Meet Bill Yung

That preening Master of the Universe wannabe you see above is Columbia Sussex CEO William Yung III, subject of a lengthy (and deeply unflattering) exposé in the Louisville Courier-Journal. The article basically explains what Missouri Gaming Commission Director Gene McNary meant when he cryptically told the Kansas City Star‘s Rick Alm that “There were things turned up in the investigation that did not comport with law-abiding behavior.”

On a more humorous note, the Courier-Journal article refers to Yung as a “gambling czar.” In an industry dominated by the likes of Kirk Kerkorian, Sheldon Adelson, Steve Wynn, Gary Loveman, and various and sundry Fertittas, Yung is — at best — more like a minor aristocrat whose estates are slowly going to seed. (His casino employees could certainly identify with the serfdom.)

Put on a happy face: New Jersey authorities are doing the best they can to spin the paltry number of bids (at best, three) for the Atlantic City Tropicana as a big win. We still don’t know if Colony Capital actually put in a formal offer, although this newspaper didn’t get the memo about the Mohegans’ high-profile pullout.

A casino that was projected as selling for in excess of $1 billion could now go for considerably less. “Given where they are [relative to the market], if you were a bottom-feeder, you’d wait ’til the last dog was hung,” says a source familiar with the situation, adding that the condition of the Trop may have scared off buyers: “It’s basically three crummy properties and one great one smushed together.”

To nobody’s surprise, the New Jersey Lege passed a $90 million, three-year subsidy for the Garden State’s horse racing industry, to be funded by Atlantic City casinos. You might say that the casinos are the horse in this case, lumbered with an overweight jockey in the form of the state’s struggling tracks.

Lousiana riverboat gets third chance. The Hollywood Shreveport riverboat casino couldn’t make a go of it under the now-forgotten Hollywood brand and then turned turtle while under Penn National’s stewardship. Now, Reno-based Eldorado, which has been running the place for three years, has been approved to take full control of the vessel, which is worth roughly $40 million.

BoSox take a stand. When there’s a players’ strike, managers and coaches have to toe ownership’s line and work with the scabs. But when Boston Red Sox ownership tried to shortchange its coaching staff, the players threatened to boycott the season opener unless their coaches were properly compensated. Now that’s team spirit.

On the other hand …

Steroid-lovin’ union boss Don Fehr is demanding — nay, insisting — that, by golly, somebody better hire “Balco Barry” Bonds or there’ll be consequences ‘n stuff. Hmmmm, let’s see: a decrepit, 43-year-old, surly, steroid-using player who clanks up the plate wearing a veritable suit of armor, can’t play defense and is under federal indictment? Nah, I don’t see any problems there. No distraction whatsoever.

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Scant interest in A.C. Trop

So the deadline for bids on the Atlantic City Tropicana has come and gone, and there are only three bids on the table. Or maybe two.

Though I may have a dollar figure on the Cordish Cos. offer later today, even if it doesn’t match the shrouded-in-mystery Joseph Palladino bid ($1.1 billion, including capital improvements), Cordish can be safely described as the company to beat. It built Atlantic City’s The Walk retail mall and former Trop exec Dennis Gomes — on whose watch the Trop’s generally admired The Quarter was built — is Cordish’s point man. Gomes enjoys long familiarity with both the Trop and the overall Atlantic City market, dating back to his Trump Taj Mahal years, and he’s a former regulator, to boot. (He helped bust the Vegas skimming operation that became the subject of Nicholas Pileggi‘s Casino.)

Even if the Palladino offer doesn’t turn out to be smoke and mirrors, his arrogance may be his undoing. Saying you won’t disclose your investors unless your bid is accepted wouldn’t fly in Nevada, so what is Palladino smoking to think that New Jersey’s even-stricter regulators will swoon at his feet?

As for the third offer, Colony Capital‘s $850 million, it may turn out to have been pure rhetoric. It’s 50/50 that Colony didn’t follow up with a formal bid (just as occurred the last time the Trop was on the market). I’m guessing Colony didn’t follow up and — if so — it’s looking like a company that talks big but doesn’t put its money where its mouth is.

In Colony’s defense, the double-whammy of sleepy Aztar Corp. and cheapskate Columbia Sussex is said to have left a plethora of deferred-maintenance issues at the Trop. (Based on my experience of its Vegas counterpart, I can believe it.) Also, did Colony expect the bottom of the credit markets to fall out when it first threw that $850 million figure out there?

Unless Palladino is just fronting for those blushing violets (not!) Steve Wynn or Sheldon Adelson, I’m saying this is a slam dunk for Cordish, regardless of the dollar amount. Besides, you’ve got to love the guy who gave Atlantic City the tic-tac-toe-playing chicken.

‘Gaters rule! You can’t beat a tic-tac-toe playing chicken, but it pleases me no end to report that Stargate: The Ark of Truth is still #1 on Amazon’s DVD list, a week after hitting stores. Unfortunately, this also means that thousands of Americans will be seeing my cameo appearance in the DVD ‘extras’ and wondering, “Who the f@#& is that dweeb?”

