David McKee

A call to action

Posted on May 1, 2008 by David McKee

Remember that editorial about construction safety (or the obvious lack thereof) that I said the Las Vegas Sun ought to be writing — as opposed to printing a jeremiad about the Miley Cyrus photo flap? Well, it’s been written … but not in or by the Sun, but rather by a man who knows the commercial building inside out, Tony Illia. He says what needs to be said. As he puts it, “the price of life is being determined daily on Las Vegas Strip.”

Remember when the State Dept. was looking askance at Macao for acting as a laundromat for dirty money, particularly from crazy Kim Jong-Il? Now it’s the turn of the Philippines, whose 15 government-owned casinos have been designated a money-launderer’s paradise. Pagcor has never had a sparkling reputation and the vast Philippine archipelago is rife with terrorists, rebels and kidnappers. So this unholy nexus of government, suspect cash and myriad evildoers does much to explain why U.S. casino operators give the Philippines a wide berth as they attempt to penetrate virtually every other major market in the Pacific Rim.

The wait is over. In the unlikely event you were anticipating my appraisal of Tom Breitling‘s Double or Nothing, it’s to be found in the new issue of City Life. Let’s put it this way: Jack Sheehan was Breitling’s initial co-author but Cal Fussman finished the job and gets the credit. Sheehan was the luckier of the two.

Posted in Downtown, International, The Strip | Comments Off

Stumped by a reader

Posted on April 29, 2008 by David McKee

For those of you who don't click on the "Comments" link, my last update on the casino freeze in Macao prompted a response that left me, momentarily, at a loss for an answer (other than "I'd hate to pass up an opportunity to make fun of Stanley Ho, that's why.")

The question was: Why should we care about the international misadventures of companies who flee American affordability while chasing the Chinese dollar?

Somebody else want to take a crack at that? Anyone?

In bobblehead veritas. In case 15 seasons (and counting) of sub-.500 baseball haven't gotten the message across, Pittsburgh Pirates ownership makes sure Pirates fans get the message. Mutual, I'm sure.

Posted in Baseball, Macau | Comments Off

Safety scandals still fester

Posted on April 25, 2008 by David McKee

No harm, no foul. That's more or less the company line coming out of One Harrah's Court, after Clark County reluctantly released a document detailing 34 fly-by-night remodeling jobs during the 2000-07 period. But following procedures codified in law apparently doesn't matter when the jobs are "minor in nature" (per Harrah's official excuse). Besides, doing this work on the sly saved Harrah's 34 permit fees. Thrift, Horatio!

Whether we're talking about MGM Mirage corner-cutting on security at Luxor or Harrah's Entertainment not pulling permits and shutting down its Seven Stars Lounge, one does well to remember that these are still comfortably profitable companies ($1.7 billion last year, in MGM's case). So it's not a question of keeping the wolf from the door.

"Juice" in action. Meanwhile, Boyd Gaming is in the hot seat concerning an incident at The Orleans that resulted in two grisly deaths. (The company says it doesn't want to "relive the tragedy"; neither do the victims' families, I'm sure, but they have to do so on a daily basis.)

While the issue was initially OSHA's $185,000 fine for safety violations, it soon transpired that three members of Gov. Jim Gibbons' administration, including one of his chief advisers, had "big-footed" the matter. Their unprecedented intercession on behalf of Boyd was considered so egregious that Boyd's own safety manager quit in outrage, as did an OSHA investigator. (Gibbons is a longtime beneficiary of Boyd's largesse.) It also resulted in a watered-down settlement. Boyd says top state officials got into the act because "They wanted to address their relationship with the casino industry." Huh?

It's a complicated story, involving evidence of unresponsiveness to safety issues by Boyd and a drawn-out, fits-and-starts investigation by OSHA. The latter acceded to a settlement which ties its hands, forbidding it from conducting regular inspections of Boyd properties for two years. Also, OSHA will provide Boyd employees with safety training — on the taxpayers' dime.

Now the Nevada Attorney General's office is looking into whether Business & Industry Dept. boss Mendy Elliott — or other state officials — had a thumb on the scales of justice. The attorney for the Industrial Relations Division says Elliott and another high-ranking state official were involved at Boyds' request; Boyd hotly denies the allegation. It also disputes that $45,000 donated to Gibbons' gubernatorial campaign (plus $40,000 across his five congressional races) constitutes a "major" contribution. In today's politics, maybe not, but it's scarcely chump change.

Perhaps Boyd also has a reasonable explanation for why it didn't assuage the concerns of its safety manager, especially after receiving comparable OSHA citations at two other casinos. As for OSHA, it finds itself in a bind whereby it its initial fine is more like an opening bid. If the company accepts it, all well and good. If not, OSHA is faced with a protracted appeal process in which its citation may be reversed — and during which the cited problem goes unremediated. So it often bargains for a reduced fine and immediate action. In the case of the Orleans incident, though, it looks like OSHA had some non-kosher "encouragement" to play Let's Make a Deal.

Posted in Boyd Gaming, Harrah's, MGM Mirage, Politics, The Strip | Comments Off

Did he or didn't he?

Posted on April 22, 2008 by David McKee

While I'm somewhat skeptical of the claims of Richard Suen, vis-a-vis his relationship with Las Vegas Sands, if he wins his lawsuit in Clark County District Court, he'll probably have Sands executives to thank for it. They've been tripping over their shoelaces in court testimony. William Weidner's latest gambit has been to say that Suen didn't earn his dough. Which would seem to implicitly concede that he had a valid agreement with Sands.

Suen's case probably isn't being helped by an attorney who confuses cash flow with profit. And Weidner outfoxes him on whether Sands is making a profit in Macao. Sands' performance on the stand has been maladroit and this case still looks like it could go either way, thanks mainly to a few own-goals scored by the home team.

More readers' gripes: A Californian follows up on another reader's suggestion for an inventory of gripes about niggling casino thrift moves, inspired by Harrah's Entertainment's suspension of Las Vegas Review-Journal sales. The newly submitted grievances are …

"1. the Hard Rock stopped serving Guinness at the tables.

