The promo from Hell

Posted on May 28, 2008 by David McKee

In a radical departure from hallowed Columbia Sussex tradition, the Las Vegas Tropicana has discovered the concept of the promotional allowance. Presumably Tropicana Entertainment co-prexy Scott Butera gets credit for talking boss William J. Yung III into doing some risky, out-of-the-box type things like … marketing and even — Gasp! — promos, some of them fairly proactive. I mean, we’re talking about the company that yanked out the “free slot pull” promo two days after taking over the Trop, back in early ’07.

Nah, my only beef (and “beef” is the operative word) with the Sunday-Thursday “Roll 4 Gas” promo is that three of a kind gets you a free buffet for two. Seriously, is this a promo — or a punishment? I’ve eaten at that buffet. It’s the worst I’ve had in town and you could grow a beard waiting for your server to put in an appearance. To add insult to injury, prices have gone up quite a bit — 22%, in fact.

The Trop could put its own spin on the Wal-Mart slogan and go with, “Always rollin’ up prices.” Except that the disembodied yellow dot-head would have to wear a frown in place of a smile.

Posted in Columbia Sussex, The Strip | Comments Off on The promo from Hell

Harrah's: Digging to China

Posted on May 23, 2008 by David McKee

Given the recent freeze-out on new casino operators in Macao, executives at Harrah’s Entertainment might as well be sporting T-shirts that read, “I spent $577.7 million in Macao and all I got was this lousy golf course.” And, in light of Harrah’s considerable debt load, CEO Gary Loveman will have the unenviable task of advising tight-fisted co-owners TPG and Apollo Management what to do next with their expensive piece of Chinese real estate.

They could gamble on hunkering down for a few years, taking a low near-term return while waiting for Macao supremo Edmund Ho’s successor to possibly liberalize the enclave’s gaming regime, admitting new corporate players. Or Loveman could try to peddle it around — probably at a loss, seeing as the land can’t be rezoned for gambling and he’s dealing from a position of weakness.

(A third option, whereby Harrah’s acts as a passive hotel operator as part of a joint venture in which Wynn Resorts or MGM Mirage owns the casino just seems too transparent and disingenuous to get past the current regime, IMO. It’d be obvious a subversion of the “three-plus-three” arrangement, turning it into 3 + 3.5.)

The fate of the golf course is a pressing question only because Harrah’s latest “Consolidated Summary of Operations” contains some scary-looking numbers. When 1Q08 is compared to 1Q07, interest expense has increased threefold (from $185.8 million to $557.6 million). Pile on $211.3 million in early retirement of debt – to reduce those interest payments – and an 11% decline in income from operations and it’s quite a jolt to the balance sheet. In the 1/28/08-3/31/08 period, combined income of $445.5 million was negated (and them some) by $679.2 million in interest expense and early debt retirement.

Then there’s the matter of the shuffling of properties between Harrah’s Entertainment and Harrah’s Operating Co. According to one analyst, it works like this …

Harrah’s Las Vegas, The Rio, the Flamingo, the A.C. Harrah’s and Showboat Atlantic City, Harrah’s Lake Tahoe, Harvey’s and Bill’s Lake Tahoe are going into the Entertainment portfolio, to be followed by Harrah’s Laughlin and Paris-Las Vegas. But then Bill’s, Harvey’s and Harrah’s Lake Tahoe, and Showboat are re-shuffled into the operating company.

(What? No mention of Bally’s Las Vegas? Hmmmmmmmm. Why does the word “implosion” keep bouncing through my brain?)

In an excellent analysis, Amy Calistri writes, “Reducing interest expense, through the reduction of debt, has to be at the heart of this accounting tangle.” In other words, Harrah’s is positioning itself for a big sell-off, fleeing the Tahoe market and reducing its high Atlantic City exposure, already worsened by good business at Harrah’s Chester. Trouble is, Calistri goes on, casino valuations aren’t what they used to be and potential buyers might still find credit scarce.

(The problem with operator consolidation is that it’s taken a lot of potential buyers off the table – no more Argosys out there — although Ameristar Casinos needs to rack up some debt to reduce its profile as a takeover candidate. Penn National is in a buying mood but, with its private-equity buyout threatening to unravel, it’s got hassles of its own.)

As for the cheese-paring moves that customers are reporting at Harrah’s Strip properties, Calistri warns that “cost cutting and efficiency will only help [Harrah’s] at the margins … Indeed, Harrah’s biggest hurdle toward profitability over the near term is likely to be undoing the debt associated with their acquisition.”

Which is why when analysts float the idea of Harrah’s buying Galaxy Entertainment as a quick means of entry into Macao, I’m tempted to employ one of my Mom’s favorite retorts: “Using what for money?” Galaxy has its problems (like basically learning the casino business on the job) but with no new gaming concessions on the Macanese horizon, its value just shot up considerably.

And then there’s the little detail of a $2.8 billion (with a ‘B’) tribal court judgment against Harrah’s that, if it continues to stand up (much data here), will lumber the company with even more debt and interest. The verdict isn’t really Harrah’s fault: The case dates back to when Arthur Goldberg was alive and running Park Place Entertainment, which became Caesars Entertainment, which was bought by Harrah’s Entertainment, which is contemplating changing its name to …  Caesars Entertainment.

It’s a good thing Apollo and TPG hung onto Loveman, just in case their casino acumen is on par with Apollo’s retail acuity. Earlier this month, Apollo vassal Linens ‘n Things filed for bankruptcy in what Bloomberg called “the biggest leveraged buyout failure since credit-market disruptions began last summer,” and what one analyst characterized as “an utter and complete disaster.” The company will close 20% of its stores, leaving 2,500 people unemployed.

Apollo’s exposure is only (“only”) $260 million, meaning that others, primarily General Electric, are holding most of the bag on this debacle. And maybe the timing wasn’t so good for taking real estate franchisor Realogy Corp. private for $8.5 billion, either. (Bloomberg says $6.6 billion.)