Posted in Atlantic City, Columbia Sussex, Movies, Regulation | Comments Off on Scant interest in A.C. Trop

A.C. Trop to go begging?

You have to wonder after reading this story, which suggests that — out of a field of two-dozen potential suitors for the Atlantic City Tropicana — virtually everyone is heading for the tall grass. Or maybe it's an en masse fake-out and some "surprise" bids will sneak across the transom at 4:59 p.m. EST.

To get a recurring annoyance out of the way, I don't know why reporters keep dragging Harrah's Entertainment into this. With four casinos on the Boardwalk already, Harrah's would undoubtedly stir antitrust concerns if it made a play for the biggest hotel in the market. As for MGM Mirage, does anyone seriously think it's got the the time or the interest in bothering with the Trop when it's got a $5 billion dollar Atlantic City project of its own on the drawing boards?

Mohegan Sun has taken a powder and it looks as though Pinnacle Entertainment (whose Boardwalk megaresort project is currently in abeyance) is doing the same. Colony Capital's Owen Blicksilver is doing his usual "no comment" thing, and most everyone else (Cordish Cos., Ameristar, the Bashaw/Barr duo) is following suit. What's more, The Press of Atlantic City suggests that the Trop's asking price may be in freefall.

True, there's a $950 billion offer on the table from what is aptly described as "a mysterious New York investment group." I'd be be surprised if this particular bid doesn't evaporate upon closer inspection by Bear Sterns, hired to perform due diligence for the State of New Jersey. Plus, the Trop may just be too dilapidated and too damn old to take on right now.

Then again, Columbia Sussex CEO William Yung III might get the courts to enjoin the sale altogether, pending the outcome of his lawsuit against the New Jersey Casino Control Commission. I'm sure the NJCCC's potential can't-sell-the-Trop predicament will cause him no pain, personally. (His bondholders, though, may take a different view, seeing as they're counting on that Trop-sale cash he promised them.)

Posted in Ameristar, Atlantic City, Columbia Sussex, Harrah's, MGM Mirage, Pinnacle Entertainment | Comments Off on A.C. Trop to go begging?

Need casino furniture, cheap?

When I visited Detroit, the official position of MGM Grand Detroit was that its vacated temporary casino (formerly an IRS building) could be re-activated as a casino, if MGM so chose. I guess they chose otherwise. Yes, this roulette table could yours for a mere thousand clams. Come on down!

Bankruptcy in Bossier City. There’s been a malaise in that Louisiana market ever since Class III gaming started to make inroads in Oklahoma, threatening Bossier City‘s key feeder markets, like Dallas-Fort Worth. Now an ex-Isle of Capri riverboat casino has hit a financial shoal.

Blackballed on the Strip? Or maybe you’re just having a hard time breaking in? No matter. The Seminoles need a few good dealers (3,650, to be precise) and they’re going at least as far as Atlantic City to find them, maybe even to Las Vegas, they say. (I mean, we’ve only got, what, six Columbia Sussex properties here? The Seminoles will have those 3,650 dealers in nothing flat.)

But if you’re really hard up for comedians (and maybe too cheap to buy an ad), you can always put your phone number in a Las Vegas Review-Journal and risk being inundated by every bad standup comedian with an Internet connection, a mouse and a telephone. Heck, Fitzgerald‘s did. That’s 702/388-2400 and ask for Gene Sagas. I’ll be expecting S&G‘s usual 10% commission if you get the gig, OK?

Posted in Columbia Sussex, Detroit, Downtown, Florida, Louisiana, Tribal | Comments Off on Need casino furniture, cheap?

Stat of the Week

According to a report filed by private detective Jim Perry of Perry Investigations, on the evening of Sept. 1, 2007, he spent two hours conducting surveillance at the Tropicana Resort & Casino, between 8:15 and 10:15 p.m. During that time, Perry observed only one security guard “in the casino and outside of the casino.”

Two hotel towers, 46 table games, 1,280 slots, 61,000 square feet of casino alone* … and one security guard. To quote Pvt. Hudson (unforgettably played by Bill Paxton) in Aliens, “I feel safer already.”

*–Figures obtained from the 2006-07 Casino City’s North American Gaming Almanac.

Posted in Columbia Sussex, The Strip | Comments Off on Stat of the Week

This week in Columbia Sussex

"Things are a little murky." That's how the Cincinnati Enquirer describes the Did-he-or-didn't-he issue of whether Kentucky Gov. Steve Beshear met with million-dollar booster and Columbia Sussex CEO William Yung III, whose desire for a Cincinnati-area casino is the worst-kept secret in the Bluegrass State. (Beshear does, for the record, acknowledge hobnobbing with several players in the horseracing industry, but not with Yung.)

However, a game of keep-away involving records of visitors to the governor's office is clouding the issue. For some, the whole matter is starting to look rather seamy. And, considering the ethical sinkhole that swallowed the administration of Beshear's predecessor, can you blame them?

Having proclaimed for all to hear that the arrival of Pinnacle Entertainment would write finis to one of their riverboats, Penn National and Columbia Sussex have to decide whether to put up their dukes or cut and run. Not that they have to hurry: Pinnacle's Riviere project is still two-plus years away.