2. when Barbary Coast changed over to [Bill's Gamblin' Hall & Saloon], they took out their double-deck blackjack tables and replaced them with 6:5 single deck. therefore, I no longer play there, and I play at limits that they would actually care about.

3. Venetian moving their valet stand into the garage. and it's always full now. less likely to go there. good thing they have Palazzo now for easier (emptier) parking.

4. I'm comped at Red Rock Resort] so it doesn't really matter to me, but if I had to pay their nightly $20 "resort fee" I'd stay somewhere else just on principle.

5. Red Rock won't comp decent scotch at the tables. Talking about anything better than a $30 bottle. You'd have to do a hard comp which is silly.

6. Red Rock's gift shop closes. it can't cost that much to staff the place overnight, and that's a convenience that any hotel should have. Need some advil or antacid or something at 2 AM? too bad.

7. Monte Carlo's brewpub stopped being a 'brew' pub. Was nice having something different back there, I used to go there all the time.

8. Harrahs rerouting everything so you have to walk through that stupid fake-Mardi Gras thing just to walk down the street. I can't stand it there, and make it a point to cross the street rather than walk through White Trash Land. Friends feel the same way.

9. everything that Binions has done since they stopped being the Horseshoe."

On that last point, Terry Caudill promises that help is on the way. As for refusing to serve Guinness to table game players? That's just … perverse.

Posted in Downtown, Harrah's, MGM Mirage, Sheldon Adelson, Station Casinos, The Strip | Comments Off

‘Luxoricana’?; When unions attack (each other)

Posted on April 22, 2008 by David McKee

Labor unions aren’t very popular these days but sometimes even the mere threat of one is enough to effect improvements. Such seems to be the case at Luxor, where the International Union of Security, Police & Fire Professionals of America (uff da!) seeks to expand its MGM Mirage presence beyond MGM Grand Detroit. After Luxor comes Mandalay Bay.

Prior to the union showing up at the pyramid, “officers say, hiring and overtime freezes left properties understaffed and on-duty guards vulnerable,” reports the Las Vegas Sun. “Cuts were so deep, they say, that a lone guard was sometimes posted on the Luxor casino floor.” What is this, the Tropicana?!?

If true, that’s the kind of false economy we expect from bottom-feeders like Columbia Sussex, not top-echelon operators like MGM Mirage. For the love of all that’s holy, next to fire safety, the last area where one should scrimp is security. I mean, that’s not Monopoly money out there on the casino floor.

“MGM Mirage has reinstated overtime and boosted staffing levels, and is now offering officer-training classes,” according to a union rep, as well as replacing “battered patrol vehicles.” It shouldn’t have to take a union-organizing drive to effect that kind of positive change, but in this case it’s good it did. I sincerely hope this is the last we’ll hear about security getting short-sheeted on the Strip.

When unions attack (each other). Well, I never thought I’d live to see the day when one union pickets another. But that’s what’s happening in the ongoing scrumdown between the Culinary Union and a Vegas newbie, the Transport Workers Union. The latter is representing casino dealers at Wynn Las Vegas and Caesars Palace.

At issue is an initiative petition through which the TWU seeks to outlaw the sort of tip-confiscation practices currently in place at Wynn (and creeping into other businesses in the Vegas and Laughlin markets, I’m told). But, responds the Culinary, the initiative is “half-baked,” simplistic and would void existing contracts.

The Culinary’s opening salvo in this escalating war practically oozes faux solicitude for casino dealers. But if getting what’s fair for dealers were a Culinary concern, it wouldn’t have been MIA during the Wynn dustup or the uprising at Caesars. It’s the biggest open secret in Las Vegas that detente between the casino giants and the Culinary is maintained largely by dint of the Culinary taking a hands-off attitude toward dealers.

Still bloodied from its botched endorsement of Sen. Barack Obama, the Culinary is also having to tiptoe carefully in sending the message out that money from Sheldon Adelson is bad, bad, baaaaaaaaaaaaaaaad!

Drawing to a weak hand? Elections won by dealers’ unions in Atlantic City and Las Vegas: Six. Contracts negotiated: Zero to date. Even if we subtract Caesars Palace, given the recency of the vote there, and the Atlantic City Tropicana, which is in trusteeship and in no position to negotiate with anybody, that still leaves an 0-4 record. Besides, with both markets experiencing revenue declines — and the potential for job cuts — casino management can probably afford to run out the clock.

This week in Columbia Sussex. The pep-talk tour by Tropicana Entertainment President Scott Butera played Cincinnati this week. “Clearly, the company is undergoing a full recapitalization,” he understated. The story’s reference to the LV Trop as the company’s “crown jewel” will draw an ironic laugh from anyone who has witnessed the place’s wilted condition of late.

Meanwhile, the company hasn’t backed off its plan to erect a ginormous eyesore in place of the existing Trop: “a gambling facility twice the size of the Pentagon.” Columbia Sussex CEO William J. Yung III “acknowledged the project may cost more than $1 billion.” (More than a billion? Really? Ya think? A shrew customer, this Yung.) But, having arguably overpaid for Aztar Corp. (now reduced to one casino each in Las Vegas and Laughlin), the Wal-Mart approach seems inevitable. “It has to be done to maximize the value” of the site, according to Butera. Sadly, he’s probably right.

Nor is it surprising that Yung is being blamed/scapegoated for the collapse of Gov. Steve Beshear‘s pro-casino push in the Kentucky Legislature. Yung’s galumphing attempts to cash in on Beshear’s candidacy were certain to raise a ruckus — and, boy, did they ever.

Also, buying a would-be casino facility in Covington, before any enabling legislation had been passed, any popular vote had been taken, any applications made, any jurisdictions established or any licenses awarded is the sort of thing that looks at best presumptuous and, at worst, like the fix is in. And, following the catastrophic tenure of Beshear’s predecessor, Kentuckians seem doubly shy of anything that smacks — however remotely — of cronyism.

