:37 A.M. EST, 11/6/08

In simple terms, Fitch, the bond rating agency, is lowering the ratings on certain parts of ColSux debt. The lowering is due to potential litigation costs, which could affect ColSux ability to pay the debt off. The effect of lower ratings is a higher cost for capital for the company in the future. 

As for the debt being defeased by 92%, this link will provide a full explanation, but it means the amount defeased is not a liability on the balance sheet when the company places cash or other assets with an escrow agent to cover the amount of defeased debt.

12:53 P.M. EST, 11/6/08

Securities that have been secured by another asset, such as cash or a cash equivalent, by the debt-issuing firm. Firms that have created defeased securities, which are typically bonds, will have sufficient cash set aside for retirement of the debt upon maturity. For example, the U.S. government could place the funds necessary to pay off a series of Treasury bonds in a trust account specifically created to pay the outstanding bonds upon maturity. The government sets aside these funds to ensure that it has enough cash to pay its bonds when they are due. Commonly, defeased securities are retractable.

Securities than can be defeased will often carry a lower yield than comparable securities, as the option to retire the debt early favors the issuer and caps the potential investment return for the bondholder. However, for a risk averse investor, this feature proves beneficial because it lowers the default risk of the security. The document you referenced really has little bearing on Columbia Sussex itself.  It’s actually pertaining to Asset Securitization Corp. and the bonds they issued to cover mortgages. It seems that on this particular loan, they’ve paid off 92% of the mortgage. It would sound like a positive sign to me, anyway.

12:54 P.M. EST, 11/6/08

The company “Asset Securitization Corp” has pooled together multiple commerical mortgages. The mortgage payments “pass through” this company. In other words, they collect the payments and send them onto investors. This pool of assets is what is being downgraded. “[O]ne loan remains in the pool” means that all other mortgages have been paid off with the exception of ColSux.

Here’s another link with an excellent definition of defeasence. Downgrading the pool of mortgages of which ColSux is the only remaining mortgage doesn’t have any direct effect on ColSux.

President-elect Obama is on Line Two, guys. He says he needs you to help him sort out the mess at Treasury. But seriously folks …

Congratulations to everyone who participated. I think we’ve started something. And I’ve learned a lot of somethings. A day without new knowledge is a day wasted, IMO.

Posted in Columbia Sussex, Movies, Wall Street | Comments Off on Winners! We've got winners!

Casino Vote '08: Dan Lee's the big winner

Posted on November 5, 2008 by David McKee

JP Morgan has proclaimed Pinnacle Entertainment “the biggest winner this election day.” By voting to both lift the cap on buy-ins and the close Missouri to additional casinos, Show-Me State voters delivered a gift to Pinnacle CEO Dan Lee, who has massively invested in the greater St. Louis market and can now reap the benefits of higher wagers and artificially limited competition. Anybody contemplating the investment risk that Pinnacle has been lately (with at least $2.85 billion in outstanding projects) can sleep a little more soundly tonight.

But, as Morgan analysts point out, the stomping of a pro-casino initiative in Ohio redounds to the benefit of Pinnacle’s Belterra casino (and Penn National‘s Argosy Lawrenceburg riverboat). While the Ohio vote reflects a certain amount of anti-casino sentiment, this was one of those ballot measures where the devil was in the details. It polled well in the immediate region, which has been hard-hit with job losses (5,000 of which casino backers promised to replace) but it was “no sale” upstate. An otherwise leftward-trending electorate was unpersuaded.

Specifically, there was a “trap door” in the enabling language that might have let Lakes Entertainment slip its tax obligations if tribal casinos open in the Buckeye State (a long shot, but one voters weren’t willing to hazard), not to mention that the casino was to be allowed to operate with scant oversight. Oh, and the license fee ($15 million) wasn’t chicken feed, but it’s considerably less than what casinos are ponying up elsewhere — like Kansas — where no monopolies are promised. The face-saving spin was that “misleading ads” were to blame — like that’s anything new in politics.