And don’t forget about Harrah’s unraveling international strategy, which was ill-timed at best and possibly a total bust. But that’s a topic for another time …

Posted in Ameristar, Atlantic City, Harrah's, Macau, MGM Mirage, Penn National, Pennsylvania, The Strip, Tribal, Wall Street | Comments Off on Harrah's: Digging to China

R-J to Vegas: "We're Podunk"

Posted on May 23, 2008 by David McKee

Warning: The following blog post contains ridicule of the Las Vegas Review-Journal and a Republican senator with good hair. No actual copies of the R-J were harmed in the writing of this post.

*****

There I was, thinking that I was living in a (mostly) booming metropolis — albeit going through one of its periodic "down" cycles. It's a city that's grown too fast for the infrastructure to keep pace; ditto "quality of life" necessities like parks, libraries and schools, of which we never seem able to build quite enough.

But these are symptoms of growth, as we draw not only a vast number of international visitors but myriad new residents as well (some of them here illegally, it's true). I don't see as many casino-employee name tags anymore of the sort that informed you your check-in clerk was Corazon from Manila, for instance, and that's a pity. They were a tacit tribute to the "Las Vegas dream" that's lured so many here from faraway climes, yours truly included.

So I look out my office window at the third (and counting) tower of the Palms, then turn to the electronic version of the Dogpatch Daily and read that, no, we are not a burgeoning city with a massive resort industry but "a remote desert town built to indulge Americans' fantasies." (I guess overseas fantasists need not apply.) And this from the paper's tourism correspondent! "Remote desert town"? "Indulge … fantasies"? Did they send him to report on Pahrump by mistake?

And then, as if the Average Joe hadn't figured this out already, we get the thunderingly obvious observation, "Every extra dollar would-be tourists cough up at their hometown gas stations and grocery stores is a buck that won't be shoved into a slot machine, slipped to a hotel desk clerk in hopes of a room upgrade or tucked into a dancer's G-string this weekend."

Really? Ya think? Just maybe? Did you omit any clichés there, perhaps? Oh, and if anybody believes an "extra dollar" will be sufficient to get themselves a room upgrade, then their Vegas really isn't showing.

Add Sen. John Ensign (R-Shadow Creek) to the list of Las Vegans who seemingly hate Las Vegas. According to the Las Vegas Sun (which, unlike the Dogpatch Daily, has the mentality of a big-city newspaper), the exquisitely coiffed young senator "isn’t convinced Nevada needs [Congressional] money to handle the hepatitis C crisis." Translation: If you're among the estimated 15,000 people who can't afford a $200 hepatitis test, drop dead.

Other items the Sun says Ensign found "offensive" were 13-week extensions of unemployment benefits and home-heating subsidies for poor people (during a recession, fer crissakes!). “I have always been very consistent about caring about our children and our grandchildren," crocodile-wept the well-heeled Circus Circus heir. Yeah, it's just their parents and grandparents — some of whom probably used to work for your dad — about whom you can't give a rat's ass.

Ensign's also against the Webb version of the GI Bill (as opposed to the competing McCain one) because its financial assistance to former servicemen and -women "would actually weaken our military because it encourages people to get out."

Ah, so that's how we keep our military strong: Not by incentivizing people to serve but by essentially throwing them from the train when they choose to leave. Brilliant! "Re-enlist or face poverty." Heckuva job, Brownie, er, John.

Although I'm not a Republican, the elephant party would have surely done better in '06 and would be more fearsome this year if they had more plain-spoken, principled representatives and candidates like New Jersey's Murray Sabrin. He and I would never agree on environmental issues or the Brady Bill, for instance, but I sure like the cut of his jib, as the saying goes. (His Iraq policy, which boils down to "We won; let's leave," would find a lot of takers, too.)

Check out the audio excerpts, in which Sabrin gets right to the point while opponent Dick Zimmer hems, haws and obfuscates like the Washington hack he is. Sabrin probably won't make it past the primary, which is too bad because he has the makings of a terrific candidate, and would have considerable appeal to Libertarians and proverbial "swing voters." But if you liked George W. Bush you'll love Dick Zimmer.

Posted in Atlantic City, Downtown, Election, Politics, The Strip | Comments Off on R-J to Vegas: "We're Podunk"

Cliché of the Year

Posted on May 20, 2008 by David McKee

"It's hard to pinpoint which one it is, but it's like the perfect storm — they all hit you at the same time." — Harrah's Entertainment Eastern Division President J. Carlos Tolosa.

Nothing against Mr. Tolosa but this is becoming the most overused phrase in business. Rub two or more vaguely coincidental economic factors together and, all of a sudden — it's "the perfect storm"! Eeek! Run for the cellar!

Seems we're hearing this wheeze a lot lately … to excuse the collapse of Columbia Sussex, for starters. In Tolosa's case, he's conflating Pennsylvania slot parlors, the recession and a largely ignored smoking ban. There won't be a true smoking ban until mid-October, the impact of the slot parlors should have been seen coming a long way off, and the recession … well, that sort of did take us by surprise. I'll give him that one.

But really, let's shelve "perfect storm" cliché until we have economic conditions that truly befit such cataclysmic terminology.

By the way … Harrah's recently reported diminished profitability in its Atlantic sector, citing the impact of Harrah's Chester: "The new casino and the partial opening of a new hotel tower at Harrah's in Atlantic City led to profit gains in the company's northeast region, though profit was lower than it might have been as revenue shifted from Atlantic City properties to Pennsylvania, where gaming is taxed at a higher rate, Harrah's Chief Executive Gary Loveman said Friday."

Ummmmm, you guys at Harrah's are supposed to be the math geniuses of the industry, right? The fellows who built an empire through number crunching par excellence? So didn't you run any, like, economic models on how going into eastern Pennsylvania might sap your Atlantic City market, where you're heavily exposed? Or that there were more cents to the dollar to be extracted from New Jersey, where the tax rate is but a modest fraction of Pennsylvania's? It just seems like you should have seen this Peter-robs-Paul scenario a good ways up the road, so to speak.

Hindsight being 20-20, Harrah's would surely have been better off putting all its marbles on Pittsburgh. Instead, it lurked behind a local stalking-horse group and put its primary effort into (literally) shoring up a racing oval in Chester.