Whitewash? There’s a difference between not speaking ill of the dead and telling a very incomplete version of the truth. Such is the case with the sentimental obituary of a casino executive whose conduct at the helm of the Las Vegas Hilton was considered sufficiently deplorable that the Nevada Gaming Control Board voted unanimously to deny him a gaming license at the old Sands, in 1989. Sheldon Adelson was able to have that recommendation overturned by the Gaming Commission — an instance of “juice” (as demonstrated here) so significant that it gets an entire chapter in the history of Nevada casino regulation (pp. 128-55).

(An interesting saga involving Max Schmelling also didn’t make it into the obit even though it’s a now-famous incident.)

Full disclosure: I was delegated to edit Henri Lewin‘s copy during the period he had his Casino Journal column. To put it kindly, it was an experience that was indescribably unique and unforgettable.

Posted in Atlantic City, Columbia Sussex, Kentucky, MGM Mirage, Regulation, Sheldon Adelson, The Strip | Comments Off

A reader's suggestion

Posted on April 21, 2008 by David McKee

… and, no, it isn’t that I perform anatomical impossibilities on myself.

Rather, one of LVA‘s faithful “Question of the Day” readers suggests we run a poll or forum topic (or maybe both) on niggling little subtractions from Vegas casino floors which might save a few bucks on the bottom line but which detract from the guest-service experience — traditionally one of the casino industry’s strongest links.

Such false economies could include the closing of the Las Vegas Club‘s sports book, the reported removal of the shoeshine stand from the Gold Coast, Harrah’s Entertainment‘s cessation of single-copy sales of the Las Vegas Review-Journal (Steve Friess reports that Harrah’s may done a lot more than that) or the Tropicana‘s … well, you could fill a whole column with what the Tropicana has discontinued (seven things occur to me off the top of my head).

Any other suggestions? My personal peeve is the closing of the IMAX theater at Luxor, a place where I dropped a fair amount of $$. Given the number of movies in rotation at any point, repeat visits were an absolute must. Now it will give way to two funerary exhibits (Titanic and Bodies) for which one visit apiece is probably sufficient.* It may be the more remunerative course for Luxor to take, but it blows all the same.

* — One visit to Bodies would actually be one too many for me, but others find it less ghoulish and more fascinating.

Komodo Dragons at Mandalay Bay! Well, one Komodo Dragon. But one is a 100% improvement on none. Besides, if you dropped off your tax forms at M’Bay on April 15, you got free Shark Reef tix, which are good through June 30 … meaning that you’ve got 11 days to see Mr. Dragon gratis, from his June 20 debut onwards.

That’s all for today. Not that there isn’t a ton of news worth reporting (the Adelson vs. Richard Suen throwdown, the ongoing OSHA controversy, more Columbia Sussex craziness, just for starters) but other responsibilities at LVA take priority at the moment. But that means expanded LasVegasAdvisor.com content will be yours sooner rather than later.

Posted in Downtown, Harrah's, MGM Mirage, The Strip | Comments Off

A good question

Posted on April 17, 2008 by David McKee

Math was always my worst subject, so it’s a good thing I’ve got sharp-eyed readers who keep me honest. One of them asks how MGM Mirage is going to save $75 million (later restated by the company as $200 million) by showing 400-plus managerial employees the heave-ho. “What,” the reader asks, “is the annual salary of the 400 managers? [$]75,000,000/40 = $187,500 […] pretty good gig for middle management!” (Can’t argue with that last point, for sure.)

To be fair, let’s re-divide by 440 (the precise number of mid-level people MGM has said it let go), which gives us $170,454.54. But I’m still foxed for an answer — unless the value of employee benefits, like health insurance (possibly including dependents) is being factored into MGM’s equation. Asks the reader, “is somebody fudging some numbers?”

Well, considering that those numbers increased by $125 million in the space of a day, I’d conjecture that despite “months of research” MGM is itself unsure as to what they are. Maybe it just threw a ballpark figure out there and then, when Wall Street reacted with a sell-off, tossed out a bigger one. But that’s 101% speculation.

Speaking of MGM Mirage, it must be feeling pretty confident that server-based gambling in Nevada is a “go” because it’s inked a memo of understanding with IGT for the latter to set up a all-server-based casino at CityCenter. (Yes, even table games)

Although, as the Las Vegas Review-Journal’s Howard Stutz once observed, server-based gaming is forever ‘a year away,’ it makes more sense to put the infrastructure in beforehand than to retrofit. Plus, with CityCenter’s opening night a year and two-thirds away, Nevada has plenty of time to sign off on the technology. It also provides a distinctive selling point for a casino that’s been overshadowed by all other aspects of CityCenter so far.

Unfortunately for IGT, the good news was upstaged by 2Q08 results that came in 35% lower than expected. The recession also cast a pall over the outlook for the rest of the year. Here’s the full report.

There’s got to be some good news, right? Indeed. Tourists visiting Macao are spending 15% more than last year. I wish they were spending it in the good old U.S. of A. But at least they’re still spending.

Oh, and CotaiNews.com has launched an offshoot, devoted to worldwide casino developments. The lead story? Myriad Botanical Resort (above) — what else? According to the blog, Myriad’s snow park is still part of the plan. Wacky! Like I said, it’s the Dixie Dubai.

Is Eisenhower still president? That’s how I felt last night after a BoSox/Yankees game that ran a mind-numbing 4.25 hours and ended with a football score (9-15) … which didn’t preclude Joe Girardi from having Mariano Rivera warm up to protect a six-run lead (had it been a mere five runs, I’m sure panic would have run rampant). The Yankees are aging better than the BoSox, who look ancient and cement-footed, but it took them a week to steal their first base, so don’t expect much excitement out of either team. Just mediocre pitching vs. worse pitching, while they take turns clubbing each other into submission.

Posted in Baseball, International, Macau, MGM Mirage, Mississippi, Taxes, Wall Street | Comments Off

MGM Mirage: What's it all about?

