{"id":31497,"date":"2022-08-03T09:56:14","date_gmt":"2022-08-03T17:56:14","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=31497"},"modified":"2022-08-15T09:38:17","modified_gmt":"2022-08-15T17:38:17","slug":"flamingo-sale-forget-it-mega-jottings","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/flamingo-sale-forget-it-mega-jottings\/","title":{"rendered":"Flamingo sale? Forget it!; Mega-Jottings"},"content":{"rendered":"\n
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Caesars Entertainment<\/strong> formally took the Flamingo<\/strong> off the sale block yesterday, at least for the foreseeable future. CEO Tom Reeg<\/strong> cited ‘market conditions<\/a>‘ (odd when the Las Vegas Strip<\/strong> keeps breaking records). There is also the complication that Vici Properties<\/strong> has right of first refusal on a sale, throwing a cock-block on any big spender the Flamingo might attract. Chances are, having knocked the price down from $2 billion to $1 billion to $800 million, Reeg is still having trouble finding takers for the property. Planet Hollywood<\/strong> theoretically remains in play but Reeg’s preposterous insistence on keeping the conjoined Zappos Theater<\/strong> (Or have they changed the name again?) is a serious deterrent. “There are plenty of interested parties,” Reeg claimed, blaming his inability to cut a deal on \u201cthe financing environment is what it is. If that\u2019s going to impact what someone will pay, there\u2019s a level I\u2019m not going to chase, and I\u2019m very happy to just clip the free cash flow and come back later.\u201d <\/p>\n\n\n\n\n\n\n\n

He also pooh-poohed the sale as “a discretionary trade”\u2014and never mind that Caesars has been hyping this to investors for untold months as a payday that would help retire a worrisome amount of debt. \u201cFor all the hand wringing about leverage and balance sheets all of a sudden, we really don\u2019t stress about that at all,\u201d Reeg sneered. \u201cWe feel really good about the position we\u2019re in and we\u2019re going forward.\u201d After having the nerve to accuse said investors of hypocrisy, Reeg peremptorily said he would take no more questions on the topic. That’ll show those uppity Wall Street<\/strong> boffins.<\/p>\n\n\n\n

Another possible reason CZR is suddenly hoarding hotel rooms is that what once looked like overexposure now is a bonanza. The company record levels of room revenue last quarter on 97% occupancy, as Strip takings vaulted 34% from 2Q21. Caesars Forum<\/strong> continues to power convention business, with group-business nights up incrementally from late last year. COO Anthony Carano<\/strong> reported a “noticeable” bounce-back in international business and, yes, Baby Boomers too. Hinting at strong July\/August numbers, Reeg added, “There are not strong enough words to convey how well it\u2019s going in Vegas for us.\u201d<\/p>\n\n\n\n

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Reeg did a fan dance about the postponed Adele<\/strong> shows (no, they’re not moving to Planet Ho, as erroneously reported elsewhere). \u201cThat\u2019s a lot of revenue that\u2019s going to impact the Vegas market. When that particular entertainer starts, a lot of revenue will run through that goes to the artist, a little bit of profit to us, and a better customer on the floor.\u201d He also had the bad taste to joke that amateur videos of flood waters inundated decrepit Strip assets<\/a> was “some good social-media footage.\u201d This guy really doesn’t have a clue, does he?<\/p>\n\n\n\n

Like Boyd Gaming<\/strong>, Caesars has seen a falloff in unrated play (compensated for at the higher, rated end), while construction at Caesars Atlantic City<\/strong> is impeding revenue there. The company fell back on 2019 comparisons to make its regional revenues appear better, as they didn’t come up to 2Q21 levels. (Federal stimulus checks, whither art thou flown?) Reeg claimed this was working out the way he planned it all along. We guess that’s what you say when Monday’s gaming floor at Harrah’s Philadelphia<\/strong> looks like this:<\/p>\n\n\n\n

