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 “from a position of financial and operational strength.” Minus the Atlantic City Tropicana, Casino Aztar (sold) and Horizon Vicksburg (sold), and with Horizon Lake Tahoe now on borrowed time? And with Trop bonds trading at half their face value?
Yesterday’s Wall Street Journal story can now be presented in its entirety. The WSJ calls Columbia Sussex owner of “a small casino kingdom.” Fair enough, although some of us think of it more as a relatively minor principality whose castles are crumbling.
And did Butera really say Tropicana Entertainment wasn’t planning to sell any of its 11 casinos, or did the WSJ reporters simply misconstrue his words? I mean, he did get the memo about Casino Aztar and Horizon Vicksburg having been sold, yes? (Both transactions are in the regulatory-approval and closing processes.) Elsewhere, he implies that Tropicana Entertainment may be out of Chapter 11 by year’s end.
Here in Las Vegas, the Culinary Union may have reason for anxiety, but Casino Aztar‘s workforce has been assured that pay and benefits will continue as before. If all goes according to plan, Evansville employees should be out from under Tropicana cloud in a month or so, when Eldorado Resorts‘ application for ownership is expected to go through.
The endgame? By pumping up the volume of anti-New Jersey Casino Control Commission rhetoric, blaming it for Columbia Sussex’s fiscal predicament and asking the NJCCC to hold off selling the Atlantic City Tropicana until market conditions improve, one possibility suggests itself.
Perhaps this is too Machiavellian by half, but is Yung and Butera’s goal to wrest the A.C. Trop away from the State of New Jersey via the courts (thereby reconnecting Tropicana Entertainment to its primary lifeline) or at least keep it ensnarled in liitgation to kingdom come? Maybe even extract a nine- or 10-figure settlement from the state, thereby erasing much of their debt?
Yes, this is a crummy time to be selling a casino in Atlantic City. Even the Bader Field fever has abated, for the nonce. And yes, the longer Butera and Yung can get the NJCCC to draw out the sale process, the better their chances of getting the forfeiture of the A.C. Trop before a court.
But the NJCCC isn’t in the business of running casinos and it has an obligation to the taxpayers to unload it (and the attendant costs of trusteeship) sooner rather than later. Not to mention that union talks are in abeyance as long as the Trop’s status remains in limbo. As for getting the highest value for the property, how long would the NJCCC have to wait for market conditions to return to the fevered climate of 2006?