Oh well, if Don Barden's finances continue to quiver like Jell-O, the Harrah's-Backed Group That Isn't Harrah's may get a do-over in Pittsburgh, where it looks more and more like the city fathers backed the wrong horse (and chose an awful site into the bargain).

Posted in Atlantic City, Columbia Sussex, Harrah's, Pennsylvania | Comments Off on Cliché of the Year

Quote of the Day

Posted on May 14, 2008 by David McKee

“The Strip has done phenomenally well, but I think there’s a segment of the population that’s kind of getting ignored, the value-conscious customer who really can’t afford the kind of pricing the Strip offers these days.” — Binion’s and Four Queens owner Terry Caudill.

Posted in Downtown | Comments Off on Quote of the Day

The Alystra is toast

Posted on May 14, 2008 by David McKee

OK, so it was a derelict that's been closed for 10 years and unlikely ever to reopen. But the Alystra is now officially "a total loss." Too bad. It was an attractive building that happened to sit in a sort of mini-Bermuda Triangle where no casino could flourish. It also was operated in a manner that brought it afoul of the Nevada Gaming Control Board. There were some flutters of interest 16 months ago, then silence. Since the Alystra had become a homeless hangout, it'll probably be no great mystery how it caught fire.

A bad month for Adelson. First, there was a shaky performance on the witness stand in the Richard Suen/Las Vegas Sands lawsuit. Then a first-quarter loss. Now he's been questioned in a bribery investigation of Israeli Prime Minister Ehud Olmert's government. Sheldon will probably have to do a little 'splainin' to the Control Board when he gets back from Jerusalem.

Luxor 2.0: A review of the ongoing makeover has been posted at VegasTripping.com. The verdict: "Pharoah's Tomb Meets Airport Bar." Hard to believe that Luxor is already 18 years old — unlike Excalibur, which only looks like it's been around for 30 years or so.

Nathan Burton at the Flamingo. I went. I saw. (And the stunt pictured here does not figure in the act, so caveat emptor.) The magic tricks were sloppily executed — you had to wonder what the coterie of rival magicians in attendance thought of them — and almost made one nostalgic for Hans Klok. For this Harrah's Entertainment ditched Society of Seven?

No warp speed here: A story that broke on the Web last week (and was picked up by LVA's "What's News" page six days ago) finally crept into the pages of the Dogpatch Daily. (UNLV's David Schwartz has a good critique of the situation, though.) The same writer who branded Strip casinos as "monuments to gullibility" now turns his scorn upon patrons of the Las Vegas Hilton's Star Trek attraction — while managing to meet the R-J's two-factual-mistakes-per-story quota and confusing "premiere" with "premier."

But he's not alone. A local publisher mistakes "ringer" for "wringer" in …

An utterly ridiculous column that suggested the Democratic presidential ticket be suggested by a coin-toss. Seriously. It's difficult to decide if this is a bigger insult to Las Vegas Sun readership or to the democratic process itself, this flippant (pun intended) notion of hinging the fate of our country — and perhaps, by extension, the world — on a game of chance. As one Sun reader notes, "I admire your ability to get paid for this."

Since one normally needs to pack a lunch and some No-Doz to finish a Brian Greenspun column (and I couldn't even get through this one w/o skimming), I'll boil down the "logic": "Hillary Clinton has worked harder than any person I know of to become America’s president [and] running for president, and the presidency itself, has to be the hardest job on the planet."

So? Meaning if Greenspun's next-door neighbor worked harder than Hillary Clinton to be on the donkey-party ticket, then he/she would deserve it even more? As Clint Eastwood's William Munny observes in Unforgiven, "Deserve's got nothin' to do with it."

Greenspun cites exit polls as holy writ, whereupon his moving finger moves on to write, "We all know that the polling this year has been wrong at best" (Who's this "we all"? I know no such thing. Do you?) "People, for good or bad reasons, don’t tell the truth to pollsters when it comes to race or gender." Well, if true, that puts paid to those exit polls in which Greenspun places so much stock.

After calling upon the respective campaigns not to "short-circuit the democratic process," out comes the loony coin-toss idea. Why? "We accept the coin toss in every other facet of our lives," quoth the suddenly Solomonic Greenspun. Oh, do we? Maybe that's how they make important decisions at Greenspun Media but I don't think, for instance, that the board of Harrah's Entertainment decided not to accept Penn National's buyout offer because the nickel came up "heads."

Hey, let's have representatives of the Kurds, Shiites and Sunnis over to the Bellagio poker room to decide the fate of Iraq in a game of Texas Hold 'Em, with Halliburton taking a "rake" of the pot. Works for me.

The clue to Greenspun's thoroughly trite and un-democratic "solution" can be found in a passing comment that enfranchisement "for far too long has been a burden to Americans rather than a blessing." I'll leave you to ponder the disturbing — and elitist — implications of that telltale remark.

Posted in Architecture, Boulder Strip, Election, Harrah's, Penn National, Regulation, Sheldon Adelson | 1 Comment

Quote of the Day

Posted on May 9, 2008 by David McKee

“Tropicana [Entertainment] did not view workers as a valuable commodity and I think they regret it now.” — Culinary Union supremo D. Taylor, on the collapse of Columbia Sussex‘s heavily leveraged casino portfolio.

Posted in Columbia Sussex, Culinary Union | Comments Off on Quote of the Day

Not smoking stunts your (revenue) growth

Posted on May 7, 2008 by David McKee

Let's get one thing clear: Smoking is a noxious habit that's likely to kill you and certain to alienate other people, in my opinion. (I had two grandparents who smoked until the air turned blue, then smoked some more, which may explain my antipathy to the, uh, pastime.)

But … not smoking appears to be bad for the health of casinos, at least in Illinois. April's numbers are out and they're down over 19% — far more than can be plausibly blamed on the recession. For instance:

The biggest loser: It's Penn National's Alton Belle, off by 27%, with an $8 million gross. The rest of the results, as reported by Bear Stearns are as follows (with gross gaming $, when available) …

Harrah's Joliet: -18% ($26.4 million)

Grand Victoria [MGM Mirage]: -18%

Hollywood Casino [Penn National]: -20%

Empress Joliet [" "]: -26% 

Casino Queen: -5.3%

Harrah's Metropolis: -25.5% ($9.8 million)

Pair-A-Dice [Boyd Gaming]: -16% ($9.7 million)

Illinois' smoking ban went into effect Jan.1 and things clearly haven't been the same since.