But if Hollywood and the Belle of Baton Rouge (soon to be displaced by Amelie Bell [above]) stay put, it's a tacit admission that their parents' anti-Pinnacle campaign tactics were a bunch of B.S. Or so implies the Baton Rouge Business Report. An analyst hired by Penn crunches the numbers and concludes that Belle has the better profit margins, ergo the better chance of eking it out in a post-Pinnacle market. Penn could counter-attack by bringing Argosy Lawrenceburg downriver from Indiana, greatly increasing its Baton Rouge capacity.

But New Orleans-based gaming analyst Nicholas Danna "says [Columbia Sussex] has shown a tendency to overpay for properties, making it harder to reinvest in what they have." He notes, though, that Baton Rouge is a market with considerable room for growth, compared to New Orleans (Belle's former home).

Back in Atlantic City, there are still only two bidders for the Atlantic City Tropicana, although the others may be waiting until next Monday, hoping to slap down a last-second bid that catches the competition unawares. However, since trustee Justice Gary Stein isn't held hostage to "maximizing shareholder value," he doesn't have to take the highest offer. (By contrast, Aztar Corp. had little choice but to sell its assets to Columbia Sussex, even if it knew full well what depredations would follow.)

According to Richard Perniciaro, director of the Center for Regional Business & Research at Atlantic Cape Community College, as paraphrased by NJ Biz, desiderata include "stability, cash to invest and experience in both gaming and working with labor unions. “ In other words, somebody 180 degrees from Columbia Sussex's CEO. Despite the paucity of bids on the table, analysts are starting to doubt that Stein can have the sale wrapped in June (his deadline has already been extended once)

Tropicana execs and overseers, meantime, are forecasting a rosier future, as part of their sales pitch, according to a 36-page memo intercepted by The Press of Atlantic City. Part of the turnaround is to be achieved by restaffing player-development and marketing staffs that Yung decimated. These aren't pie-in-the-sky estimates.

According to the document, it will take more than two years to restore revenue levels to pre-Columbia Sussex levels. And though 300 staffers will be added by year's end, employment levels at the A.C. Trop will still be only 85% of what they were before Yung's minions got in and started slashing away.

Posted in Atlantic City, Columbia Sussex, Kentucky, Louisiana, Penn National | Comments Off on This week in Columbia Sussex

Spitzer: It's the hypocrisy, stupid!

So New York Gov. Eliot Spitzer had sex with a prostitute. Yes, Mrs. Spitzer should brain him with an iron skillet, kick his philandering ass out of the house, divorce him … and that’s just for starters. But, as someone who favors decriminalizing and even legalizing sex-for-pay, let’s not get distracted by who”Client #9″ paid to do the nasty, how many times and with whom. Heck, by the time you read this, Spitzer’s political career could be history.

What makes this a story is that, after years of being the white knight of Wall Street, Spitzer has become Gov. Humpty Dumpty, and you know what happened after Mr. Dumpty’s great fall (off of a wall, no less). Spitzer was also pursuing a vendetta against his chief political adversary, Continue reading

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Billie: Odd Man Out; Tilman Fertitta Gets Miffed

For one month at least, you’ve got a reason to read Playboy for the articles (well, three if you count Kurt Vonnegut’s essay on the firebombing of Dresden and new fiction by Dog Soldiers author Robert Stone).

Controversial former Seminole chairman James Billie is the subject of a lengthy profile. He’s plotting a return to the directorship of the tribe now that it’s flush with Hard Rock and Class III gambling cash. Author Pat Jordan‘s story is a sentimentalized apologia for Billie, told almost exclusively by Billie and his sympathizers (NIGC Chairman Phil Hogen makes a cameo appearance).

To hear Jordan tell it, all that stands between Continue reading

Posted in Downtown, Tribal | Comments Off on Billie: Odd Man Out; Tilman Fertitta Gets Miffed

Atlantic City, the glass half-full

Normally a 1.5% jump in casino revenue wouldn’t be cause for dancing in the streets and maybe today’s numbers aren’t reason to get carried away. Given that there’s a quadrennial aberration (i.e., Feb. 29) in play, the +0.1% in slot revenues can probably be discounted outright. But with tables up 4.9%, we see continuing evidence of Atlantic City being reinvented as a tables-driven market. Slots, after all, you can get in Pennsylvania, Connecticut, Delaware and (sort of) in New York.

Mind you, Atlantic City is still -4.4% from last year’s pace. And $384 million, while scarcely chicken feed, is a good ways off of the Boardwalk’s highest month: $504.8 million in July ’05. On a happier note, casinos are likely to be insulated from any further government shutdowns in Trenton.

Except for Trump Plaza’s 13.8% jump, few of the upward fluctuations were dramatic, with second-best going to Harrah’s Marina, closely followed by the same company’s Showboat and — a little further back — Caesars Atlantic City, putting three of Harrah’s four properties in the “plus” column for the month. Led by Trump Plaza, those properties were distinguished by dramatic gains at the tables. Except for the Plaza, revenue declines at the slots tended to keep all the other gainers in the single-digit column.