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Stock analysts were aptly wowed by Caesars’ numbers, which were “stronger than expected results in Las Vegas<\/strong> offset by a shortfall in its regionals segment,” along with a narrower-than-expected negative return on investment in the digital sphere. Cash flow beat Wall Street’s consensus expectation by 8%. JP Morgan<\/strong> analyst Joseph Greff<\/strong> credited Caesars’ marketing cutbacks and fewer promotions for the improved sports betting numbers “rather than a broad industry rationalization; some of this sequential improvement is also seasonality and coming off a big launch in” New York State<\/strong>. Baby Boomers are “just piercing” their 2019 spending levels, but still shy of that of younger demographics. <\/p>\n\n\n\n

Still, Greff couldn’t overlook the recessionary economy, projecting a 10% revenue decline for the Strip next year and a 6% one regionally. (To put this into perspective, the Strip generated $1.1 billion last quarter and regionals $1.5 billion for CZR.) The company reenters the Lake Charles<\/strong> market in December, which should help counteract any regional softness. And the company is about to put shovels in the ground for new casinos in Virginia<\/strong> and Nebraska<\/strong>, as well as a Harrah’s Hoosier Park<\/strong> expansion.<\/p>\n\n\n\n

Digitally, Caesars was expected to post $137 million negative ROI but pruned that to $69 million, a significant accomplishment. (So long, DJ Smoove<\/strong>.) Those losses may ramp up again as Caesars Sportsbook<\/strong> enters NFL<\/strong> season but the company hopes to contain them. Positive ROI is still 15 months away, even by Caesars’ projection, which has to be taken as a best-case scenario. While the company may not have sold any Strip assets, it did book $730 million from the William Hill<\/strong> sale, taking net debt down to $13.2 billion.<\/p>\n\n\n\n

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Summarized Deutsche Bank<\/strong>‘s Carlo Santarelli<\/strong>, “Net-net, as we noted post\u00a0BYD\u00a0results, we think the\u00a0CZR\u00a0print bodes well for LV operators 2Q22 reports (MGM\/[Station Casinos<\/strong>]), less favorably for regional operators, and we believe the digital performance is somewhat\u00a0CZR\u00a0specific, given the shift in strategy.” Like Greff, he couldn’t handwave recessionary trends: “we see little reason for aspirational forecasts in the current environment. While cracks have yet to appear in Las Vegas, there are several oars moving the wrong direction that could provide future headwinds (airfares\/airline capacity, the impact of gas prices on drive to traffic, difficult comparisons, broader travel optionality). In regional markets, we believe cracks are becoming more evident, with [gross gaming revenue] and [non-gaming revenue] slowing in many key markets, costs increasing, and the consumer outlook appearing softer.”<\/p>\n\n\n\n

First to break the Flamingo sale, Santarelli had this to say about the non-sale: “At this stage,
we believe there is activity around the process, but securing financing, for potential buyers, remains an incremental impediment.” He also hinted at a reason Caesars might be experiencing seller’s remorse: It will soon lose 15% of its room inventory when The Rio<\/strong> leaves the fold, future uncertain. At least the makeover of Harrah’s New Orleans<\/strong> into Caesars New Orleans<\/strong> “is progressing well.” Truist Securities<\/strong> analyst Barry Jonas<\/strong> largely echoed the upbeat parts of Greff’s and Santarelli’s prognostications, so there is no reason things are going to go anything but well in the Roman Empire for some time to come.<\/p>\n\n\n\n

The Nevada Resort Association<\/strong> has inherited Sheldon Adelson<\/strong>‘s political reverse-Midas touch. It put $1.5 million into defeating several Democratic legislators and chalked up only one win<\/a>. We’re only finding out now because the NRA’s Nevada Rising<\/strong> PAC didn’t have to report until after the primary election. Virginia Valentine<\/strong>‘s fund succeeded in shooting down union leader Brian Lee<\/strong> for Assembly District 27. All other NRA candidates\u2014two Dems and one Republican\u2014rolled snake eyes. Valentine’s fellow conspirator, Billy Vassiliadis<\/strong>, threatened \u201cThis primary is only the beginning,” and that more puppets, er, candidates would be forthcoming. Amplifying the menace, he continued, \u201cWe’re talking about folks that are willing to sit and listen to a broad set of arguments and not just feel they owe a single constituency their wholehearted, full-throated support without concern or consideration for what those impacts might be.\u201d Nice district you’ve got there. Hate to see anything happen to it.<\/p>\n\n\n\n