Details were the bane in Maine, too, where Olympia Gaming found itself on the losing end of a casino plebiscite. Maine voters have taken a go-slow approach to casino expansion in their state, also voting down a racino at Scarborough Downs. There also seems to have been some “payback” involved — from Down Easters who had seen their own casino aspirations crushed five years ago. If they couldn’t have a casino, those upstart resort communities were going to be SOL, too. So there!

Pat LaMarche expresses her considered opinion of Maine’s electoral process.

Lowering the legal gambing age to 19 stuck in voters’ craw, as did certain other special privileges which were to be extended to the Oxford County casino and to Gary Goett‘s Olympia. Project booster Pat LaMarche sniffed that folks in Maine were “very unfriendly” and says she’s going to take her ball and LaMarche right next door to New Hampshire.

On the other hand, LaMarche is the bete noire of intolerant religious wack jobs, so that’s something in her favor.

Having a win/win day, was also the good fortune of Ameristar Casinos, which will see some relief in Colorado, in addition to prevailing in Missouri. In return for helping the state’s community-college system, Colorado casinos get some new goodies that — we hope — will ameliorate the effects of the state’s smoking ban.

It’s a mixed bag, albeit more positive than negative, for Penn National. It headed off the Ohio threat but finds its flagship property in West Virginia facing competitive pressure not only from Pennsylvania but soon from Maryland, even though the latter’s ramp-up is roughly four years away. Penn astutely protected its flank by optioning strategically placed real estate near Baltimore, in its first move after its LBO imploded last summer.

(Amusingly, both sides in the Maryland fight used President-elect Obama as a “product placement” in their literature. They knew a good “branding opportunity” when they saw one.)

Hopefully the Maryland Lege will revisit (read: reduce) the confiscatory 67% tax rate. Otherwise, brace yourself for Ye Olde Shack O’Slots, as no sane businessman would invest heavily in a casino with such a narrow operating margin. By establishing a Maryland beachhead, Penn is probably thinking more in terms of capturing “leakage” from its other nearby properties, not having visions of $$$ dancing in its head.

Former governor, sometime racino proponent and “Casino Jack” Abramoff beneficiary Robert Leroy “Bob” Ehrlich Jr. (R) hoped to “see us kill this turkey,” but that sounds like sour grapes from the one-term blunder, er, wonder. Gov. Martin O’Malley (D) moved the ball across the goal line with 59% support, whereas Ehrlich couldn’t get it upfield in four tries — even in the post-9/11 economy. It may nearly be Thanksgiving but the only turkey in sight is Ehrlich (or is that a thinly disguised Steve Carell?)

Speaking of “Casino Jack”, add him to the “losers” column of our S&G “Winners & Losers” with a capital “L.” From the jailhouse, convicted felon Abramoff tried to ‘Swift Boat’ his archnemesis, John McCain, but the effort sank without leaving the pier. What a schlemil.

Loose change: Voters also gave their assent to a lottery in Arkansas and expanded table games at Greenbrier Resort in West Virginia. So I’d score that as two lost battles (Ohio, Maine), one decisive victory (Maryland) and incremental wins in four other skirmishes.

On balance, a good day.

Posted in Ameristar, Colorado, Current, Election, Gary Goett, Horseracing, Indiana, Maryland, Penn National, Pennsylvania, Pinnacle Entertainment, Politics, Regulation, Taxes | Comments Off on Casino Vote '08: Dan Lee's the big winner

Columbia Sussex contest

Posted on November 5, 2008 by David McKee

I’ve got to confess that bond-market lingo is hardly my strong suit. So can anyone out there explain what this bulletin means for casino industry pariah Columbia Sussex?

One loan remains in the pool: Columbia Sussex, which has been fully defeased and has an anticipated repayment date in 2015. As of the October 2008 remittance date, the transaction’s outstanding principal balance has been reduced by 92.0% to $77.3 million, from $967.2 million at issuance.

Be the first one to answer and a free copy of Bill Zender‘s Casino-ology shall be your reward.

Open mouth, insert foot. That’s”President-elect Chickenshit” to you, Congressman.

Great moments in journalism. The Wall Street Journal‘s editorial page can be pretty hardcore. But it seems to strike exactly the right, measured tone today, rising to the occasion with grace.

