![\"\"](\"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-content\/uploads\/2010\/06\/hard-rock-blue4-300x195.jpg\" "\\"hard-rock-blue4\\"")
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Update: Taken by surprise, the Hard Rock’s owners swung into action with a countersuit<\/em>.<\/p>\n If you’re in New York City<\/strong> next Monday and have a little “mad money” in your pocket, like a hundred grand or so, you have the exciting opportunity to become a junior secured creditor<\/a> in the Hard Rock Hotel & Casino<\/strong>, aka<\/em> “Project Paradise<\/strong>.” Lender NRFC HRH Holdings<\/strong> has retained Las Vegas-based Global Gaming & Hospitality<\/strong> to hold a foreclosure auction of a pair of Morgans Hotel Group<\/strong> subsidiaries along with other HRH collateral (including “gaming assets and intellectual property”) that is securing a mezzanine loan that’s junior to a pair of other loans — part of $1.36 billion that Morgans has borrowed against the property over the last several years.<\/p>\n Morgans recently surrendered the deed<\/a> to a hotel project in Miami<\/strong>, where it operates (and partly owns) the Shore Club<\/strong>, which is also in foreclosure<\/a>. Should the HRH LV go that route, the winner of Monday’s auction will have purchased a place in the queue, should its assets go on the block.<\/p>\n According to the Nevada Gaming Control Board<\/strong>, Morgans has essentially been running an outlaw operation<\/a> characterized by “excessive drunkenness, public sexual acts, date rape, prostitution, extortion\/misquoting of service charges, drug distribution and abuse, violence, the admittance of minors, the dumping of incapacitated club-goers into casino venues and failure to cooperate with law enforcement<\/em>.” The hotel-casino’s pool party may be called “Rehab” but, from the sound of things, it’s Hard Rock employees and hosts who need to be in detox. Morgans was initially defiant, refusing to admit culpability and boasting that only 2.5% of its HRH employees (all employed in nightclubs or security [!]) couldn’t pass a drug test.<\/p>\n Given the hotelier’s ropey financial condition, we can count it out of its continued participation in Echelon<\/strong> … from which it pinched the “Mondrian” brand it now plans to slap on the HRH Tower<\/strong>. Being shot of serially inept Morgans would be a blessing in disguise for Boyd Gaming<\/strong>, giving it a pre-made excuse to downsize Echelon into something more market-friendly.<\/p>\n It’ll be in prestigious company, as MGM Resorts International<\/strong> chose a heckuva bad time to cozy up to the Mubarak family (Pansy Ho<\/strong>? Gamal Mubarak<\/strong>? MGM sure knows how to pick ’em). As Richard Abowitz<\/strong> points out, Hosni Mubarak’s dim future is a penumbra that falls over MGM’s Egyptian joint venture, too.<\/p>\n","protected":false},"excerpt":{"rendered":" Update: Taken by surprise, the Hard Rock’s owners swung into action with a countersuit. If you’re in New York City next Monday and have a little “mad money” in your pocket, like a hundred grand or so, you have the … Continue reading ![\"\"](\"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-content\/uploads\/2010\/03\/HRH-LV.jpg\" "\\"HRH")
This comes on the heels of reports that Morgans, coming off a $37 million loss in 3Q10 and tottering under $801 million in debt, is peddling a pair of NYC hotels to ease its burden. Ominously, one of its major investors wants “to discuss a wide range of strategic alternatives<\/em>” for the company, which bit off way more than it could chew when it purchased the HRH LV for $760 million, leaving ex-owner Peter Morton<\/strong> laughing all the way to the bank. Inflation of the property into a jumbled, Strip-sized megaresort has further weighed on the bottom lines of Morgans and its financier\/majority HRH owner DLJ Merchant Partners<\/strong>. Lenders could also void Morgans management contract, unless the Vegas market rebounds and rescues the HRH from taking a ride on the Foreclosure Express.<\/p>\n![\"\"](\"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-content\/uploads\/2011\/02\/HRH_BG1.jpg\" "\\"HRH_BG1\\"")
As for one of the casino’s<\/strong> prize assets, its brand name, it’ll be a footrace between creditors and Hard Rock Caf\u00e9 International<\/strong> to see who can wrest that particular plum from Morgans’ grasp. The former, owned by the Seminole Tribe<\/strong>, is using a recent six-figure fine imposed by Nevada<\/strong> regulators as further ammunition in its war<\/a> with Morgans and DLJ.<\/p>\n![\"\"](\"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-content\/uploads\/2010\/03\/ed_scheetz.jpg\" "\\"ed_scheetz\\"")
According to Sun<\/em> reporter Rick Velotta<\/strong>, during an appearance last Friday on Nevada Week in Review<\/em>, Morgans execs told the Nevada Gaming Commission<\/strong> that “rogue employees” were running rampant and upper management was powerless to stop them. This sorry admission<\/a> is one more metric of just how far over its head Morgans has been since party animal ex-CEO Ed Scheetz<\/strong> (left<\/em>) bought the place five years ago. If, per HRH attorney Frank Schreck<\/strong>, Morgans has been “vigilant” against illegal drug use on property, the number and breadth of violations is such that I’d hate to see what laxity looks like. (The recent drug bust of Bruno Mars<\/strong> has supposedly caused other pop acts to pout that they won’t be able to get stoned on-property, according to Schreck.) The sole saving grace for Morgans is that no snorting or toking (or screwing) was observed on the casino floor. If it had, DLJ would be shopping around for a new casino-management company.<\/p>\n![\"\"](\"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-content\/uploads\/2011\/02\/logo-caesars-cairo.png\" "\\"logo-caesars-cairo\\""){kind=logo}
Sinai strife<\/strong>. The continuing unrest in Egypt<\/strong> is having some unfortunate ramifications for the gambling business. Casinos in Taba<\/strong>, on the Sinai<\/strong> peninsula, went dark last weekend<\/a>. If the inevitable downfall of Hosni Mubarak<\/strong>‘s junta brings about democratic elections, conventional wisdom holds that Egyptian social norms will take a more conservative swing. That could be very bad news for the country’s two-dozen-plus casinos. By extension, it would also bode ill for Genting Bhd<\/strong>, which operates there<\/a>, as well as for Caesars Entertainment<\/strong>. Gary Loveman<\/strong>‘s company runs London Club Cairo<\/strong> and Caesars Cairo<\/strong> through its London Clubs International<\/strong> subsidiary.<\/p>\n