It would have been a banner month for all three Trump Entertainment Resorts casinos (at a time when the company could really use some good news) were it not for Trump Taj Mahal getting clobbered at the tables (-11.4%), for an average Trump gain of 6.1% (still better than Harrah’s Marina). Borgata, as usual, had a good month, up 3.4% and leading the market in volume of win ($60.88 million). Low man on the win volume totem pole was Trump Marina, at $18.67 million.

Not only was Resorts Atlantic City near the bottom of the win-volume spectrum, it posted the worst revenue decine, -7.8%. (A $2.8 million gain at Trump Plaza was the closest February came to a dramatic revenue fluctuation.)

Although it’s still in seventh place, in terms of win, the Tropicana finally appears to have stanched the bleeding. Under the guidance of among others, a returning Pam Popielarski, a state-appointed transition team has slowed the catastrophic revenue slide that characterized the mismanagement of ousted operator Columbia Sussex. A bad month at the slots wiped out a gain at the tables. However, given the Trop’s recent history, a -3.7% Y/Y decline really is cause for dancing. May the turnaround continue.

Posted in Atlantic City, Boyd Gaming, Columbia Sussex, Donald Trump, Harrah's | Comments Off on Atlantic City, the glass half-full

Treasure hunt for Columbia Sussex story

A lengthy item on the latest twists and turns in the Columbia Sussex saga, begun Wednesday and finished today, has — through a quirk of our blogging software — posted not as the most recent item but somewhere over on the next page. My apologies for the inconvenience. Here's the short cut.

Posted in Columbia Sussex | Comments Off on Treasure hunt for Columbia Sussex story

Moulin Rouge project puts cart before horse

A group hoping to revive the long-faded glories of the Moulin Rouge hasn’t found construction financing. But no matter: They’ve signed a casino-management team; Epic Gaming, a company whose only other ongoing concern is a tribal casino in Oklahoma, with 550 slots. This is not a choice of operator that leaves one brimming with confidence.

Epic used to go by the handle of Ellis Gaming. Although founder Shawn Ellis is long gone, his team of heavy hitters is still in place. With the likes of former Caesars exec John Groom on board, theoretically Epic has the sort of braintrust that could reimagine the Moulin Rouge as someplace hip and sexy … although its Bonanza Road neighborhood is anything but. Even someone who works there keeps drawing attention to its “vacant and burned buildings, repair shops, a United Parcel Service distribution center and a homeless shelter.”

Epic recently pursued one of the casino licenses up for grabs in Kansas but its application was unceremoniously swatted away. As for the developers, they expect that a hoped-for rezoning (skedded for April 2) will lure construction money out of the woodwork. Under the newly unveiled arrangement, Epic will get to keep all the gambling revenue — unless or until Moulin Rouge Development Corp. or Republic Urban Properties obtains a gaming license.

It’s a business model that’s quickly becoming, if not prevalent, very popular along the Strip (as at the Sahara) … although you’d have to have an MGM Mirage-like revenue stream (60% non-gaming) to make it pencil out, and Harrah’s Entertainment just reported softness in precisely that segment of its Vegas business.

Posted in Downtown, Kansas, Tribal | Comments Off on Moulin Rouge project puts cart before horse

'Sin Fund' falls upon evil days

Not so long ago, journalists like yours truly, were hailing the early success of the Ladenburg Thalmann Gaming & Casino Investment Fund (GACFX). Unfortunately, since its apogee in the fall of last year GACFX has been in a steep decline, losing roughly a third of its peak value.

As one observer commented, upon bringing this to the attention of S&G, “[It] makes money placed in a piggy bank look like a good investment!”

Your Columbia Sussex moment of Zen: An LVA reader writes, “I understand that the River Palms, Tropicana Express in Laughlin are now owned by the Columbia Sussex Corp. I visit these hotels regularly and have noticed that they are slipping in quality. By that I mean the maintenance, i.e. carpets are worn, rooms need remodeling, buildings need paint, and buffets at both Laughlin properties have declined dramatically.”

Hmmmm … sounds an awful lot like my last visit to the Tropicana Las Vegas.

Posted in Columbia Sussex, Current, Laughlin | Comments Off on 'Sin Fund' falls upon evil days

Desperation in Florida

Is Isle of Capri‘s racino a disappointment (especially for horsemen)? Is Boyd Gaming taking Florida expansion off the table? Is Magna Entertainment threatening to close overextended Gulfstream Park? What’s a Florida lawmaker to do?

Why, legalize every form of gambling short of cricket fighting, of course. Statewide slots, a lottery, regulated “adult arcades,” high-stakes poker — it’s all on the table as Sunshine State solons head back to Tallahassee, no doubt looking forward to two months of nonstop eye-poking and head-slapping between Gov. Charlie Crist (R) and archenemy House Speaker Marc Rubio (R), as they tussle over a shrinking state budget.

Rubio’s still trying to rein in Crist’s Class III compact with the Seminole tribes, but that horse may have long since left the stable. The Seminoles are proceeding as though they’d never heard of Marc Rubio. Should he get a court to overturn the compacts, Florida lawmakers who have had a taste of once-forbidden Seminole gambling lucre may already be hooked and repudiate Rubio (who’s a lame duck, anyway).