Las Vegans, on the other hand, can be ever so proud of the example set by the Review-Journal, whose editorial writers — as is so often their wont when vox populi is not vox R-J, curl up in the corner kicking and screaming in impotent, infantile rage.

Posted in Columbia Sussex, Election | Comments Off on Columbia Sussex contest

Winners & Losers

Posted on November 5, 2008 by David McKee

And now the obligatory post-Election, What’s-it-all-about-Alfie roundup …

Culinary Union 1, Casino CEOs O: True, the Culinary tripped all over its own feet in the early going, leading to Democratic caucuses that weren’t so much “Barackular” as “debacular.” But D. Taylor & Co. backed the winning horse and did it early, which earns some chits down the road, plus they have a new Capitol Hill friend in Rep.-elect Dina Titus. Messrs. Lanni, Loveman, Wynn, Adelson and Trump made a variety of presidential wagers, losing every one.

Ameristar Casinos/Pinnacle Entertainment: They wanted a protected oligarchy in Missouri and now they’ve got it — and at relatively little additional tax burden to them.

Slot manufacturers: OK, so Ohio and Maine didn’t come through and the Missouri market is frozen. But 15K new slots in Maryland ain’t chicken feed. Plus a West Virginia casino expansion that flew under the radar got voted in. Inexplicably, slot stocks traded downward. Stupid Wall Street.

Colorado casinos: They didn’t so much “win” as get a hefty lifeline thrown to them by Rocky Mountain State voters who approved 20X higher betting limits, ’round the clock operations, and roulette and craps. (No Sen. John McCain sightings in Cripple Creek yet, though.)

Freedom’s Watch: So far F-Double-U is 6-9-1 (with Sen. Gordon Smith [R] of Oregon momentarily in the “tie” column) in its top-priority races. I’m feeling generous and crediting the Adelson front group with “wins” in the case of self-destructing Rep. Tim Mahoney (D-FL), who continued the scummy tradition of predecessor Mark Foley, and in that of Sen. Saxby Chambliss (R-GA), who faces a December do-over, thanks to Georgia law. And veering off at the last minute to spend money attacking not-up-for-reelection Sen. Chuck Schumer (D-N.Y.)? Adelsonian political acumen at its finest. Winner? Loser? Let’s call it a draw.

Poker: Just when it looked like the poker phenomenon was about to jump the shark, Continue reading →

Posted in Alaska, Ameristar, Atlantic City, California, Colorado, Current, Donald Trump, Economy, Election, Florida, Gary Goett, Harrah's, IGT, Internet gambling, MGM Mirage, Mississippi, Missouri, Pinnacle Entertainment, Politics, Sheldon Adelson, Steve Wynn, Taxes, The Strip, Tribal, Wall Street | Comments Off on Winners & Losers

Senate prediction: feeling good

Posted on November 3, 2008 by David McKee

I've been checking Intrade's election "futures" markets and, if you "buy" Sen. John McCain at 9.9 you could collect on the longshot of a lifetime. (I'm of the pessimistic "I'll believe an Obama win when I see it and not one second before" persuasion.) Unless, that is, you want to go waaaaaaaaaaaaaaaay out an Aleutians-length limb and buy Ted Stevens "futures" (which is an ironic term, seeing as Sen. Stevens appears to have no future whatsoever — at least none that don't involve a long series of numbers across his back).

I notice that Intrade's odds have reversed on the Al Franken/Sen. Norm Coleman slugfest in Minnesota, while the trends in all the other ones I profiled last week have solidified. (Reform Party candidate Dean Barkley is a respected figure and has made a robust showing in the polls but is doomed to be an also-ran yet again.)

So I see no reason to amend my prediction: Dems gain six seats, for a total of 55 (plus Bernie Sanders), but Coleman comes from behind late in the fourth quarter to prevent further GOP erosion.

Forget Tim Pawlenty; if Coleman pulls this out I expect him to be the Minnesotan to start showing up on the futures markets as a contender for 2012.

Eighteen months later … Believe it or not, it's been 18 months since Michelle Obama made her first campaign visit to Nevada. Yours truly was detailed to cover that June '07 stump speech — actually more of a marketing effort to raise people's comfort level with the Obama "brand" — which I sandwiched between CineVegas screenings. So how does today's visit compare to what seems like 18 years ago?