This Just In … Sheldon Adelson is stubborn. Who knew?

Posted in Boyd Gaming, Harrah's, Illinois, MGM Mirage, Penn National, Regulation, Sheldon Adelson | Comments Off on Not smoking stunts your (revenue) growth

Columbia Sussex quickies

Posted on May 7, 2008 by David McKee

Tropicana Entertainment Co-President Scott Butera has really been working the phones — a salutary, welcome change from the truculence and stonewalling reporters came to expect from Columbia Sussex.

(Apparently Las Vegas Tropicana execs were among those left in the dark about the impending bankruptcy, even though the company was clearly ramping up for it well in advance. With a forbearance, a court date and a labor negotiation all impending between May 5-15, the timing of the Chapter 11 announcement looks less and less coincidental by the day.)

Butera tells GlobeSt,com, the company was caught in fiscal triple-pincer movement consisting of an economic downturn that curtail traveling and gambling (i.e., “an unprecedented drop in the debtors’ revenue”), a plummeting real estate market (i.e., a dwindling asset base), and “dislocated” credit markets (i.e., nowhere from which to borrow more), all of which effectively increased the company’s already high leverage.

But when he says that the higher leverage was responsible for the workforce reductions in Atlantic City (over 900 employees), that’s just B.S. — to put it very kindly. As documented by the New Jersey Casino Control Commission, a central point of CEO William J. Yung III‘s “road show” presentation to sell bonds that would finance his Aztar Corp. takeover was the elimination of $35 million or more in salaries (a plan carefully concealed from New Jersey regulators). He also didn’t waste any time bringing out the chainsaw in Las Vegas, either — long before any downturn in the leisure sector was evident.

Butera was also wrong when he said Columbia Sussex was forced to sell its Indiana riverboat. It could have fought the (probable) loss of its license. But if that course of action was contemplated, it wasn’t for long, as Yung pledged to sell Casino Aztar to pay down debt immediately after his New Jersey license was yanked.

And, if you’re a fan of irony, you’d have to enjoy Butera’s description of the NJCCC as “arbitrary and capricious” — the exact same words the NJCCC used to describe the decision-making process at Columbia Sussex. Coincidence? I think not.

According to GlobeSt.com’s Brian K. Miller, the Atlantic City Trop sale can’t close escrow until Columbia Sussex’s appeal runs its course. The latter’s case may have merit (especially if employs some of the arguments UNLV’s David Schwartz has propounded in the pages of the Las Vegas Business Press and his DieIsCast.com blog — now sporting a new design).

But if “Attila the Yung” wins, God help the poor Trop employees — and customers. Yung: The Sequel could give new meaning to “back with a vengeance.”

The bottom line of Butera’s ongoing saga of spin, spin, spin is that the blame for this debacle never, ever rests with Columbia Sussex or Bill Yung. It’s always those Family Circus poltergeists “Ida Know” and “Not Me” who are culpable.

Unimpressed with Butera’s analysis is Tom Weston, who argues that the Trop co-president’s analysis is pretty much ass-backwards. Money quote: “But the truth is that Columbia-Sussex operating policies, including massive layoffs and declining standards, caused problems throughout the casino empire long before the New Jersey license was revoked.”

Boardwalk Bargain: Is the bidding process for the Atlantic City Trop still open? Trustee Gary Stein implies as much — or that the two or three known bidders are haggling, seeing a chance to snap up a distressed asset from a bankrupt company at a fire-sale price. Stein’s remark that he’s ready to re-start talks with “interested parties” strongly suggests that he’s lost patience with Cordish Cos., the New York mystery bidders and maybe Colony Capital. Anybody want a little (OK, huge) fixer-upper on the Boardwalk?

An anonymous reader of the Las Vegas Sun (who appears to be an employee of either the Tropicana Express or River Palms, in Laughlin, alleges (see “Discussion”) that management has raised the possibility of cutting employees back to 32 hour weeks, potentially triggering the loss of health benefits.

Then again, an R-J reader once claimed to have official, inside, black-and-white corporate knowledge that Paris-Las Vegas would be split off from Bally’s and one of them would be sold. That’d be a neat trick when you consider that the two casino-hotels share a Siamese-twin sort of physical plant, which was why Hilton Gaming (remember them?) was able to build Paris-Las Vegas for considerably less than a billion dollars.

Posted in Atlantic City, Columbia Sussex, Indiana, Laughlin, The Strip | Comments Off on Columbia Sussex quickies

Earth to NYT, Earth to NYT …

Posted on May 7, 2008 by David McKee

They don't call the New York Times "the gray lady" for nothing. Today, she seems a little more hard of hearing and out of touch than usual. Four of the six "New Titans" pictured in this story haven't been in the casino industry for more than three years.

Mind you, there could be worse things than if Messrs. Breitling, Agassi & Rogers pooled their pennies and bought the San Remo/Hooters out of its interminable "for sale" limbo. Or maybe they could scare up the $1 billion necessary to persuade Columbia Sussex to part with the Las Vegas Tropicana. They seem like just the fellows to bring class back to that much-abused dowager.

Tim Poster, though, they should probably leave at home. As depicted in Breitling's Double or Nothing, Poster comes off as temperamentally ill-suited to running a casino. After all, if you raise the limits on high-end play, you've got to lie in the bed you've made, not have a meltdown and get resentful toward the player(s) who took you to the cleaners.

Posted in Columbia Sussex, The Strip | Comments Off on Earth to NYT, Earth to NYT …

From A(BBA) to Z

Posted on May 7, 2008 by David McKee

Too much blogohrrea and too little hydration have left me spent, drained, kaput-ski. (Mind you, some would say I’ve been running on empty for a long time.) And when our cranky blogging software devoured another hour’s worth of work — this one about Las Vegas Sands‘ emergency “stop-loss” mission to Macao, it was time to stick a fork in me.