As for the absence of cricket fighting from the list of proposed fiscal remedies, I’d guess that’s just an oversight.

The Schmuck Report: On a humorous note, sports reporter Peter Schmuck takes a glance at the gleaming façades of Florida’s racinos and declares that “the experiment with increased gambling in Florida appears to be a success.” This is either disingenuous boosterism for bringing racinos to Maryland (an on-again, off-again quest) or else Schmuck is happily inhabiting a parallel universe.

Corzine opines. New Jersey’s governor goes on the record as favoring smoke-free casinos. He also backs the Casino Reinvestment Development Authority in its quarrel with Atlantic City over whether or not to sell Bader Field to Penn National. (Turns out Penn wants additional land re-zoned for casinos, too.)

Financing is sufficiently concrete, Corzine says, for both Revel and MGM Grand Atlantic City, and he’s bullish on Pinnacle Entertainment‘s postponed megaresort. And playing the stock market isn’t gambling, he says: “We made probability judgments about the viability of assets.”

Posted in Atlantic City, Boyd Gaming, Florida, Horseracing, MGM Mirage, Penn National, Pinnacle Entertainment, Politics, Tribal | Comments Off on Desperation in Florida

Isle: Goldstein out, Perry in; Trump pummeled

Isle of Capri Casinos announced widening Y/Y losses today, along with the retirement of CEO Bernard Goldstein after 16 years at the helm. He gives way to board member James Perry, former CEO of Argosy Gaming and (briefly) Trump Entertainment. Along with COO Virginia McDowell, Perry presided over Argosy’s glory years, ones in which it emerged as the Rolls-Royce of riverboat-casino companies, eventually making it a takeover target for Penn National Gaming.

Perry faces a daunting task at Isle, whose stock is trading at a seven-year low. According to Isle, Perry has a turnaround plan in place, whose components include reintroducing the Lady Luck brand (to connote second-tier markets), upgrading amenities — not currently regarded as one of Isle’s strengths — and a downsizing at the corporate level.

However, in a possible allusion to the scorched-earth business methods of competitor Columbia Sussex, McDowell says, “We recognize, however, that companies cannot save their way to success and we continue to reallocate our resources in order to improve the overall guest experience,” etc.

Isle’s net revenues were up, but largely on the strength of newly opened or acquired properties (like its Waterloo, Iowa casino, above). One of those is the Casino Aztar boat in Caruthersville, Missouri, which the state wouldn’t let Columbia Sussex acquire in the Aztar Corp. buyout.

Back out the new properties and the balance sheet looks a whole lot worse, with revenue -11% instead of +17%.

Louisiana and Mississippi revenues are down, as casino competition returns to pre-Katrina/Rita levels. In Iowa, Isle is experiencing the same malaise as nearly everyone else — a plight that’s bound to worsen if the state approves as many five new casinos. Nearly $5 million went down the tubes in a futile tilt at the Pittsburgh market and a foolish run at Singapore.

Trump Entertainment Resorts was also feeling the pain today, as losses grew a jaw-dropping nineteen-fold (yes, 19X) on a 6.4% slip in revenue, coming in 2% below analyst expectations. The loss was swollen by a $147.4 million in “intangibles,” plus a $91.3 million write-off on the declining value of Trump Marina. “There’s no question Atlantic City is a difficult environment to operate in, and some properties had a difficult fourth quarter,” remarked Bear Stearns analyst Carlo Santarelli, displaying a genius for understatement.

Posted in Atlantic City, Columbia Sussex, Donald Trump, Iowa, Isle of Capri, Louisiana, Marketing, Mississippi, Penn National, Pennsylvania, Singapore, Wall Street | 1 Comment

Columbia Sussex strikes back

This could become a Hammer Studios-esque series of updates. Just contemplate the possible titles: The Curse of Columbia Sussex, Columbia Sussex Has Risen from the Grave, Taste the Blood of Columbia Sussex, Columbia Sussex and the Monster from HellColumbia Sussex Must Be Destroyed, Brides of Columbia Sussex, to be followed of course by Son of Columbia Sussex  or even Jesse James Meets Columbia Sussex’s Daughter … culminating in the inevitable I Was a Teenage Columbia Sussex.

(OK, so Jesse James Meets Frankenstein’s Daughter wasn’t a Hammer movie, even if it was a real one, directed by the infamously expedient William, “One Shot” Beaudine. But you get the idea.)

Aaaaaannnnyyyyyway … you’d think William Yung III‘s debt-lumbered lodging/casino company, with bondholders nipping at its heels, would be glad to get the cash it’s due from the upcoming sale of the Atlantic City Tropicana. You would think wrong. Yung has thrown another hissy fit, in the form of a 60-plus page lawsuit. He wants that casino back and accuses the New Jersey Casino Control Commission of lacking impartiality, and also of “ad hoc rulemaking and standard-setting.”