Posted in Alaska, Election, Minnesota | Comments Off on Senate prediction: feeling good

Missouri amendment to pass: JP Morgan

Posted on November 3, 2008 by David McKee

Analysts at JP Morgan like the chances for a Missouri constitutional amendment largely bankrolled by Ameristar Casinos and Pinnacle Entertainment. While Ameristar stands to benefit in tangible ways, JP Morgan focuses on what it could for Pinnacle: a 15% increase in Lumiere Place cash flow and perhaps another $2 per share (at $5.41 as of this moment).

Other takeaways from today's investor note: 1) Lake Charles, La., which Pinnacle dominates, looks good to buck the national trend and keep growing its casino revenue; 2) the heretofore disappointing Lumiere Place is at "an inflection point" in which its Four Seasons hotel starts to become a contributor instead of "a drag on earings"; 3) Pinnacle is holding its ground, at Belterra, better than most of its southern Indiana competitors — Penn National's Argosy Lawrenceburg in particular.

There's still the matter of the $600 million River City project in suburban St. Louis and Pinnacle's stymied Atlantic City megaresort. Pinnacle appears to have let spending get pretty exuberant (only in its $250 million Baton Rouge riverboat casino do budget and market really seem to square up), so it'd premature for CEO Dan Lee to take any victory laps — not that it would be in his nature.

Update: Only in the convoluted logic of the Las Vegas Review-Journal would a constitutional amendment that bars new casinos from Missouri be blithlely described as "Gaming expansion." So, if Ohio voters approve Lakes Entertainment's proposed casino, will that be "gaming contraction"?

Posted in Ameristar, Atlantic City, Indiana, Louisiana, Missouri, Penn National, Pinnacle Entertainment, Wall Street | Comments Off on Missouri amendment to pass: JP Morgan

'Show Me' more money

Posted on October 31, 2008 by David McKee

Missouri voters are being asked to approve a constitutional amendment, submitted by Ameristar Casinos executive Troy Stremming, which would make a couple of significant changes in how business is done in Show-Me State casinos. (The full version is here, but the précis tells you what you most need to know.)

There are three salient features to this amendment, which might be summarized as The Good, The Bad and The Neutral.

The Neutral: Taxes on casinos would be raised 1%, for a total rate of 21%. In and of itself, this is not such a big deal, as I’ll explain below.

The Good: The amendment repeals the state’s loss limits, a paternalistic measure which doesn’t actually limit how much you can lose (like that’s any of Jefferson City’s beeswax) but how frequently you can buy in. This should have been history a long time ago or, better yet, never enacted.

The Bad: The amendment would close Missouri to new casino licensees. Anybody already licensed or building in Missouri (read: Pinnacle Entertainment) would be grandfathered. After passage of the amendment, the only way into Missouri would be if an existing riverboat were sold, went out of business or lost its license.

That’s a pretty sweet deal, especially if you’re Ameristar and probably want to bat your eyelashes at potential suitors. Ameristar’s two Missouri casinos did a combined $160 million in cash flow last year and the company, using its 2007 financials, is conservatively worth $2.1 billion. A freezing of the Missouri market would make Ameristar more valuable still.

But the amendment anti-competitive on its face. Nor have I heard any compelling argument for closing Missouri to additional operators — other than protecting the ones already there from an environment that will be somewhat more competitive as Kansas’ casinos begin to enter the fray.

And … this may be more cracker-barrel philosophy than economic theory, but if Ameristar, Pinnacle, et. al. are going to enjoy protected-oligarchy status, the citizens of Missouri ought to get more than an extra percentage point of tax from those sinecures. If voters are being asked to slam the door in the face of prospective casino developers (such as one in Cape Girardeau), then existing operators ought to reciprocate by agreeing to a new tax rate that’s not one but several points greater.

As it stands, the best-case estimate is that the 1% increase will bring an extra $156 million per year to state and local kitties. Ameristar’s riverboats alone represented $117 million in gaming-tax revenues last year. Missourians will have to weigh the $156 million bird in the hand against the bird-in-the-bush economic impact that one or more additional casinos would represent. For once, I’d take the bird in the bush.

