Taking back (Harrah’s) America

Ever-vigilant in his watch over “The Borg” (aka Caesars Entertainment), Vegas Tripping author Chuck Monster has been keeping a gimlet eye on the revival of Project Linq. Granted access to internal Caesars documents, Mr. Monster reveals that the much-needed makeover of the O’Shea’s/Imperial Palace slum neighborhood is but the first phase in something much bigger: the long-dormant Harrah’s America mega-über-ultraresort, also fleetingly known as “Epicentre.” (Something tells me casino developers are going to be avoiding titles with “Center” for a while.)

Questions remain begged, such as: What will the area use for emergency-vehicle access once the street between the Flamingo and O’Shea’s becomes a retail mall? The best news is that the cesspool known as O’Shea’s will become history, to replaced by a mid-market version of Crystals. At least some of the Japonaiserie will be scrapped off Imperial Palace and its hotel towers might actually receive the implosion that then-Harrah’s Entertainment planned for them when it bought the place in 2005. If aforesaid demolition eventually engulfed the Warsaw Pact “architecture” of claustrophobic Harrah’s Las Vegas, few would protest.

Of course, this seems the very devil of a time to go to Wall Street for financing … and never you mind that $18 billion in long-term debt hanging over the company like the Sword of Damocles. Heck, Caesars has been pleading poverty and rattling its tin cup at Nevada taxpayers in an effort to get a vanity stadium built out back of where its Ferris wheel will arise. Still and all, the sooner the first phase gets underway, the better. Besides, taking “Impotent Palace” and Harrah’s LV out of action will enable Caesars — and its competitors — to raise room rates on the Strip, by dint of manufacturing a supply/demand crunch. Strangely, the “Harrah’s America” idea was being pitched to Wall Street even as CEO Gary Loveman was hopping an E-ticket ride on the crazy train, shopping the mother of all LBOs to private-equity marks sober investors like Texas Pacific Group and Apollo Management. It was/is a grandiose 10-year scheme that should have been in Year Four at this point. Had Loveman not gone loco, we’d be writing about Imperial Palace in the past tense, as we pondered the impending implosion of Harrah’s LV.

Once you get past the “big swinging dick” rhetoric of CFO Jonathan Halkyard‘s tumescent Power Point presentation to Bank of America (available from S&G upon request), one sees that Harrah’s was in a period of strong cash-flow growth in 2006 and should have been able to fund the early stages of the master plan even in a Recession … if only Loveman hadn’t kneecapped his own company. Regardless of circumstances, scrapping a refit of Bally’s Wild Wild West in Atlantic City with the better-performing Horseshoe brand was a mistake. But it’s a good thing Loveman & Co. held off demolishing Harrah’s Marina in favor of something that looks suspiciously like Wynncore. The casino-hotel in its current form is regularly a top performer in the market (if it ain’t broke …) and a new Atlantic City megaresort could easily have run afoul of the monetary problems that stalled Revel for months on end.

The demolition of Bally’s Las Vegas, to be replaced with a Strip-side, Horseshoe-branded casino is an idea that’s been kicking around for a good six years … the worst-kept secret of the Loveman regime. It was to have begun two years ago, but with so many other Strip resorts-to-be stuck in the mud and waiting for demand to resume, it would be surprising were Bally’s to be imploded and rebuilt in this decade, if ever. Existing Caesars properties are in embarrassing states of disrepair and have been for years. Where’s the money for that? Or for Clark County-approved remakes of the Caesars Palace “pedestrian realm” and of access from the Las Vegas Strip into Paris-Las Vegas that have been gathering dust since the last three election cycles? As for pipe dreams like Baha Mar in the Bahamas and El Reino in Spain (whose logo was, aptly, Don Quixote), those went up in smoke along with Caesars’ credit rating. Now the company’s shopping around for hotel-development deals in India (“Horseshoe Mumbai”?).

“We will be careful of taking out a lot of capacity at once,” Halkyard pontificated to the money men. Too bad he didn’t exercise the same circumspection toward taking on a lot of debt. Project Linq would be a reality instead of an on-again, off-again mirage. Besides, as one of Chuck’s readers writes, “This still seems like a huge expense just to pay homage to the black guy from the Mod Squad.”