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Jottings<\/em><\/strong>: Siegel Group<\/strong> will have to face the music or (worse for them) pay restitution to Clark County<\/strong>, which is now investigating the slumlord\/casino company’s eviction practices, deemed “uniquely egregious” by members of Congress. “It is simply unconscionable that trust organizations like Siegel Suites<\/strong> chose to use this historically turbulent time to not only take advantage of those most in need, but also to do so egregiously,” stated county spokesman Dan<\/strong> Kulin<\/strong> … Full House Resorts<\/strong> glossed over a disappointing second quarter<\/a> but stressed better things to come. CEO Dan Lee<\/strong> projects that Chamonix<\/strong> in Colorado<\/strong> and American Place<\/strong> (above<\/em>) in Waukegan<\/strong> will double the company’s revenue all by themselves … Tribes in Maine<\/strong> are going to have a long wait for sports betting<\/a>. Rules probably won’t be formalized until January of 2024, even though legalized sports wagering goes into effect next week. Given their online monopoly, tribes are projected to garner 85% of the revenue, a figure we think is conservative … <\/p>\n\n\n\n

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Riding for a fall at Kings Mountain.<\/figcaption><\/figure><\/div>\n\n\n\n

Lake Las Vegas<\/strong>, that monument to conspicuous overconsumption in the Vegas Valley<\/strong>, is drying up. Lake Mead<\/strong> is 10 feet below the level at which it can supply the McMansion community’s signature water feature. Henderson<\/strong> is obligated to keep the lake wet<\/a> but the ‘how’ is presently unclear. It’s a fitting milestone for a let’s-pretend village that typifies Vegas’ inability to think past today … Dennis Conrad<\/strong>, our role model in the casino biz, has penned a tribute to stellar design consultant<\/a> David Kranes<\/strong>, a fine author and truly imaginative thinker. Casino owners ignore Kranes’ counsel at their own peril: The only casino he graded ‘F,’ the Maxim<\/strong>, went out of business soon thereafter … Nikki Haley<\/strong> and Rep. Jim Clyburn<\/strong> (D) are running for the tall grass as a North Carolina<\/strong> casino scandal continues to grow legs<\/a>. Said Clyburn of his brother’s profit participation in tribal Two Kings Casino<\/strong>, \u201cI don\u2019t care. He gets to make a living. I don\u2019t get his permission and I don\u2019t give him mine.\u201d For her part, Haley said she was against the casino before her husband was for it … Saying that Fontainebleau<\/strong> is 75% finished, developer Jeffrey Soffer<\/strong> has a 4Q23 opening<\/a> penned in for the megaresort. Said Fontainebleau Development<\/strong> President Brett Mufson<\/strong>, \u201cThe Las Vegas<\/strong> tourism industry has shown incredible resiliency throughout the last two years, and we believe our target opening date allows us to perfect our vision while positioning Fontainebleau Las Vegas for success in a new era of growth and visitation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Caesars Entertainment formally took the Flamingo off the sale block yesterday, at least for the foreseeable future. CEO Tom Reeg cited ‘market conditions‘ (odd when the Las Vegas Strip keeps breaking records). There is also the complication that Vici Properties … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[65,23,60,244,27,274,133,145,14,4,59,198,58,68,131,84,147,53,156,101,261,95,6,33,25,130,243,57,280,9,19,20,38,252],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/31497"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=31497"}],"version-history":[{"count":2,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/31497\/revisions"}],"predecessor-version":[{"id":31501,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/31497\/revisions\/31501"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=31497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=31497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=31497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}