Barring a full reading of the complaint, the best line has to be the accusation that the NJCCC behaved in an “arbitrary, capricious and unreasonable” manner. Pot, thou hast called the kettle black! If anybody’s operating methods are “arbitrary, capricious and unreasonable” it is those of Columbia Sussex, at least if its own testimony before the NJCCC is any yardstick.

“The one-member audit committee that Tropicana put in place in June of 2007 has been in widespread use by other New Jersey casinos,” whines a company press release. Maybe so, but the problem with the Trop’s ostensibly independent committee of one is that it consisted of an attorney (Jeffrey Silver) who was on retainer to Columbia Sussex, a conflict of interest that did not emerge until later that summer.

Oh, and anyway, “such a requirement is not sufficiently spelled out in the New Jersey Casino Control Act, and therefore is not something Columbia-Sussex could have complied with,” according to a Philadelphia Inquirer report.

In other words, ‘We didn’t break the rules. And if we did, it’s because we didn’t know what they were.’ (Funny how Columbia Sussex has butted heads with regulators in almost every state — New Jersey, Indiana, Missouri and Nevada — where it sought casinos of late. Must be a vast conspiracy, no?)

Another non-argument is the contention that the NJCCC didn’t take into account a 94% occupancy rate. So? Harrah’s Atlantic City runs at 90%+ but at least 70% of those rooms are comped. The company also complains that the NJCCC overlooked “the firm’s financial stability,” which may be a tough case to make when you’re staving off bankruptcy.

In a final, maudlin touch, Columbia Sussex ends its press release by “decrying the virtual absence of interrogation about the company’s business plans and aspirations that is ordinarily a staple of renewal hearings.”

Oh dear, this is too tragic. Yung is conveniently forgetting that his stewardship of the Trop was hanging by a thread when he came before the NJCCC. The latter had been presented with a recommendation from the New Jersey Division of Gaming Enforcement that Columbia Sussex be allowed a provisional, one-year renewal — based on the satisfaction of 26 conditions. In other words, Yung’s best hope was to get off with probation, and he didn’t. (Trop lawyers asked for a five-year, unconditional renewal but, given the circumstances, that was an unrealistic expectation.)

What might those “aspirations” have been? Yung had already sent the property Columbia Sussex described “as key to the company’s future, generating more than a third of total operating revenue and 36 percent of total operating profits” into a tailspin, off $19 million in the first six months of last year.

His Tropicana Entertainment casino portfolio was down -5.6%, year over year, for that same period despite adding four ex-Aztar Corp. properties to its stable. What The Press of Atlantic City called Yung’s “slash-and-burn business model” was fluffing up profit margins in the short term, but at the price of depressed revenues.

By the third quarter, not only were revenues down even further (-9% Y/Y), so were profits (-8%). In what looked like a desperation move, Yung started to peddle the Atlantic City Trop’s most highly praised asset, its $280 million The Quarter, to pay down debt. (He was subsequently dissuaded, perhaps because the first offer he got was for only $70 million.)

Anyway, it seems that Columbia Sussex’s attempted default on its $750,000 fine to the State of New Jersey was just a ploy to buy time until its lawsuit was filed. If so, the NJCCC has decided that two can play that game. Overruling its own conservator, it has ordered Columbia Sussex to pay up, starting now — even if it means dipping into the Trop’s cash flow. Such regulatory choler is not difficult to understand, as it appears that stalling on the initial $125K payment was yet another chapter in a long history of Yungian dissembling when it comes to cooperating with the Garden State’s regulatory structure.

In the most recent issue of Casino Lawyer, respected attorney Frank Catania uses Columbia Sussex as “a textbook example of how to lose a casino license.” Catania’s analysis doesn’t bode well for Yung’s chances in a court of law, as he finds that Yung’s “arrogance was reflected in [Tropicana Casino Resorts’] poor presentation at Tropicana’s licensing hearing, where the testimony of the company’s witnesses was found to be poorly prepared, inaccurate, evasive, unbelievable, hollow and, in one instance, perjurious.

Or, as one NJCCC member wrote, “I was left with the impression that the applicant felt that the process was just an inconvenient formality.”

Yung might also want to stock up on ginko biloba before he gives any further testimony, too. Before the NJCCC, he pleaded to being ignorant and out of the loop on how his company operated — a sorry performance by the president, CEO and sole director of Tropicana Entertainment.

However, before Yung gets his day in court, he’s got until the end of the month to A) restructure $690 million in debt or face Chapter 11 and B) sell his Casino Aztar riverboat before the State of Indiana seizes it. So what’s Yung’s endgame?

That’s a subject for another day … although a small casino up at Lake Tahoe could hold the key to Columbia Sussex’s fate.

Posted in Atlantic City, Columbia Sussex, Indiana | Comments Off on Columbia Sussex strikes back

'Terrible' timing

By golly, it seems like a mere nine days ago that a local newspaper story was reporting disproportionately strong lottery sales at a California-border store owned by Herbst Gaming. "Since taking over the store, the location's total lottery ticket sales have been more than $8.9 million," said the newspaper, although Herbst executives refused to take any of the credit that was being foisted upon them. "It's something to which we haven't given much thought," disclaimed one.