Correction: Yesterday, I passed along a Center for Responsive Politics assertion that presidential campaign donations from the defense industry favored Sen. John McCain. According to OpenSecrets.org, it’s the other way around and they’ve got the numbers to back it up. (It seems to have more to do with longstanding resentment of McCain among defense contractors than with enthusiasm for his opponent.)

Posted in Ameristar, Election, Missouri, Pinnacle Entertainment | Comments Off on 'Show Me' more money

Wisdom from Wall Street

Posted on October 30, 2008 by David McKee

"Any gaming operator that postpones spending and preserves capital in this environment should be rewarded, in our view." — Stifel Nicolaus & Co. analyst Steven Wieczynski, reacting to news that MGM Mirage had put its Atlantic City and north-Strip projects onto the back burner. Boyd Gaming has extended the hiatus of Echelon and Las Vegas Sands is curtailing its Sands Bethlehem project.

I.O.U.S.A. Making a movie on the subject of the national debt seems like exercise in masochism. Making an absorbing and readily comprehensible film on that abstruse subject is a signal achievement. For those of you who object to my pro-Obama leanings, I should point out that — based on the facts and figures put forward by filmmaker Patrick Creadon (he did Wordplay, for you Will Shortz fans), the Democratic economic plan wouldn't do much more than nibble around the edges of the national debt burden.

Posted in Atlantic City, Boyd Gaming, MGM Mirage, Movies, Pennsylvania, Sheldon Adelson, The Strip, Wall Street | Comments Off on Wisdom from Wall Street

Boyd Takes Sanity Pill

Posted on October 29, 2008 by David McKee

After insisting right up to the bitter end, and then some, on going full-tilt with Echelon, now on hiatus for 7-12 months, Boyd Gaming CEO Keith Smith is modulating his tone. According to Reuters, "He emphasized that Boyd remains 'committed to having a meaningful presence on the Las Vegas Strip,' and is now looking at alternatives including opening the project in phases, modifying its scope or entering into other partnerships."

Far be it from me to mention that *cough* certain blogs *cough* have been urging all or most of the above for a while now. Especially the "entering into other partnerships" part. As far as Echelon's retail mall is concerned, the collapse of General Growth Properties renders the question moot — and gives Smith an excuse to put it indefinitely on ice.

This might be a good time to ease out flibbertygibbet Morgans Hotel Group, which has been almost as big a drag on Echelon as GGP — but I won't press the point. Whatever Boyd comes up with may not be a second Borgata, but it will still elevate the company's image in Las Vegas. There never was any discernible point in trying to do a CityCenter and build everything in one great gulp. That was stepping a little out of Boyd's league. Smith's pause for reflection will undoubtedly result in a more prudent and affordable — and soundly capitalized — Echelon 2.0.

Putting the "monitor" in Christian Science Monitor. The respected newspaper is going to a Web-based publication model. I wonder if a certain local publisher still thinks it will literally be two generations before Americans regard the Internet as their primary news source?

Posted in Boyd Gaming, Current, Morgans Hotel Group, The Strip | Comments Off on Boyd Takes Sanity Pill

Reader recommendations

Posted on October 28, 2008 by David McKee

Last week, I solicited recommendations for affordable hotel rooms, on behalf of a reader. For those of you who don't monitor the "Comments" threads, here's what some readers had to offer …

• Why not the Main Street Station; it's downtown, clean and comfortable with nice beds including down comforters. Decent food and not bad gambling! Rooms are reasonable.

• Hooters, it isn't the most modern, but it's probably the prototype of what people mean when they babble about "boutique" hotels. Not too large, intimate feel, and balconies that still be accessed.

• I never stayed there in its heyday, but I think the criticism of the Plaza is a bit unwarranted. Is it top quality, no, but it is a fun place to play, great sportsbook, and you don't have to worry about spilling a drink on the carpet. I really believe some critiques I read online are from people who do not realize that in a town where one room may cost you $199 a night, the hotel with the $35 room for the same night might not be of the same quality.