So I may take it easy for a couple of days — relatively speaking. (Which is okay, because Ian Sutton has all the news that’s fit to link over at GamingFloor.com.) ‘Cause when I’m not blogging or writing squibs for “What’s News,” I’m whaling away on our big “Question of the Day” archive, categorizing and cross-categorizing. And out of all that mulching, we intend to produce a super-FAQ, a gambling/Vegas lexicon and guide that will hopefully merge some of the best features of QoD and Wikipedia.

In the meantime, let’s end with even more good news: Mamma Mia! just marked its 2,000th Las Vegas performance last Sunday night. I’ve had the great good fortune to see it three times in three years, belatedly getting in touch with my inner ABBA fan.

That’s meant seeing three Sophies, nine prospective fathers, two or three Skys (Skies?), but always the indomitable Carole Linnea Johnson and her two kick-ass sidekicks, Vicki Van Tassel and Robin Baxter. I have no idea what impact the forthcoming movie version, starring Meryl Streep, will have on the Las Vegas box office or whether MGM Mirage will give Mamma Mia! another reprieve. (It’s already had one stay of execution.) But long may these Dancing Queens reign.

Posted in ABBA, MGM Mirage, Movies, Sheldon Adelson, The Strip | Comments Off on From A(BBA) to Z

Animal Cruelty

Posted on May 6, 2008 by David McKee

1) Following Saturday's tragedy at the Kentucky Derby, maybe it's time to put "the sport of kings" out to pasture. After all, market forces have already appeared to have "selected out" horse racing for extinction. Just think of all the states where horse racing is subsidized by slot machines and VLTs (and contemplate the irony of the snobbiest of sports being underwritten by the most snob-averse form of commercial gambling). And if some states (think Maryland, Kentucky) don't have slots propping up the horsey set, it's not for lack of trying.

At the very least, horse breeders, trainers, tracks and racing associations should adopt en bloc the recommendations of ESPN horse racing analyst Randy Moss (no, not that Randy Moss). They include: A) ban the whip; B) change the track surfaces, as has been done overseas; and C) stop medicating horses on race day to enable them to run. The last is just plain common sense, but it seems it takes the sad fate of a Barbaro or an Eight Belles to get it through our communal noggin.

2) If pictures like these make you sick …

… then this blog has, at long last, done some good. These poor, tortured animals are part of some sick, twisted person's "art installation." It's really interactive "snuff" porn. If you want to put a stop to this, sign here.

Now if only we could wrap our minds around the unimaginable enormity of 22,000 lives (at minimum) lost in the Burmese catastrophe …

(I see that Laura Bush is getting a raw deal for making a few common sense remarks about the crisis. The moral? Whatever you do in politics, for Pete's sake, never speak your mind.)

Posted in Animals, Politics | Comments Off on Animal Cruelty

Tahoe: Scratch one casino

Posted on May 6, 2008 by David McKee

Part of the ongoing fallout from the Tropicana Entertainment bankruptcy is an even more dire forecast for the Lake Tahoe market. How bad is it? Well, even though Columbia Sussex has an option to renew its lease on the Horizon, the property’s owner, Park Cattle Co., says it intends to take possession of the property when the lease is up (in three years) and “expects to convert the Horizon into something other than a casino when the property changes hands.”

I guess you know things are bad when casino gambling ceases to be the highest and best use of a Nevada resort hotel. And you have to love the quote from the hospitality consultant who says Tropicana’s Chapter 11 filing won’t hurt the Horizon and sister property MontBleu so long as they don’t “have to start cutting corners.”

Man, you’re talking about Columbia Sussex! It’s what they do! (Bill Yung used to brag about it.)

Rounding up the rest of the Columbia Sussex reportage for the day, the admirably optimistic Scott Butera says his company is entering bankruptcy Continue reading →

Posted in Atlantic City, Columbia Sussex, Indiana, Lake Tahoe, The Strip | Comments Off on Tahoe: Scratch one casino

Quote of the Day; More MGM and Trop news

Posted on May 6, 2008 by David McKee

Cher: “[a] well-preserved diva-saur.” — The New York Post

(Props to Jessica Roe for spotting this gem.)

MGM Mirage 2.0? Two separate companies, one in hotels and one in gaming? Makes sense, especially with so much non-casino expansion into Dubai and China. Besides, it might afford a graceful way around the potentially awkward problem of obtaining gaming licenses for Dubai World. After all, that Pansy Ho probe was still dragging along in New Jersey, last I heard. Had MGM Mirage been bifurcated earlier, perhaps Pansy could have been nominally responsible for the Macao hotel operations while MGM Mirage was titular owner of the casino.

It’s an idea that merits further discussion. (Steve Friess got there first and has a just slightly different take.)

Keeping up with Friess. He’s been way ahead of me on the unfolding Tropicana collapse. Interesting how the Columbia Sussex company line to Friess was “pure speculation” (i.e., a non-denial denial), even though Tropicana Entertainment had already confirmed it to The Associated Press. Sounds like another case of the ColSux left hand not knowing what the right hand is doing.

Friess has the official filing, too, and he’s less than impressed with the new management team, seeing as their last gig was The Cosmopolitan, not a project renowned for its robust financial health.

Note that MGM Mirage’s Alan Feldman tells Friess that acquiring The Trop is something “we have not considered,” as though to say it’s beneath MGM’s notice. To say it’s unlikely is one thing; to it’s not even been thought about, quite another. (It would give MGM complete control of the “new” Four Corners at Tropicana Avenue and The Strip, though.)

Back during the Aztar bidding war, Feldman had been openly disappointed that Dan Lee and Pinnacle Entertainment didn’t emerge victorious (see penultimate paragraph). Perhaps MGM would like to see a classy property on that corner — just so long as somebody else goes to the trouble of buying and building it. After all, it’s not like they don’t have an iron or two in the fire already.

Posted in Columbia Sussex, Current, MGM Mirage, The Strip | Comments Off on Quote of the Day; More MGM and Trop news

Still more updates!