Posted on April 16, 2008 by David McKee

By now it’s old news that MGM Mirage took a paring knife to its personnel roster and gave 440 staffers the sack on Monday. Admittedly, saving $75 million seems like trimming a fingernail off a company whose 2007 profit was $1.58 billion (nor has the company acted as though in peril of dire penury).

Then again, MGM Mirage didn’t do a Columbia Sussex and take it out on service-level employees, choosing instead to thin the ranks of middle management. And, truth be told, I’ve run across some bureaucracy there that might be fairly described as “bloated.”

But MGM Mirage must have decided that Version 1.0 of its downsizing didn’t play so well, especially with its target audience, Wall Street. A downward skid in MGM stock accelerated before stabilizing today.

Hence, President Jim Murren rolled out Version 2.0: No, it wasn’t a reaction to the darkening economy (which at least Sen. John McCain is willing to call a recession, even if the occupant of the White House is boating on DeNile), contrary to what Alan Feldman had said previously. And the projected savings had risen overnight to $200 million.

OK, Murren’s the numbers guy, so let’s go with the larger figure. But what about this spin that the sudden exodus (abruptly announced to the affected employees mid-Monday) was the elimination of “redundancies” from MGM’s takeover of Mandalay Resort Group?

Does it really take three years and “months of analysis” (at God only knows what cost) to identify a few hundred redundant employees (a seemingly disproportionate number of whom are in the Mississippi market)? Then again, if you’re trying to make the case to your shareholders that you’re running an less-than-optimally-efficient company, “streamlining” that moves with the speed of a Galapagos tortoise constitutes mighty convincing evidence, IMO.

(Steve Wynn is right on the money, I think, both in terms of the deleterious psychological effect and the failure to use subtler methods, like attrition.)

MGM is far from alone in this situation (even if its newly restated motives may be disingenuous) and — given the alarming erosion of gaming stocks in the last six months — perhaps we should heave a sigh of relief that the cuts haven’t come sooner and in larger chunks. That’s not much comfort if you’re among the newly unemployed or contemplating the ripple effect on the local economy, but the industry is reacting with much greater circumspection than it showed in its panicky overreaction to the 9/11 crisis.

MGM Mirage will probably continue to be about as profitable as it is now. And if there’s any villain in this scenario, it’s those shareholders who whinge if their EPS is off by so much as a fraction of a penny (it does look as though MGM is going to miss its quarterly target) and devil take product quality. Fortunately, MGM is run by people for whom quality matters.

Speaking of Columbia Sussex, new Tropicana Entertainment President Scott Butera (no stranger to financially troubled companies, having served at Trump Entertainment Resorts and the Cosmopolitan), has been making the rounds and putting a friendlier face on his company’s oft-truculent public posture. He places the best spin possible on the collapse of his company’s Lake Tahoe lawsuit (in which Columbia Sussex at least eked out a three-year stay of execution, with hope of an eventual pardon).

He’s also managed to gain a 25-day reprieve from Wilmington Trust Co., contingent upon various conditions which include essentially pledging the Las Vegas Tropicana as collateral. I’m not sure that 25 days counts as “significant” given the number of things which would have to happen in order for Wilmington Trust to be assured that its $960 million was safe.

The proceeds from the sales of the Horizon Vicksburg (above, $35 million), Casino Aztar ($220 million) and Atlantic City Tropicana (unknown) have already been pledged to other debtors, and the pace at which the latter two sales close is now up to regulators in Indiana and New Jersey. Columbia Sussex’s cut of the A.C. Trop sale will have to come to $747 million to reach even the bottom of analyst Barbara Cappaert‘s $982 million-$1.34 billion aggregate price. It’d be a heck of a time for Butera to have to hang the “For Sale” sign on the LV Trop, but with Wilmington Trust breathing down his neck, he may have little choice.

Posted in Atlantic City, Columbia Sussex, Indiana, MGM Mirage, Mississippi, Steve Wynn, The Strip | Comments Off

Nine down, 153 to go

Posted on April 11, 2008 by David McKee

Our blogging software just ate a lengthy post on the smoking controversy in Atlantic City. And a follow-up effort. Which is technology's way of saying, "Fuck it; it's Friday and I'm outta here!"

In other news, Bill Clinton still can't find the truth with both hands and a flash light. (The accompanying "I almost caught one THIS big" photo is particularly apt.)

But, to end the week on a positive note, I see that the snakebitten Detroit Tigers have finally taken a game, bringing their winning percentage to a robust .111. On the other hand, the St. Louis Cardinals offloaded most of their power hitters — not to mention the sublime David Eckstein — in the offseason but are 7-3. Go figure.

And the Los Angeles Angels of Anaheim have a half-share of the lead in the AL West. So life is good.

Posted in Atlantic City, Baseball | Comments Off

Columbia Sussex evicted (sorta)

Posted on April 11, 2008 by David McKee

In what has been described as an “abrupt” end to the Columbia Sussex/Park Cattle Co. lawsuit, playing out up in Douglas County, Nev., the former has paid out $40 million of an eventual $165 million and given Park Cattle the option to terminate Columbia Sussex’s Lake Tahoe Horizon Casino lease in 2011 — 29 years ahead of schedule. This is a staggering defeat for ‘ColSux,’ which had initiated the litigation and will be hard-pressed to spin this as anything but a debacle. Park Cattle also won the right to turf its Kentucky-based adversary out of the nearby MontBleu Casino Resort & Spa (formerly Caesars Tahoe) in 2018.

Given the “contumacious” nature ascribed to stubborn CEO William J. Yung III, he must have been advised that his case was going down in flames. It’s not in his nature to fold his hand so meekly. Without revealing anything specific, I can say that for Park Cattle to allow Yung to hold onto the Horizon beyond 2011 would require his company to turn over a new leaf of continental proportions, especially after Park Cattle’s court filings accused ‘ColSux’ of basically wrecking the place — both physically and financially.