We also got a must-to-avoid missive about Imperial Palace, known to locals as "Impotent Palace." Vox populi, vox dei.

Seen last weekend at Caesars Palace: "On Friday, a substantial amount of water was leaking from the ceiling in the Caesars Palace Forum Casino. Four large wastebaskets were hastily placed in the middle of the casino floor to catch the water–which made Harrahs premier property look like a low-rent grind house. The problem was resolved by Saturday, but it illustrated what happens when you're almost $25 billion in debt and losing money every day: You opt for what's euphemistically called 'deferred maintenance,' which means you don't spend any money on repairs until the pipes break."

Posted in Boyd Gaming, Downtown, Harrah's, The Strip | Comments Off on Reader recommendations

Just say ‘no’

Posted on October 25, 2008 by David McKee

Fall is in the air here and so is election fever. I’m just back from early voting and a honkin’ big Obama rally is gearing up on the other side of town, so the mind is full of matters electoral.

The responsibility that comes with this bully pulpit includes making election recommendations with restraint. So, with exception of a ballot initiative or three, I’m going to attempt to refrain from stumping for individual candidates. Although I would humbly suggest that you might — might — want to think carefully before voting for any candidate who enjoys the blessing of that noted casino industry expert, Continue reading →

Posted in Downtown, Election, Reno, Taxes, The Strip | Comments Off on Just say ‘no’

Case Bets: Sands bankruptcy?; California spite, Ted Binion still dead, etc.

Posted on October 24, 2008 by David McKee

The ‘B’ word. Yup, somebody finally said it. Stifel Nicolaus & Co. analyst Steven Wieczynski blames The Big Sands Sell-off on fears that “Las Vegas Sands is in jeopardy of running out of cash and going bankrupt.” Sands stock closed the week at a dismal $6.32 a share, 96% off its 52-week high.

The Adelson family, meanwhile, plans to turn its pockets inside out, looking for money.

Gary Jacobs is a good guy. The MGM Mirage executive veep is among the donors supporting California‘s Proposition 2, which would ban certain forms of cruelty to farm animals. Which earns him this animal lover’s vote of thanks.

Other Nevadans are really motivated to donate to Proposition 8. Steve Friess has all the details. Having shot Nevada’s economy in the leg with their opposition to gay marriage, some of the same folks may inflict similar economic damage on California. Which is their First Amendment prerogative and amen to that, but I’m not of the misery-loves-company persuasion.

Nevada’s casino resorts have been cut out of on a lucrative market segment, although Harrah’s Rincon has been among the California ones benefiting from Silver State prudishness, which Harrah’s Entertainment has cannily leveraged into some Vegas-honeymoon promotions. If tribal sovereignty doesn’t shield Harrah’s Rincon and other gay-friendly casinos from Prop 8, I guess that Prop 8 donors from economically blighted Nevada can congratulate themselves on having lopped off their nose to spite their face yet again. Anyway, kudos to Harrah’s execs Michael Weaver and Gwen Migita for contributing to the anti-Prop 8 campaign.

This just in: Made-for-cable movie about Lonnie “Ted” Binion stinks. Hey, it’s a Lifetime Channel production. What else would you expect?

Posted in Animals, California, Election, Harrah's, Marketing, MGM Mirage, Politics, Sheldon Adelson, The Strip, Tribal, TV, Wall Street | Comments Off on Case Bets: Sands bankruptcy?; California spite, Ted Binion still dead, etc.

Is Peter Carlino crazy?

Posted on October 24, 2008 by David McKee

Now I know that Penn National is all a-flush with cash these days and CEO Peter Carlino is probably feeling bullish. Still, in a recent visit to Vegas to assess possible casino acquisitions, he's alleged to have acted like he just fell off the turnip truck.

According to Steve Wynn — in the course of scotching a rumor that he might buy up some MGM Mirage property — Carlino made the company an offer for Bellagio. Carlino must think that J. Terrence Lanni is an awfully desperate man. Why else would MGM part with its most powerful revenue driver on the Strip, a casino that is regularly in Majestic Research's top three when it comes to game usage (over-simply, sheer preponderance of players)?