Posted on May 6, 2008 by David McKee

Another day, another default. Tucked snugly at the bottom of Tropicana Entertainment‘s notice of default is another news nugget. Seems that the City of Evansville has informed the Columbia Sussex subsidiary that it’s defaulted on certain terms of its lease with Evansville (including minority-hiring obligations). That sale of Casino Aztar to the Caranos undoubtedly can’t close fast enough, bringing an end to 16 months (and counting) of recriminations along the Ohio River.

Spoke too soon? Did I say that the year-old Tropicana Casinos & Resort (TCR) Web site was finally finished? Wrong again. At least it’s easier on the eyes than the brutal-looking Columbia Sussex Web site, a relic of the Pleistocene Era of Web design.

About that Chapter 11 filing. During yesterday’s taping of the next “Vegas Gang” podcast, we were under the impression that the Tropicana default took the company by surprise. But lookee here. Could ColSux have been planning this move long in advance? Naaaaaaaaaaaaaaah!

If you’re a vendor and made delivery before Cinco de Mayo, take a number and go to the back of the line. (See FAQs #1 & 2; most of the others are just boilerplate happy talk.)

The Trop Has Two Daddies. If a company has two presidents, which one is really calling the shots? Just wondering.

“Why,” you might ask, “are certain casinos excluded from the Chapter 11 filing?” Good question. The Atlantic City Tropicana is under trusteeship of the State of New Jersey (and I’ll bet the New Jersey Casino Control Commission is real happy it didn’t return the property to Columbia Sussex, as requested by CEO William J. Yung III and trustee Gary Stein a few weeks ago).

The Westin Casuarina in Las Vegas and the Amelia Belle riverboat (above) are owned by Tropicana Entertainment CEO Yung’s TCR. Tropicana Entertainment is a discrete subsidiary of TCR, separated by a pair of holding companies. (And, just to make matters even more opaque, the Amelia Belle is scheduled to be swapped out with the Belle of Baton Rouge, which is part of the Chapter 11 proceeding; I wonder how their respective parishes will sort that one out?)

As for Greenville, Miss.’s Lighthouse Point Casino, it’s severally owned. One percent is held by Yung personally, 79% by Tropicana Entertainment and one of its subsidiaries, and 20% by unrelated third party Rainbow Entertainment.

I apologize for not being able to share the Columbia Sussex corporate chart with you. Our PDF-making capacity is offline for the day, but I hope to have it for you soon.

Posted in Atlantic City, Columbia Sussex, Indiana, Louisiana, The Strip | Comments Off on Still more updates!

More updates (or, Trouble with Trolls)

Posted on May 6, 2008 by David McKee

First, a correction: The Tropicana Casinos & Resorts Web site is here, finally up and running after languishing in a half-finished state for an entire year. I don’t know why Columbia Sussex has left the Tropicana Entertainment domain name sitting out there vacant (probably something to do with saving money) but that’s why you (or rather, I) shouldn’t Google “Tropicana Entertainment.”

The troll who says that the “Casinos” link “has been off the Columbia Sussex Web site for months,” however, is sadly misinformed. (I know, because I accessed it at least as recently as April 11.) Unless 24 days constitutes “months.” I was never good at New Math.

Then some good news: Tropicana Entertainment management is promising no (additional) layoffs at the Vegas property, in the wake of the bankruptcy filing, according to a KVBC-TV report this morning. That’s another pleasant change from what we’ve gotten used to since the property changed hands.

On the other hand, staffing has been cut so deeply in certain areas that it’s difficult to imagine where they could find room for further reductions. One maid to every hotel floor, maybe?

Aforesaid troll wrote in today mostly to spew ad hominen insults, and ethical and personal slurs, but also to float a few contentions, vis-a-vis the Tropicana bankruptcy. He’s thoroughly unpleasant but may have something of value to contribute to the discussion, especially as he seems to be privy to information that hasn’t appeared in news coverage of Tropicana. To wit …

A) “Any conversation with analysts would tell you that [Tropicana Entertainment President Scott] Butera was brought in for this very reason [bankruptcy]. His hiring was, it is widely believed, forced upon [Columbia Sussex CEO William] Yung by the debtors. This is what he does. He is in it for the long haul, as he was with Trump on his financial problems.”

(In support of this argument, one could cite the displacement of Yung sidekick Theodore Mitchel with Robert Kocienski, Tropicana Entertainment’s new CFO. Whatever the reason, the shift brings a long-overdue infusion of demonstrable casino expertise to Trop HQ.)

B) “Tropicana Entertainment intentionally missed the [Credit Suisse] payment which defaulted the Tropicana here because preparation for the bankruptcy filing was being prepared. CS, as well as all the creditors, have been in continuous contact with Butera.”

(I can’t wait to find out how Wilmington Trust Corp. feels about that, having been persuaded to give Butera the proverbial ‘just a little more time’ to work things out. Forbearance ends May 15; Chapter 11 filed May 5. Score: Butera – 1, Wilmington Trust – 0.)

(UPDATE: The forebearance agreement was amended late last week.)

C) “The true value in the Aztar [Corp.] deal was, and still is, the 34 acres on the Strip.”

A matter of opinion, Mr. Troll (who labels any view to the contrary as “idiotic”). Analyst estimates placed as much as $985 million to $1 billion-plus worth of the Aztar deal on the Las Vegas Tropicana.

However, as anybody who’d ever read any Aztar financials would know, the Atlantic City Tropicana was basically carrying Aztar, bringing in over half the company’s cash flow and revenue (see p. 22): 64% and 58%, respectively, in 3Q06. The LV Trop accounted for 13.5% of EBIDTA and 17% of revenue in that same time frame.

D) “The same would have happened if they lost control of Vegas … “

Flat wrong. The financial damage caused by subtracting the LV Trop’s cash flow wouldn’t be chicken feed, but it wouldn’t have been the dagger blow to the heart that was the loss of the A.C. Trop (see above). The Vegas site might have a lot of potential value that hasn’t been unlocked — or is being underutilized — but the Atlantic City property was putting by far the most cash on the table … a not inconsiderable value when there are interest payments to be met.

Then again, Columbia Sussex might unlock a treasure chest of wealth when Tropicana Entertainment crawls out from beneath the rubble and erects a vast pleasure palace on the Strip. And the cow might jump over the moon, too. But I’m not staying up nights.