Fast-forward six days and it turns out Herbst is "evaluating financial strategic alternatives," with the help of Goldman Sachs. Why? It would seem that Nevada's partial ban on smoking in public places (aka Question 5) has delivered a dagger thrust to Herbst's slot routes, whose performance is off by one-fifth. Which partly answers the question of how slot routes would fare in Question 5's aftermath.

Last week, it also emerged that one of the moves being contemplated is the sale of some or all of Herbst's casino empire, mostly amassed in the last 14 months through the absorption of three castoff MGM Mirage properties in rural Nevada and the Sands Regent brand. That's a debt load that Herbst can ill-afford to carry if its slots routes continue to tank.

Standard & Poor's cut Herbt's credit rating to CCC today, in part because of "continued weak operating performance at the company's riverboat and land-based casinos." Already WHO-TV, in Des Moines, Iowa, is reporting that one casino is openly for sale. It reminds me of another company that grew too fast too soon …

Columbia Sussex driving out business? A 104-year-old hardware store and a paint store are shutting down and (in the case of the paint store) moving, all to make room for a casino that might be built if the Kentucky state senate and the voters of the Bluegrass State approve a proposal currently before lawmakers. Oh, and if Covington, Ky., is awarded one of the nine licenses and if that license goes to Columbia Sussex. If not, Columbia Sussex owner William Yung III will have himself a $7 million collection of empty buildings, albeit at the mouth of a freeway exit. So it's not totally a spin of the roulette wheel. Just mostly.

And now for some positive thinking. Naysayers who freak at the thought of a 9.75% casino tax rate might want to consider the influx of investment — albeit somewhat attenuated at the moment — into Atlantic City, where the tax rate is 9.5%. MGM Mirage isn't wavering from its high-profile commitment and not only is Penn National willing to go all in, it's wagering that it can lure three other casino companies … provided it gets all of Bader Field as a precondition.

True, Pinnacle Entertainment is hesitating and the Curtis Bashaw/Wallace Barr project seems to have been indefinitely back-burnered. But, in the former instance, icy credit markets are primarily to blame. As for the latter, the Bashaw/Barr duo is presently in the hunt for the Atlantic City Tropicana, which would make a good strategic fit with Bashaw's Chelsea Hotel redevelopment. So it's far too early to pronounce Barr & Bashaw's south-Boardwalk casino-hotel D.O.A. … unless they land  the Trop, in which case a nice little 'flip' awaits them.

Whoever thought Atlantic City would be the Land of Opportunity?

Posted in Atlantic City, Columbia Sussex, Herbst Gaming, MGM Mirage, Penn National, Pinnacle Entertainment | Comments Off on 'Terrible' timing

Columbia Sussex dodges bullet

Yes, Columbia Sussex is in default on $960 million in debt, says a Delaware court. But it's not in immediate default, giving the hotelier at least another month to wriggle out of that tight spot. However, a source for the Las Vegas Sun says the verdict “is probably the death of Columbia Sussex's equity interest” in the Las Vegas Tropicana.

If a receiver has to be appointed, it won't happen a moment too soon. The LV Trop has fallen into dire condition, seemingly more through indifference than anything else, and parts of it are appallingly filthy and/or dilapidated. It's several decades behind the rest of the Strip. Even though people like to deride Circus Circus, Jay Sarno's labyrinthine monument to coulrophobia, it's at least 100X nicer than is the Trop at present.

One potential buyer Casino Aztar, in Evansville, Ind., has been tipped. Racino owner Centaur Inc. could make a logical suitor for the riverboat. The Indiana market has been diluted by the addition of racinos and a casino resort at French Lick, the latter hitting Casino Aztar fairly hard. And Centaur's Jim Brown used to run Casino Aztar.

But Centaur is apparently close to exhausting its $1 billion gaming-acquisition fund; with Kentucky taking a good, hard look at legalizing casinos, a Hoosier State riverboat on the Kentucky border just might not be the prize purchase it once was. And Columbia Sussex may have less than a month to cut a deal before its Indiana license is yanked. (Currently, Casino Aztar is operating with a staggering number of job vacancies, including internal auditor and director of security.)

More and more, Columbia Sussex's overambitious attempt to absorb Aztar Corp. is looking like one of the biggest debacles in casino history.

Posted in Columbia Sussex, Indiana, Kentucky, The Strip | Comments Off on Columbia Sussex dodges bullet

MGM Grand to make a big splash

Our "ace in the hole" source has caught wind of a major expansion of the pool area and water features at MGM Grand, extending toward the Signature condos. The official verbiage is as follows:

The plans depict a recreational area that includes pools, spas, cabanas, and accessory buildings in conjunction with the MGM Grand Resort Hotel. The new recreational area is located on the north side of the existing pool complex and in between the Signature resort condominiums and the Convention Center building. Along with the pools and spas, 4 independent manmade decorative water features are proposed that range in size from 40 square feet to 496 square feet for a total of 1,227 square feet of water features. The water features according to the applicant cannot be used for human contact due to the small size. The applicant has attempted to integrate the pools and spas with the water features, but due to design and engineering constraints it was determined to keep them as separate features. Per Title 30, the MGM Grand Resort Hotel is allowed a maximum of 25,699 square feet of water features; however, the resort is under the allowed limit for water features.

