Remember how Penn National Gaming tantalized us with its sale process for the Tropicana Las Vegas, hinting at a bidding war and outright predicting a massive cash haul for the company? Well, Penn was evidently so bereft of suitors that yesterday it vended the Trop to its REIT, Gaming & Leisure Properties Inc. Penn CEO Jay Snowden spun it as a desperation move brought on by the Covid-19 outbreak. Whatever the case, Shaft’s Big Score turned out to be Snowden’s Big Snore. What did Penn get for the Trop? The right to continue operating it—interesting, in view of Penn’s ambivalent relationship to the property—and $337.5 million worth of free rent. And even to get that, Penn had to throw in the lease to its unfinished Morgantown casino in Pennsylvania.
In return, Penn has the option to buy Hollywood Perryville, in Maryland, another casino on which it has blown hot and cold (and which grosses relatively little money). Concluded Snowden, “While this transaction will help relieve liquidity pressure in terms of rent obligations, we are committed to take further steps to reduce our ongoing operating expenses in order to ensure we have a healthy business to return to when we re-open our doors.” Translation: Cost cuts are coming.
Perryville, MD: I used to go there on occasion. They took out the moderate sized buffet and now it’s a coffee shop. There are no free player drinks In MD. The casino promotions are “play before gift”. Coming from nearby DE, there’s a round trip $8.00 toll @ Newark, DE, and a I-95 North toll of $8.00 when leaving Perryville, and a $5.00 bridge toll if coming from NJ. How many ways can you say Perryville just isn’t worth the trip?
Implode the Tropicana.