Things would be a lot worse for Yung had the case gone to the jury and he’d lost, if one Park Cattle contention is correct. The landlord claims that $1.73 billion in debt related to Columbia Sussex’s Aztar Corp. buyout was attached to Wimar Tahoe, the holding company to which Park Cattle leases the Horizon. Given that Horizon-related litigation was ongoing at the time, this allegation (if accurate) suggests remarkable imprudence on Yung’s part. Had the Douglas County jurors told him, “Get out ASAP,” Yung would have really have had some ‘splainin’ to do to his debtholders, with whom his relations are already strained.

At least cooler heads prevailed in the strange saga of the Westin Casuarina and its … um … creative way of collecting a $57,000 convention bill (i.e., soak the attendees). After the wrath of Hell broke about its heads, ‘ColSux’ realized that maybe tiptoeing into your customers’ wallets — without telling them first, which would have required spending money on stationery and postage — wasn’t such a great idea and belatedly did the right thing by remitting the fifty grand or so it had run up on unsuspecting customers’ credit cards.

Give Columbia Sussex credit (if you’ll pardon the term) for realizing that its position was indefensible — ethically, at least and perhaps legally, too. You know what would have been even smarter? Not doing it in the first place! It’s a sad day when you have to congratulate someone for showing common human decency.

Turnaround at Trop? True, the Atlantic City Tropicana is coming off a horrible March, but merchants at its Quarter retail annex see signs of improvement. One tenant reports a year-over-year improvement of 40% while another sees the Trop loosening up on the comps. Now they just need to get people to gamble there, too.

Posted in Atlantic City, Columbia Sussex, The Strip | Comments Off

Double whammy in Atlantic City

Posted on April 10, 2008 by David McKee

Casinos made a bad bet in Atlantic City. They wagered that the City Council didn’t have the resolve to ban smoking altogether (except in what promise to be hellish little cells). So they dragged their feet when it came to complying with the city’s 75/25 ratio of smoke-free/smoking-enable casino square footage.

Bad idea.

The A.C. City Council voted unanimously last night to escalate to a total ban, motivated in large part not by the merits of the issue but anger at casino intransigence. Some had taken the stance that they might as well not comply with 75/25 because they casinos would eventually be made to go 100% smoke-free … a self-fulfilling prophecy if ever I heard one. A few were complying, but not fast enough to please the city fathers.

The latter may have cut off their collective nose to spite their face, especially if smokers flee en masse to casinos in Pennsylvania and New York. This certainly isn’t the best time for Atlantic City to sustain an exodus of customers. But, faced with casinos that were essentially daring the City Council to do something about their noncompliance, local political leaders were in one of those unenviable spots where you have to choose between being disliked or being a doormat. Obviously, they didn’t opt for “doormat.”

But, for pity’s sake, who was in charge of message discipline for the casinos? “Casino officials have contended that the languid pace is common,” writes The Press of Atlantic City. Call me eccentric, but a slow-moving industry doesn’t seem like the best PR image to be putting out there. And, sure as shooting, shareholders don’t react well to the notion of languor in the executive suite. Maybe those same officials can try that “Don’t hassle us; we’re lazy” argument on newly disgruntled smokers and see how well it plays with them.

Another month, another set of unfavorable revenue comparisons for Atlantic City, -10% from last March. The good news/bad news dichotomy is a familiar refrain: Slots are down (-11%) and table games are up (-6.6%). So, for all the bad news, we are seeing a kind of forcible reinvention of Atlantic City as a table-game destination, which was probably inevitable once slot machines were no longer a novelty along the Eastern seaboard.

Mind you, we’re still talking about the fourth-highest March in Atlantic City and, measured against last year’s best-ever March, comparisons were bound to be unflattering. Unsurprisingly, Borgata leads everyone in average daily revenue, almost $250K/day ahead of Bally’s Atlantic City and raking in triple the amount won by tail-end Charlie Trump Marina.

Nobody was spared some degree of decline but Harrah’s Marina kept it below 1%, thanks to an exceptionally lucky month at the tables, +40%. Trump Plaza and Taj Mahal held their revenue shrinkage below 5%, followed by Trump Marina (one of several casinos to have good table play wiped out by lower slot win), at -6%.

Bally’s was the poster child for this, a 1% table win increase negated by an -18% drop in slot win, worst on the Boardwalk. Borgata, Resorts Atlantic City and the Tropicana got walloped on both fronts, with the latter suffering 15% and 32% lower win at tables and slots, respectively. Nobody gained ground at the slots but at least Bally’s, Caesars, Harrah’s Marina, Showboat and Trump Marina posted higher table win than last year.

Higher revenue is bad? So claims one Macao gaming executive. However it’s the managing director of a Stanley Ho affiliate, one that owns the Grand Emperor, so there may be some sour groups there, born of the fact that Melco‘s Crown Macau is drinking everybody’s milkshake at the moment.

On the other hand: looser lending standards by junketeers? That sounds like something that could easily come back to bite them (if not the casinos) in the @$$. This could be a situation worth monitoring.

Posted in Atlantic City, Boyd Gaming, Harrah's, James Packer, Macau, Stanley Ho | Comments Off

Now it's Morgans' turn

Posted on April 10, 2008 by David McKee

Add Echelon to the list of Strip projects across whose future a shadow has fallen. No, the problem isn’t with Boyd Gaming. They’re right on track. According to this Reuters story, it’s Morgans Hotel Group‘s participation that’s not shaping up as planned:

Boyd’s Echelon, with an overall budget of $4.8 billion, is forecast to open in the third quarter of 2010, but funding has not been secured for a $950 million portion that is a joint venture with Morgans Hotel Group. “We’re working on that right now,” Boyd spokesman Rob Stillwell said on Monday. He said Boyd intends to open all of Echelon’s components at the same time, but noted there is some “flexibility” in the two hotels planned with Morgans.

Wall Street reacted badly to Morgans’ purchase of the Hard Rock Hotel & Casino and with so much on its plate in Vegas, it still looks like the company bit off more than it could chew. That could change, of course. I didn’t think Morgans would get as far along with its Hard Rock expansion as it has. (Thanks as always to VegasTodayAndTomorrow.com for the cool imagery.)