Still, perhaps Mr. Troll has a point or two, if his social skills are somewhat lacking. You be the judge.

Posted in Atlantic City, Columbia Sussex, The Strip, Wall Street | Comments Off on More updates (or, Trouble with Trolls)

Update!

Posted on May 5, 2008 by David McKee

The previous blog entry has been updated to reflect new disclosures regarding the Tropicana Entertainment bankruptcy. (Yes, it's official.) Also, the "Casinos" link has been removed from the Columbia Sussex Web site. The disowning begins …

(And is Tropicana Entertainment so hard up for cash it's selling its domain name?)

Posted in Columbia Sussex | Comments Off on Update!

Coming soon: Venetian Baghdad?

Posted on May 5, 2008 by David McKee

It’s not quite so crazy at it sounds. Well, OK, it does sound off-your-rocker crazy, at least while mortar shells continue to drop on the Green Zone: A $5 billion commercial development in the heart of the world’s most, um, volatile tourist destination. Marriott International is already in and a cool billion of Saudi capital has been pledged. According to the Pentagon, the plan has stoked the interest of “some deep pockets in the world of international hotels and development.”

Hmmmm … deep pockets … international development. Sounds like a job for — Sheldon Adelson! He’s certainly ploughed a lot of dough (mostly via Freedom’s Watch) in keeping us militarily invested there. He’s also been trying to cry “Havoc!” and let slip the dogs of war against Iran — which gives him something in common with Sen. Hillary “Total Annihilation” Clinton. (And to think that such mushroom-cloud rhetoric undid the presidential candidacy of the late Sen. Barry Goldwater [R-Ariz.], 42 years ago. Times sure have changed.)

Of course, there’s a little problem with the Iraqi government, which isn’t entirely down with this scheme, especially because it brings back memories of Hussein-era cronyism. The fact that ultimate veto power over who can and can’t buy in resides with the U.S. military isn’t likely to play well, either. (Our government tends to take a selective attitude toward Iraqi sovereignty, even after five years.)

Maybe Las Vegas Sands could bid on one of pathetic old Saddam Hussein‘s palaces and call it … Palazzo. And after that, maybe Venetian Tehran?

Hey, if forced to choose between a weekend in Tijuana and one in Baghdad, I’ll take Baghdad anytime.

Tropped up. The Wall Street Journal is reporting that Columbia Sussex missed a Credit Suisse interest payment last Friday, which could push Tropicana Entertainment into Chapter 11. According to the WSJ, if true, this “would be the largest corporate filing of the year, a startling reversal of fortune for the new owner of one of the most historic casinos in Las Vegas.”

According to the Las Vegas Sun‘s Jeff Simpson, who is feeling understandably vindicated, a bankruptcy filing for Tropicana Entertainment would shield Columbia Sussex’s hotel properties (and three of its casinos) from creditors. It could also mean the imposition of onerous employment contracts upon the Las Vegas Trop’s workforce.

Bad career move. Was this what Scott Butera and Robert Kocienski had in mind when they signed on with Tropicana Entertainment? Or should they have taken the presence of a Titanic exhibit at the LV Trop as an omen? Their jobs now will definitely consist of rearranging the deck chairs on the You Know What.

Update: It’s confirmed. Butera obliquely affirms what many believe: That Columbia Sussex CEO William J. Yung III overpaid for Aztar Corp., just before the bottom fell out of the market.

Wall Street analysts put too much stock (pardon the pun) in the value of the LV Trop’s Strip acreage, ignoring the fact that it was the Atlantic City Trop whose cash flow kept the lights on. I thought so at the time of the sale and ensuing events have borne that out.

With so many eggs in its Atlantic City basket, Yung could ill afford to screw up there, which he did on a colossal scale. Judging from some of the circle-the-wagons verbiage in the wire story, Butera’s high profile — and the structuring of the Chapter 11 filing — look partly like a diversionary tactic to shield Yung from blame, even though he is the sole director, president, CEO, secretary, treasurer and lone shareholder of Tropicana Casino Resorts when it hit the fan and only recently ceded the presidency of Tropicana Entertainment to Butera.

Depending on how things play out, Butera is perfectly positioned to be either the savior or the fall guy.

Best line: Butera says, “We will continue to offer our visitors and players a full range of lodging, entertainment and gaming services.” Well, that’d be a pleasant break with tradition.

Posted in Atlantic City, Columbia Sussex, International, Politics, Sheldon Adelson | Comments Off on Coming soon: Venetian Baghdad?

Wynn tells Wall Street where to go

Posted on May 2, 2008 by David McKee

Not so long ago, Steve Wynn stated an obvious truth: The our deepening recession would impact Las Vegas sooner or later. Wall Street promptly punished him by selling down Wynn Resorts stock.

Fast-forward a few months and now it’s the conventional wisdom of the moment that “Las Vegas is not recession-proof.” Turn the crank on any stock analyst and that newly minted cliché will come tumbling out. We’re not privy to the considerations that recently led MGM Mirage and Station Casinos to pink-slip a collective 500-plus employees last month. However, in the case of MGM, even a company that turned a $1.7 billion profit last year has to placate the whims of Wall Street, which lives from quarter to quarter, long-term considerations be damned.

Hence the gargantuan post-9/11 layoff that earned J. Terrence Lanni the nickname “Osama bin Lanni” from his then-employees. MGM Mirage ended up having a profitable 2001 fourth quarter and year (and some of its executives were rewarded with six-figure bonuses, too). It was a panic-driven overreaction and highlighted how the mantra of “maximizing shareholder value” had turned into a millstone around some companies’ necks.

Had MGM turned but one penny per share of profit (far less than it actually did) in 4Q01, would it have been the end of the world? If you’re a stock analyst, yes. They’ve no stomach for short-term adversity or austerity. It’s gotta be blue skies and sunshine eight days a week, 25 hours a day.

That’s why it was satisfying to “open” today’s paper and read Steve Wynn‘s thoughts on the subject. A $0.41/share profit is hardly the kind of scenario in which Wynn should be feeling pressured to lay people off. Yeah, it was 15 cents higher a year ago. And fuel was a lot cheaper then. As was food. And there weren’t Spamalot costs to write off. And the Bush economy wasn’t in the crapper. And so on.

