{"id":5500,"date":"2011-01-06T11:11:11","date_gmt":"2011-01-06T19:11:11","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=5500"},"modified":"2023-01-08T04:49:01","modified_gmt":"2023-01-08T12:49:01","slug":"palms-maloof-out-loveman-in","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/palms-maloof-out-loveman-in\/","title":{"rendered":"Palms: Maloof out, Loveman in?"},"content":{"rendered":"

Now that Las Vegas<\/strong> has fallen about as far as it can, private equity firms are picking over the city like vultures sampling carrion. Don’t get me wrong: It’s a much smarter strategy than those PE bozos who bought in when gaming stocks were at their apex, resulting in dilettantes like Colony Capital<\/strong>‘s Tom Barrick<\/strong> getting taken to the cleaners. On Wall Street<\/strong>, a fool and other people’s money are soon parted. (Note to private equity firms: A casino is not a widget factory. ‘Nuff said.)<\/p>\n

\"\"Fresh from pouncing on MGM Resorts International<\/strong>‘s half of Borgata<\/strong>, investor Leonard Green<\/strong> is at it again. This time his target of opportunity is the Palms<\/strong>. According to reporter Beth Jinks<\/strong>, embattled owner George Maloof<\/strong> is dickering with Green for continued operational control in return for a bailout<\/a>, Maloof’s venture into condo development having proven his undoing. But look who Green’s partner is …<\/p>\n

Oh no!<\/strong> It’s the dreaded Texas Pacific Group<\/strong>, co-author of the disastrous Harrah’s Entertainment<\/strong> LBO. (Green and TPG co-own Petco<\/strong>, which is too busy putting its name on baseball parks to stock the shelves of its increasingly seedy stores.) Writes Wells Fargo<\/strong> gaming analyst Carlo Santarelli<\/strong>, “we would anticipate the property being rolled into the Caesars<\/strong> [Entertainment] portfolio. We believe this would have a positive impact for both the Palms in its inclusion its inclusion in the Total Rewards<\/strong> program, and for Caesars, given Palms status as a differentiated Las Vegas asset when compared with its existing portfolio<\/em>.”<\/p>\n

Color me skeptical about Caesars’ ability to appreciate, let alone maintain, the unique half-SoCal\/half-local customer blend that Maloof has achieved at the Palms — although Caesars is currently trying to reinvent The Rio<\/strong> in the Palms’ image. Then there’s Gary Loveman<\/strong>‘s notorious war against video poker players, who spit out the name “Harrah’s” like bad food, his aversion to maintenance and Harr, er, Caesars’ tired repertory of slots.<\/p>\n

Those paytables are gonna tighten up like nobody’s business, even if Caesars CFO Jonathan Halkyard<\/strong> has to replace every EPROM chip personally. Besides, can you see that a stuffed shirt like Loveman doing a commercial opposite three talking slot machines? Only in a parallel universe, baby, and maybe not even then.\u00a0
\n<\/span><\/p>\n

\"\"<\/strong><\/span>The sight of Green<\/strong> snuggling into bed with Caesars also raises the question of how Boyd Gaming<\/strong> would feel about sharing proprietary Borgata data with a Loveman business partner. Sure enough, there are rumors of hiccups in the Green\/Boyd deal<\/a>. Some have Green getting cold feet, others suggest he might buy out Boyd altogether but retaining it as property manager. Taking the latter tack wouldn’t extricate Boyd from a prospective m\u00e9nage-a-trois<\/em> with Green and Caesars. (Nor can I readily imagine Boyd CEO Keith Smith<\/strong> relishing the task of essentially being hired help for a Green\/TPG\/Loveman troika.)<\/p>\n

Two, Caesars is maxed out in Atlantic City<\/strong>, due to New Jersey<\/strong> antitrust laws. Imagine the ruckus if Loveman made a proxy grab for Borgata, effectively turning A.C. into Caesars’ private fiefdom. (That manner of hue and cry arose when Carl Icahn<\/strong> tried to take over three bankrupt Trump Entertainment Resorts<\/strong> casinos which had a far smaller market share between them.) Green could conduct some elaborate charade whereby he tells regulators that Borgata is one pocket, a Caesar-ized Palms is in another and never the twain shall meet. New Jersey, desperate for gaming investment, just might go for it. But you’d have to be born yesterday to believe that inside information from Borgata wouldn’t mysteriously make its way to One Harrah’s Court and vice versa.<\/p>\n

\"\"Lastly, unless Boyd<\/strong> execs have taken to leaving their brains in a jar on the bedside table, in no way is a management contract an improvement their current position in Atlantic City. Half of Borgata may not be what it was seven years ago but Boyd still co-owns by far the biggest cash register in town and one of the few casinos there to show an operating profit. Borgata’s EBITDA dwarfs that of any other BYD asset. For a company with no Las Vegas Strip<\/strong> or Gulf Coast<\/strong> presence to simply capitulate in Atlantic City beggars credulity. Perhaps Boyd <\/strong>should rethink the Jersey deal and try to devise some means of yanking the “Welcome” mat out from under Green’s feet. He’s starting to sound like very bad news.<\/p>\n","protected":false},"excerpt":{"rendered":"

Now that Las Vegas has fallen about as far as it can, private equity firms are picking over the city like vultures sampling carrion. Don’t get me wrong: It’s a much smarter strategy than those PE bozos who bought in … 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":[23,60,82,3,28,42,64,7,53,11,25,9,17,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/5500"}],"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=5500"}],"version-history":[{"count":4,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/5500\/revisions"}],"predecessor-version":[{"id":32161,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/5500\/revisions\/32161"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=5500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=5500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=5500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}