Carlino made news by publicly dissing the Tropicana as a potential buy, saying "There's better stuff" to be had. Agreed. But, unless Wynn either misheard or is making mischief, Carlino seems to have veered far off the other side of the road. There's definitely some low-hanging fruit out there: The Rio, Riviera (plus debt), Cosmopolitan (ditto), maybe even the Sahara. Why he thinks MGM would part with its most valuable asset beggars the imagination.

(Wynn's hypothesis that MGM might peddle its Atlantic City land and perhaps its half-share of Borgata makes far more sense, especially with the question of Pansy Ho's suitability still hanging fire in New Jersey. And Penn has shown interest in two other A.C. sites already.)

MGM spokesman Alan Feldman is cagey, though, keeping alive the prospect that Bellagio might be had (perhaps by someone with the initials K.K.) for the right price. But I've got to believe it would take an offer as exuberant as the one El-Ad Properties made for the New Frontier before MGM Mirage would pawn its crown jewel to a rival operator.

And don't forget Downtown: Carlino is welcome to buy out slothful Tamares Group any time he likes.

Posted in Atlantic City, Downtown, Harrah's, MGM Mirage, Penn National, Riviera, Sahara, Steve Wynn, Tamares Group, The Strip, Tropicana Entertainment | Comments Off on Is Peter Carlino crazy?

Butera to NJCCC: Your people are dopes

Posted on October 23, 2008 by David McKee

Tropicana Entertainment has formally petitioned the New Jersey Casino Control Commission for the return of its former Atlantic City casino. Oh, to be in the room when the arguments are thrashed out!

Short of conducting an exorcism of the spirit of Columbia Sussex CEO William J. Yung III, it's hard to see how the NJCCC will be able to bring itself to do a 180 on this matter. (Especially when TropEnt's publicity releases still flow from Yung's mouthpieces at Beacon Advisors.)

But if TropEnt can convincingly demonstrate both liquidity and independence, it's hard to argue against it. One might feel otherwise had Justice Gary Stein not made such a total clusterfuck of the attempted sale of the Trop. Heaven only knows if even the pallid Cordish Co. bid will still be on the table by the time the New Jersey Supreme Court gets around to adjudicating TropEnt's forcible ejection from the Garden State, which could take several months.

But CEO Scott Butera, whose scattergun public pronouncements are becoming a matter of routine, may have shot himself in (or very near) the foot this time. His petition's assertion that "it is imperative that competent professionals, experienced in casino operations, be brought to bear," perhaps unintentionally implies that Pam Popielarski and the current Trop management team are incompetent and inexperienced. Which, since they were appointed under the auspices of the NJCCC, probably isn't the best way to go about making friends and influencing regulators.

Butera's got a well-respected sidekick in the person of former NJCCC Chairman Bradford Smith. Maybe he ought to let Smith do the talking, at least in situations where a modicum of diplomacy is required.

Posted in Atlantic City, Columbia Sussex, Current, Regulation, Tropicana Entertainment | Comments Off on Butera to NJCCC: Your people are dopes

A reader asks …

Posted on October 23, 2008 by David McKee

… for good hotel-room suggestions, for an upcoming trip — preferably something that's maybe a little underrated and/or off the beaten path. Since you guys (and gals) stay in Vegas hotels more than I do, it seemed best to throw this one open to the collective wisdom of the readership. If you wanted a good value but didn't to descend to the level of the Tropicana or the Plaza (both of which I've heard energetically bad-mouthed by former patrons), where would you hang your hat?

Incidentally, the LVA rating system is now open to all (i.e., no longer a perk for subscribers). So as you surf to restaurant, hotel, nightclub, entertainment pages, etc., feel free to weigh in and praise or damn, or merely damn with faint praise (or praise with faint damns) as the spirit moves you.

Posted in Downtown, The Strip | Comments Off on A reader asks …

Sunday at The Palazzo with Sheldon

Posted on October 22, 2008 by David McKee

OK, so the big fella wasn't actually there, to the best of my knowledge, but let's not allow pedanticism to get in the way of a Stephen Sondheim reference. The Better Half and I partook of a $119/night room special at the Venetian for a quiet weekend getaway.