(Though, as Wynn told the Milken Institute Global Conference, our dollar seems like a peso to Europeans, so Vegas is a becoming an even bigger draw for them.)

A big part of what makes Steve Wynn who he is, as an evolutionary force in the casino-resort industry, is that he usually builds and plans for the long-haul, for better or (if you work on Wall Street) worse. The value of having fine art on property or building a conservatory, etc., doesn’t translate directly to the bottom line, but it’s what made the Wynn brand so highly respected and fungible. You won’t see a Palazzo-style slap-happy opening from Wynn because of the value he places on his reputation.

He’s also been around long enough to have experienced a few adverse swings in business. By contrast, Wall Street’s relationship with gaming is manic-depressive. Excessive euphoria alternates with premonitions of imminent doom. It doesn’t really care if you beat up on the product so long as those ‘eps’ numbers keep going up and up.

Take this to an extreme and you get the Columbia Sussex chop-shop mentality, which juices near-term profits but results in properties whose long-term performance brings up the rear in their respective markets. And for the consumer it means being offered places like the Las Vegas Tropicana, where the prices are higher, the promotions are fewer and the product is filthy.

Margin-obsessed William J. Yung III would never be caught dead saying, “We consider the morale and feeling of security our employees have is the most important asset the company owns.” That’s why he’s an industry laughingstock and Wynn is an industry leader. (Mind you, Wynn’s tip-confiscation regime hasn’t done anything for “the morale and feeling of security” among his dealers and he seems wrongheadedly determined to make that his “line in the sand” issue.)

Sure enough, Wynn’s much-needed pushback to Wall Street produced some downward drift in Wynn Resorts stock. But we could use a few more CEOs who say things like, “My colleagues and I are paid to run hotels in good times and fair times … This is not a company that gives a damn about short-term markets.”

Good on him.

Posted in Columbia Sussex, MGM Mirage, Sheldon Adelson, Station Casinos, Steve Wynn, The Strip, Wall Street | Comments Off on Wynn tells Wall Street where to go

Same as it ever was?

Posted on May 2, 2008 by David McKee

Nothing lasts. I’m finding that out the hard way as the acid in the paper labels in my CD collection eat through the discs, gradually rendering them unplayable and sending me into a race between preservation and catastrophe. (When last I checked, catastrophe was several furlongs ahead.)

Then again, when I revisit a casino and it seems different to me — and not in the sense that they’ve removed a favorite amenity or added a new one — I have to wonder if things merely seemed better or actually were better than they are now. For instance, three of us went to the Flamingo buffet Sunday night. I’d remembered it as being good value for the money (unless you count the plasticene-looking sugar-free dessert offerings).

However, with greater experience — and, sadly, sometimes a greater waistline — comes the realization that one can achieve far greater gustatory satisfaction at the premier locals’ casinos, such as Sunset Station and Green Valley Ranch. A recent LVA survey of Strip buffets didn’t even deign to sample the Flamingo’s, based on previous disappointments, so I’d say that it probably hasn’t gotten worse — most everyone else has raised the bar.

If you’re in the Huntington Press neck of the woods, the revamped seafood buffet at The Rio is definitely worth the wait (for a lengthier appraisal, see the current issue of LVA). The one at the Palms, however, I’d count as my biggest buffet disappointment so far. I would never expect such a humdrum offering from George Maloof, especially in a casino-resort that is comfortably above average is so many respects.

The Significant Other and I both got sick after trying South Point‘s buffet, so that one’s permanently off our list. (LVA readers give it very high marks, though — much better by far than the El Cortez‘s dire 2.5 rating.) However, the most abysmal buffet of a so-called “major” casino is surely the one at the Tropicana, a really sorry sampling. However … the big, logo-stamped paper napkins are quite sturdy and double exceptionally well as handkerchiefs. So go for the napkins, stay (if you dare) for the food.

Speaking of memories, some of the old Casino Executive crowd used to motor over to Arizona Charlie’s Boulder for lunch (again, for the buffet; Terrible‘s was closer but one experiment with it was enough for us). I hadn’t darkened the door of A.C.’s Boulder in quite a while, so we headed up there last night for some high-stakes bingo — do I know how to roll or what?

It was a profitable evening for my girlfriend’s adorable Mom, who came out $495 bucks ahead. However, either A.C.’s Boulder used to be seedier than I remembered or previous owner American Casino Entertainment Properties (read: Carl Icahn) has been letting it run downhill fast. To call the amenities “spartan” would be an insult to Spartans.

And a memo to management: Your HVAC system ain’t gettin’ the job done. Cigarette smoke is jammed up one’s nostrils the moment you step through the door and the sensation never abates. I felt like I’d smoked a whole pack all at once. If you miss Nevada Palace, you’ll feel right at home here. As CheapoVegas.com used to say of the inaptly named Palace, “Not only can I cut the smoke in this joint with a knife, I can butter it too.”

So if those Pocketbook of Values coupons for Arizona Charlie’s Boulder are burning a whole in your pocket, by all means, spend ’em while you got ’em. Just leave your lungs at home.

Speaking of the Flamingo, we got to try one of the revamped “Go” rooms. The beds are plenty comfy and the bathroom is spacious (and reverberant). We also had a birds-eye view of the Bellagio fountain show. On the minus side, the decor is what you’d find in an early-Seventies Playboy décor feature, if that’s your thing, and the selection of in-room TV channels might be described as “rudimentary.” Then again, these places don’t stay in business by having you lounge around in bed watching Sunday Night Baseball.

Gold Coast update. I just got off the phone with Boyd Gaming, which says that the shoeshine stand at the Gold Coast was underutilized, so they’re brainstorming new uses for that space. So I guess you’d better pack a shoeshine kit if you’re going to be staying in the Palms-Gold Coast-Rio corridor.

Posted in Boyd Gaming, Columbia Sussex, Harrah's, Herbst Gaming, Station Casinos, The Strip | Comments Off on Same as it ever was?