Reuters reported this week that the debt carried by Harrah's Entertainment<\/b> “may weaken from already distressed level as heavy capital spending and interest payments absorb cash flows at a time when the casino operator is also facing declining gambling revenues.” We've already seen one set of quarterly income wiped out — and then some — by costly interest payments and early retirement of debt.
\nOne analyst decribes Harrah's leverage as “pushed … to the limit” with little prospect for improvement. Guess that puts paid to a Galaxy Entertainment<\/b> acquisition. Not to mention that physical expansion is going to require even further indebtedness.<\/p>\n
Meanwhile, Wall Street speculates that Harrah's may elect to retire some bonds not with cash payments … but with even more debt. The cost of insuring said debt is steep, reflective of the fact that “people are pricing in a lot of risk there,” according to analyst Christopher Snow<\/b> of CreditSights. And while analysts like Snow wait to see which way the current downturn in gambling shakes out, they're also fretting over how new infusions of rooms into the Vegas market are going to eat into Harrah's pricing power.<\/p>\n
Oh, and a slew of notes come due in 2010, when Snow predicts the company will hit “a pretty high wall of maturities starting in 2010 and going through to 2011 and afterward.”<\/p>\n
Harrah's won't fail, predicts a third analyst, “but this is a tough one.” CEO Gary Loveman<\/b>'s multi-million-dollar early opt-out clause may be looking very attractive right now. The Harrah's car isn't going over the cliff by any means, but the upside of the Apollo Management\/TPG Capital<\/b> deal still appears chimerical.<\/p>\n
The New York Yankees<\/b> are hanging in there like the tough old birds they are. And if you can bear to watch Melky Cabrera<\/b>'s graceless outfield play (a far remove from the gliding elegance of Bernie Williams<\/b> in years past), then you'll be looking forward to pulling up a table at either NYY Steak<\/b> or a Hard Rock Restaurant<\/b> in the House That Ruth Didn't Build, when it opens next year. This joint venture between the Pinstripes and Florida's Seminole Tribe<\/b> is another tribute to the economic muscle that was nurtured by tribal gaming but is now being flexed in myriad other business arenas.<\/p>\n
Still, while it's all well and good for the Seminoles to be tapping into the megamillions of the Bronx Bummers, I hope that — closer to home — they're showing some love to the Tampa Bay (Devil) Rays<\/b>, 2008's Cinderella team. If no else is up for a Rays\/Angels<\/b> ALCS, you can at least count me in.<\/p>\n","protected":false},"excerpt":{"rendered":"
Reuters reported this week that the debt carried by Harrah's Entertainment “may weaken from already distressed level as heavy capital spending and interest payments absorb cash flows at a time when the casino operator is also facing declining gambling revenues.” … Continue reading