Maybe not so "quiet." For one thing, the toilet emitted a deafening din every time it was flushed. Other than that, the decade-old hotel rooms are wearing their age lightly. The interface for the TVs is clunky and slow, unless you count the manually operated set in the bathroom. And it would be nice if one could simply draw the blinds by hand. But it was a spacious, comfortably appointed room that would have provided plenty of lebensraum over an extended sojorn. I've wanted to stay in one ever since I saw a prototype back in early '99.

(Hard to believe, but the concept of a minibar in every hotel room was considered a revolutionary-for-Vegas concept back then. Sheldon Adelson, it bears repeating, has to be counted as one of the two or three present-day figures who have done by far the most to move the "casino-based destination resort" concept forward.)

The room offer came with: comps at Lavo that we were able to parlay into five drinks, plus $50 of match play (which went unused; there's only so much you can cram into a day), etc. No "sweating the comps" there. (BTW, I have to take issue with LVA's characterization of the entrées as "Very Expensive," especially when you take into account that they're meant for sharing.)

The Zefferino brunch buffet is, price-wise, only for those in the mood to splurge, but I have no hesitation in saying it's the best I've sampled in Vegas so far. The erstwhile 40/40 Club is now the Sportsbook Bar & Grill. Former owner Jay-Z may be gone but the service there is as shitty as ever. After being pointedly ignored by the (copious) wait staff, we went over to the little coffeehouse off of Dal Toro Ristorante and were much the better off for it.

The al fresco drinking and dining at Lavo were so pleasant (and the service so exceptional) that two hours passed in what seemed like half the time. The Bloody Mary wasn't quite as good as on a previous visit, where you could eat it with a fork, but it rates up there with the ones at Gallagher's and Memphis Championship BBQ. The S.O. opted for a Saggio, which is too fruity for me, but we both enjoyed at least one Uva Bianco — a lightly sweet martini with white grapes in lieu of olives.

Be warned, though: You'll be directly across from the ridiculous "Sirens of T.I." show that is too bad to be either Camp or even mere cheese. The dialogue would embarrass an X-rated film, although nobody goes to "Sirens" for its dramaturgic values.

Cap it off with late-night dining at Grand Luxe Café (the best value for the dollar to be had on-property) and we enjoyed the makings of a near-perfect day … and a crowded one. Maybe the aggressive discounting of room rates was driving Venetian/Palazzo attendance, but the joint was definitely jumping. (Unless you wanted to play Wheel of Fortune; a bank of machines had just been removed from Venetian's floor.) Business wasn't shabby in either casino, but players clearly gravitate to the older gaming floor, judging from the greater density of people on games at the Venetian.

Between the sheer body count and the general high spirits on view, you'd be hard-pressed to know that there's a recession in progress. But be prepared to rack up some serious mileage when you stay there. After traversing the length of the Venetian/Palazzo megalith three or four times (I lost count), the unrelenting monumentality of it does get to be a bit much.

Then again, "a bit much" might be the Sheldon Adelson aesthetic in three little words.

Your father's Plaza.

Tamares gets wild. Those crazy party animals at Tamares Group have really cut loose with the budget this time. They've renovated all of four rooms at the downtown Plaza. Woo-hoo!

All right, these are prototypes for made-over rooms that Tamares promises to deliver once it settles on a design it likes. So far, color me unimpressed. The new-fangled room doesn't look like that much of an upgrade on the old-hat one.

Not only is $8 million-$13 million a far cry from the $100 million Tamares bulls … claimed it was contemplating spending on the Plaza before those El-Ad Properties spoilsports showed up with their Plaza trademark, their big bankroll and their mean old plans to build a Strip megaresort.

It's also well short of what Tamares would need to spend to get to its stated goal of being "just a notch below the Golden Nugget." (Unless it's a massive notch.) Love him or hate him, owner Tilman Fertitta has spared no expense at the Nugget, and it shows. Tamares is clearly not in his league.

Posted in Downtown, MGM Mirage, Sheldon Adelson, Tamares Group, The Strip, Tilman Fertitta | Comments Off on Sunday at The Palazzo with Sheldon