Further down in the story, Elad CEO Miki Naftali sets an end-of-2008 target to begin site excavation for his Plaza megaresort. Earlier this week, he’d told Haaretz the project “might have to be delayed.” I’m not sure if they consult a Magic Eight Ball to make decisions at Elad or whether the answer to the question, “Is the Plaza project on schedule?” is “Yes,” “No” or “Maybe” depending on the day of the week.

There’s hope for civilization: CBS gave the boot to Secret Talents of the Stars after one episode. Evidently viewers preferred that those hidden talents remain so. “CBS officials say news programing is expected as a temporary replacement. Hey, CBS! You’re running Dexter. So how ’bout more of the cool Showtime stuff, like The Tudors or Weeds or (my favorite) The L Word?

Let’s make a deal. Nevada solons reached a budget-crisis agreement with Gov. Jim Gibbons. And why not? The guy’s packing some serious heat. Of course, Gibber the Fibber may have fudged the truth on his license. In Nevada, that could be grounds for having said license revoked, but who wants to be the one to bring the bad news to the owner of a Glock, a 9 mm and sundry other firearms? Not me!

On the plus side, a well-armed and firearm-proficient Gibbons means that his security detail is superfluous, saving additional taxpayer $$$. Whoopee! And you sure can bet the Lege will be real cooperative now they know the Gibber is locked and loaded.

Posted in Boyd Gaming, Politics, The Strip, TV | Comments Off

Golden Gate update

Posted on April 9, 2008 by David McKee

Per a previous item about the Golden Gate‘s plan to remake itself as a boutique hotel, I wondered about the status of its Culinary Union contract. Not to worry: According to the union’s political director, Pilar Weiss, the two parties inked a new labor pact in February (boy, do I feel like Rip van Winkle), so Golden Gate co-owner Mark Brandenburg can presumably set sail beneath a cloudless sky, as far as his remake plans are concerned.

Now that the Gate, the Golden Nugget, the Four Queens and (coming soon) Binion’s are presenting shiny new faces to downtown, the pressure will be on Boyd Gaming and perennial laggard Tamares Group to provide a spiffier product. Boyd always knows what time it is but I’m not sure Tamares could even find a clock if its life depended on it, at least where casinos are concerned.

Posted in Boyd Gaming, Downtown, Labor, Tamares Group | Comments Off

Quote of the Day

Posted on April 7, 2008 by David McKee

“Corporate thinking is to squeeze every penny, paying attention only to today’s bottom line and ignoring the negative effect that impersonal and greedy service has on future revenues. But is this not the style of business that has forced the sale of the Tropicana and the virtual collapse of Columbia Sussex?” — Online Casino Advisory‘s Joshua McCarthy, weighing on the pro-comp side of the current schism in Atlantic City over whether or whether not to comp.

Posted in Atlantic City, Columbia Sussex, Marketing | Comments Off

High spirits in Evansville

Posted on April 7, 2008 by David McKee

The acquisition, by Reno's own Eldorado Resorts, of the Casino Aztar riverboat, is playing to the expected hosannas. Interestingly, while 21% of the workforce was pink-slipped by outgoing owner Columbia Sussex, that seems to be the least of players' concerns. An unscientific online poll has that coming in fifth of five priorities, far behind expanding the entertainment options available at the casino. Whatever the case, the prospective owners are accentuating the positive.

Memo to Dawn Gibbons: Don't quit your day job (fourth item).

Tax increases could be life or death to rural Nevada casinos, Bill Bible says, making a compelling argument. Which raises a fairness question: Should the privilege tax be applied at a uniform (i.e., regressive) rate to all Nevada casinos or should it be graduated to better reflect the market disparities between, say, Elko and the Strip? Whatever the case, smaller casinos are between a rock (the lobbying power of their bigger brethren) and a hard place (public support for hiking the privilege tax).

Players or profits? That's a dilemma being faced by Atlantic City casinos as they tighten up on comps. So, if you're a bused-in player and you think you're not feeling as much love as in the past, you're probably right.

Analyst Nick Danna says comp-addicted customers need to get the "just say 'no'" treatment for casinos. As he puts it, "There are certain customers that Atlantic City really shouldn't attract anymore because they're just not profitable." Translation: Retiree players have outlived their usefulness to the Boardwalk and need to make way for bright young things with disposable $$.

That's cold.

A small collection of imperfect shows: The never-ending mutation of Le Reve is chronicled. If you're like me and suspect that Franco Dragone just keeps throwing random junk at the wall until something sticks, this article will only bolster that suspicion. As the headline says,the show "reveals itself slowly." Three years of tinkering and they still haven't got it right? Yeah, you could call that "slow," I guess.

Typo of the Day: In the Las Vegas Sun, "Possible hostage situation diffused." I suppose they mean "defused." I'd sure hate to contemplate the alternative: possible hostage situations spreading throughout the Las Vegas Valley.

Posted in Atlantic City, Columbia Sussex, Indiana, Steve Wynn, Taxes, The Strip | Comments Off

The Westin scandal …

Posted on April 4, 2008 by David McKee

… is growing legs. No, not these kind of legs. (Well, that too.) It’s also unearthed another strange-but-true story of business as usual at Columbia Sussex. That $25/bedbug bounty at the Trop is unwontedly generous by ColSux standards — a veritable king’s ransom — even if it means the housekeeping staff is going to have do its work during the graveyard shift. (That would be interesting.)

Also, with anywhere from 12 to 22 rooms to clean, per maid per floor, how much time is the hard-worked housekeeping staff going to have to go Bug-Hunting For Dollars? (The “bring ’em in alive” proviso is the best part — and provides the company with a nifty escape clause.)

Then again … I wouldn’t oppose this bounty program being put into practice at all hotels. Could ColSux have actually had an industry-leading idea? Eureka!!!

Speaking of good ideas, repositioning the Golden Gate as a boutique hotel would qualify (although the rooms are awfully small by contemporary standards). That’s assuming the Gate has its Culinary Union contract in order. How’s that coming, by the way?