Indiana passes "Bill Yung" bill: The Columbia Sussex fiasco in New Jersey caught the Hoosier State flat-footed. What if a casino owner were to either A) lose its license,  B) go bankrupt or C) simply flee the state? A bill to designate state-appointed trustees just passed the Indiana House overwhelmingly and now goes to conference committee. An additional provision in the law would prevent the Indiana Gaming Commission from imposing further "transfer taxes," as it did in the sale of Indiana Downs.

Rashomon Dept.: A source says local impressionist Larry G. Jones is packing it in tomorrow night after a 1,600-show run at what used to be Fitzgerald's, to return at an unspecified Strip venue sometime in the near future. The Fitz's official site offers no elucidation but an affiliated Web site has him there at least through March 4.

Turns out … our source is right. Which means you've got two nights left to see Jones in action. And if that Strip thing doesn't pan out, I hear Tilman Fertitta has a showroom to fill over at the Golden Nugget.

Posted in Columbia Sussex, Downtown, Indiana, MGM Mirage, The Strip | Comments Off on MGM Grand to make a big splash

Train to nowhere

Just when it looks like the long-discussed magnetic-levitation train from Anaheim to Las Vegas (circumventing the parking lot that is I-15) is finally picking up steam — there’s an obstacle. Seems that bothersome local influence peddler Sig Rogich is throwing his weight behind a rival project, a diesel train that would run from Vegas to Victorville.

Woo-hoo! Can’t you feel the excitement? Las Vegans can hop aboard and make tracks for … outlet malls and car dealerships (two things which Vegas has in abundance). Californians, for their part, can eagerly look forward to driving in from L.A. or San Diego and then leaving their cars at what had better be the world’s largest Park-and-Ride.

On the other hand, a train to/from Anaheim would bring us that much closer to Disneyland, Knott’s Berry Farm and more thrill rides than you can shake a dipstick at. It would also enable my masochistic relationship with the Los Angeles Angels of Anaheim, who continue to raise my hopes every September, only to dash them in October, when their pitchers turn into quivery heaps of Jell-O or human piñatas.

As for Rogich, when he’s not providing rhetorical cover for LVCVA screw-ups, he’s carrying water for the vagabond Voyager Wheel. I hope he has better luck with the train than he’s had with the Ferris wheel.

Posted in California, Politics | Comments Off on Train to nowhere

Racinos a bum deal?

They are if you’re a horse owner at The Isle Casino & Racing @ Pompano Park, which not only left trainers and owners out in the cold, as far as slot revenues are concerned, it just slashed purse amounts by 35%, reports the South Florida Sun-Sentinel.

Pompano Park, it should be noted, is an isolated case. The track, owned by Isle of Capri Casinos, argues in its own defense that slot revenues were lower than expected. But will racing be driven out in the process? Again we are faced with the question of how viable horse racing actually is (I’m looking at you, Kentucky) if massive subsidies from slot machines are what’s needed to keep it alive. And while not contractually obligated to do more than it’s done for the horsemen, at first blush it looks as though Isle of Capri has pulled a bait-and-switch here.

My 18-year-old son is in the news again. Oh wait, that’s Florida House Speaker Marc Rubio, fighting a dogged rearguard action against Gov. Charlie Crist’s gambling expansion in Florida. Rubio is arguing that A) Crist’s revenue projections won’t pencil out and B) “it is morally wrong to balance the budget on the backs of the poor and the working class.”

It’s a good day whenever a Grover Norquist-type conservative like Rubio comes out against regressive taxation. Unfortunately, Rubio’s remedy is to dismantle the Florida state government. Also, he’s made a habit of opposing fellow Republican Crist whenever possible (the two are vying for the mantle of Jeb Bush) and when Rubio says he’s against “transferring” disposable income, it sounds to me like code for “By all means, let’s keep it away from the Seminoles,” whose Class III compacts Rubio is challenging in court.

So forgive me if I doubt Rubio’s altruism just a bit. (And, no, I don’t have an 18-year-old son.)

If he’s lost Schwartz, he’s lost Middle America. The lone media defender of Columbia Sussex CEO Bill Yung has left the building. UNLV’s Dr. David Schwartz finally loses patience with the Kentucky hotel baron after reading about Yung bragging on his ability to fling $1 million at the feet of Kentucky’s new governor in the same week that Columbia Sussex stiffed the state of New Jersey for 750 large. Is Yung’s company really that hard up or is this a passive-aggressive way of getting back at the Garden State?

Excessive federal zeal in prosecuting gambling rings finds an unsympathetic ear at the Supreme Court. If there’s a reason some Americans are distrustful of expanded federal law-enforcement powers, whatever the premise or the administration (the Clinton-Gore administration had its intrusive proclivities, too) it’s because, inevitably, they will be pushed past the breaking point.

Posted in Atlantic City, Columbia Sussex, Florida, Horseracing, Kentucky, Politics, Sports, Tribal | Comments Off on Racinos a bum deal?