Dead man walking: The Gibber speaks. Few listen. Mismanaging an ongoing health crisis will do that to you.

Just a big coincidence. That’s what Harrah’s Entertainment is saying about the ongoing retrenchment of its overseas projects, now that it’s out of Slovenia just weeks after ditching its Baha Mar resort. Oh, and don’t forget the second thoughts Harrah’s has been having about that London Clubs acquisition. Nope, no connection to that massive new debt load. Nothing to see here. Pay no attention to the men behind the curtain.

We’re building projects that will provide as many as 100,000 new jobs, Jeremy Aguero forecasts. But he don’t have places for them to live. We’d better get working on that hadn’t we? Or what will happen?

As the affordable-housing market has shriveled over the last several, condo-addled years, I’ve long thought we’d reach this point — where the service workers who will form the backbone of this expansive, sometimes dazzling future can’t afford to live here or are simply crowded out of the housing market. It’s ultimately self-defeating.

Every time a developer bulldozes some low-cost housing to build mansions in the sky, who’s replacing those homes and apartments? And just where are Mr. Big’s maids, maintenance people, security staff expected to live? Down with the other homeless people who were found squatting at the Klondike? Guess so.

Big Bang. If you can’t get enough of implosion videos, the Press of Atlantic City has added its own to its coverage of the demolition of the old Sands garage. Warning: The ultimate collapse is obscured when some gawker steps right in front of the news camera … although karmic punishment is quickly dispensed, as his bald spot is now showcased for the entire Internet-linked world.

Posted in Atlantic City, Columbia Sussex, Downtown, Harrah's, International, Labor, Politics, The Strip, TV | Comments Off

Headline of the Day

Posted on April 3, 2008 by David McKee

"New Jersey to casino: Trop dead" — from AFX Financial News

Posted in Columbia Sussex | Comments Off

Hooters sagging

Posted on April 3, 2008 by David McKee

Yes, they’re drooping again at the mammary-themed hotel — revenues, that is. The recession continues to hit the bargain-niche properties first and hardest. The interesting info is buried toward the end, as potential buyer Richard Bosworth (who’s already put $3 million down, with $222 million to go) is shelling out another non-refundable half-million to keep its option alive for another month.

This is the same stalling pattern Christopher Milam fell into with the Wet ‘n Wild property. If Bosworth is having trouble scaring up the purchase price (and does the Hooters-augmented San Remo look like that tempting of a credit risk?), it doesn’t bode well for the promised $130 million redevelopment, either.

On a related note … You can set your watch by it. The annual, obligatory Passion Parties story. It must be some journalistic hazing ritual.

Fix? In? Not here! Another scofflaw gets off lightly.

An implosion! Woo-hoo! All right, so it’s only a casino garage and it’s in Atlantic City. But it looks like that Pinnacle Entertainment project is still in “on” mode, Dan Lee‘s caveats notwithstanding. There’s video, too.

Double or Nothing UNLV’s David Schwartz reviews the apologia pro vita sua of former Golden Nugget co-owner Tom Breitling. Schwartz finds a great deal to like in the book, and is very generous and sympathetic in his appraisal. I’m not scheduled to weight in on Double or Nothing until the May 5 issue of City Life, but I feel safe in saying that your book dollars are far better invested in Christina Binkley‘s Winner Takes All. Breitling’s book is a quick read, though, partly by dint of leaving out whole chunks of the story — like a not-so-successful filmmaking venture with the Fertitta brothers, which goes completely unmentioned.

How much interest will there be in Double or Nothing? Hard to say. It’s been over three years since he and Tim Poster sold the Nuggets, a timespan far longer than that of their brief ownership, and they never became major players in the industry (as opposed to the pages of Norm!). For a businessman as successful as Breitling, I’m surprised he’d get his product so tardily to market.

And now to end on a (rare, some would say) classy note …

Honoring a legend. Former Silver Slipper owner Claudine Williams receives a “Philanthropist of the Year” award tonight. Congratulations to the grande dame of the gaming industry. Long may she flourish.

Posted in Atlantic City, Charity, Downtown, Pinnacle Entertainment, The Strip | Comments Off

Monte Carlo: What the f…?

Posted on April 2, 2008 by David McKee

You know those fellows who set the Monte Carlo on fire? Well, it seems they were working under a window-washing permit. I kid you not. Tony Illia ran down this gem, which adds to the tragi-comedy of how Union Erectors turned a Strip resort into a big-ass Roman candle.

As for the non-response of the Clark County Fire Department, which declared that since the fire was unintentional no one was to be held accountable, Illia notes that this was supposed to be the new, improved Clark County and its 20-man special-investigation unit, adding "Well, it's certainly off to a bad start."

Illia, one of the best journalists with whom I've had the privilege to work, has some strong words for Clark County. Nor do the private-sector players get off the hook: "One suspects this isn’t the first time that MGM Mirage, Monte Carlo’s owner, has taken short cuts to get things done. Union Erectors has worked on other MGM Mirage properties including the MGM Grand and CityCenter. It has also done work at the Paris Las Vegas and Caesars Palace (both owned by Harrah’s) as well as The Venetian."

Speaking of fires … Arson victim the Moulin Rouge got the go-ahead from the City of Las Vegas to demolish everything save its marquee and brick tower. A new, Ed Vance-designed hotel-casino is slated to break ground next year and open in 4Q10 (which usually means, "As late in December as possible without forfeiting New Year's Eve").

Project approval and rezoning approval have already been granted for what's drawn up as a 700-room hotel, plus at least two nightclubs, four restaurants and a spa, among other amenities. It might seem small-scale by Palazzo standards, but remember that we're talking about something way off-Strip (but very close to the freeway) in a dodgy neighborhood, so it's what you might call a "marketing challenge." I'm assured that Republic Urban Properties has deep pockets (as in $4 billion deep), so it looks as though the long-promised, oft-deferred rebirth of the Moulin Rouge will finally occur.

Real Hollywood disses Planet Hollywood. Someone from the film industry strolled past Trader Vic's recently during the wee hours and was subjected to a limp rendition of "Let's Go Crazy" by Prince, played to a crowd of maybe 20 souls. The verdict? "It wasn't exactly LAX."

Posted in Downtown, MGM Mirage, Monte Carlo fire, The Strip | Comments Off

Columbia Sussex sinks to new low

Posted on April 2, 2008 by David McKee

Let’s say you’re Columbia Sussex, owner of the Westin Casuarina and notorious for your pinch-penny ways. What do you do if a convention organizer can’t pay up on its $50,000 tab? Why simply — and sneakily — bill it to the attendees, of course!

That’s the rude surprise that dental trainee Don Dible got when he received his bill from the Westin: an extra $665 charged to his credit card — five months after the fact. According to the AP’s Kathleen Hennessey, who has seen the offending document, ‘ColSux’ hit Dible up for “pro-rated amount per attendee.” A Houston dentist got socked for $1,027 … presumably penalized the extra $362 because he had the temerity to be a speaker at the conference, not just an attendee.

The Westin’s invoices are written so that it can pass the liabilities of companies like Coaching Center of Austin onto third parties. Besides Dible, at least 20 other complainants are reported to have surfaced — some of whom the Coaching Center says it has reimbursed.

“Columbia Sussex owns 13 casinos and 80 hotels in the United States and abroad, pulling in revenues of some $3 billion a year,” writes Hennessey. Small wonder, with tactics like these, which came as quite a surprise to the Las Vegas Convention & Visitors Authority‘s Erika Pope.

Congrats to the AP for snagging this story, stealing a march on both the Las Vegas Sun and its sleepier crosstown competitor.

More Trop trouble. The New Jersey Casino Control Commission has to decide whether to place the Atlantic City Tropicana back in the hands of ColSux affiliate Adamar of New Jersey to shelter the asset from a Delaware lawsuit. Wilmington Trust Corp. is suing ColSux for $960 million upon which it alleges the Kentucky hotelier has defaulted.

Trop trustee Justice Gary Stein finds himself in the awkward position of having to advocate that the NJCCC undo his own conservancy lest a court-ordered bankruptcy “affect my ability to sell the asset,” a process that hasn’t exactly had potential buyers beating down the door so far. My guess is that the NJCCC will feel boxed in and have to go along, but it doesn’t sound like NJCCC Chairwoman Linda Kassekert is any too happy with the situation — or with the behavior of Tropicana Casino Resorts CEO/President/Secretary/Treasurer/Sole Director William J. Yung III.

News flash: I was wrong. If ColSux goes belly-up that’s just too damn bad, says the NJCCC. Or words to that effect. Stein’s proposed solution would left him only nominally in the driver’s seat, with Yung regaining title to the A.C. Trop. The NJCCC also dealt a verbal smackdown to Stein, partly for exceeding his mandate — not to mention his employment of a car service to ferry him to and from Hackensack.

Meet the new boss, quite different from the old boss. “In 25 years I never had a layoff, and I don’t intend to start now.” With those words, Robert Dingman (above) got off on the right foot as trustee of Casino Aztar. (Dingman says he might even — Gasp! — increase staffing. That sound you hear is Bill Yung reaching for his defibrillator.)

The Evansville riverboat is entering an odd interregnum in which it will be run by the State of Indiana on Columbia Sussex’s dime (and I use “dime” advisedly) while the state vets would-owner Eldorado Resorts, whose interests include co-ownership of the Silver Legacy — an exceptionally comfortable casino-hotel, the nicest in downtown Reno, when I was hosted there … admittedly, back in the last century.

Having faced off with the Carano family during his Harrah’s Entertainment years, Dingman gives them the thumbs up as “great operators … our nemesis in Reno.”

The latter ponied up $220 million* for the gaming vessel ($5 million less than expected) on the very day Columbia Sussex was likely to be stripped of its license. Yung’s company had reneged on commitments to the city of Evansville, both in terms of employment levels and bringing in a new boat. It also ceased Aztar Corp.’s practice of supporting local charities and vendors.

Eldorado — which evidently relishes challenging riverboat markets — plunked down $169 million two years ago (plus an additional $9 million last month) for a Bossier City, La., boat and that would put Casino Aztar within its price range. Still, with credit markets being what they are, I’m awaiting disclosure of the terms of sale with bated breath.

“Our long nightmare is over,” added Dingman. Although he’s worked in some of Harrah’s most far-flung markets, from Vicksburg to New Zealand, serving in the Vietnam War will probably turn out to be Dingman’s best preparation for dealing with the scorched-earth tactics of Bill Yung. (As more than one Courier-Post reader points out, the new casino resort in French Lick has leapfrogged past Casino Aztar while Yung was busy subdividing pennies.) Apparently Yung’s can’t-fail business strategies included eradicating or severely diminishing promotional allowances.

No wonder Casino Aztar is 11th out of 11 Hoosier State casinos. (Only third-lowest in revenue, though.) In FY07, French Lick was breathing down Casino Aztar‘s neck, $111 million to $123.5 million.

This Should Be Interesting Dept. The Courier-Press adds that “Dingman has been granted broad powers to spend Columbia Sussex’s money on operating and improving the casino,” which apparently suffers from a shortage of dealers, among other things. But has he been granted broad Columbia Sussex money to spend? Yung is notoriously loath in that respect, so Dingman can probably look forward to having to play hardball with the corporate colossus of Fort Mitchell, Ky.

Bottom line: I’ve seen how the Caranos operate and I’ve seen how Bill Yung operates. Eldorado in/ColSux out is a happier ending to this story than we could have hoped for, say, two months ago.

* — The price is sometimes reported as $245 million because of a conditional $25 million Eldorado will kick in if it hits certain (undisclosed) metrics. The two companies are essentially making a wager that Eldorado can do something comparable to what it did in Bossier City, where it grew revenue 18% over a two-year period, in a declining market.

Posted in Atlantic City, Columbia Sussex, Indiana, Louisiana, LVCVA, Regulation | Comments Off