{"id":5834,"date":"2011-02-25T16:50:26","date_gmt":"2011-02-26T00:50:26","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=5834"},"modified":"2018-06-01T15:15:56","modified_gmt":"2018-06-01T23:15:56","slug":"hard-rock-end-of-a-bad-era","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/hard-rock-end-of-a-bad-era\/","title":{"rendered":"Hard Rock: End of a (bad) era"},"content":{"rendered":"

\"\"Scheetz’s Folly, otherwise known as the Hard Rock Hotel & Casino<\/strong>, will soon be in new hands. After several addled years under Morgans Hotel Group<\/strong>, whose bright ideas included “building a hotel suite with an S&M theme and a human cage,” lender Brookfield Asset Management<\/strong> will take title to the hard-luck property<\/a>. It will now be steered by Warner Gaming<\/strong> (a consortium of Station Casinos<\/strong> alumni) and get $30 million in new capital. That’s assuming that all goes according to plan, whereby suckers<\/span> minority owner Morgans gets the heave-ho on March 10 and Warner takes command — collision with a $1.25 billion balloon payment having proven unavoidable. Lenders will eat $357 million but get the casino.<\/p>\n

For all the battering<\/strong> Morgans’ image has taken, it will get off easily from the whole debacle. According to the Wall Street Journal<\/em>, it managed to keep its equity commitment to the $770 million purchase and (equally costly) revamp of the HRH to a puny $75 million. That’s offset by management fees Morgans has been paying itself but which aren’t on track to cover the whole 75 mil enchilada. (By trading off $178 million in debt for the keys to the HRH, Brookfield, however, is positioned to eventually flip the resort at a profit … if Warner can improve that $22 million EBITDA by 50% or so.) Morgans inflicted more damage on itself than others, its Hard Rock venture indirectly torpedoing its involvement in Boyd Gaming<\/strong>‘s Echelon<\/strong> and eventually putting Echelon itself into a coma.<\/p>\n

\"\"Credit Suisse<\/strong> affiliate DLJ Merchant Partners<\/strong>, majority owner of the megaresort, however, stands to get taken to the cleaners, however. When then-CEO Ed Scheetz<\/strong>‘s appeal for joint-venture partners to bail out Morgans fell upon deaf ears, DLJ was left holding the bag. Morgans gave the bank percentage upon percentage of the white elephant on Paradise Road<\/strong>, eventually reduced to a 13% toehold, then nothing.<\/p>\n

One of the most sensible reforms proposed for the upcoming Nevada Legislature<\/strong> is eliminating the requirement for the Nevada Gaming Commission<\/strong> to sign off on each relicensing. Almost every top executive at Warner Gaming has already been licensed as a key employee in the Silver State, so there’s no point in making them jump through all those hoops a second time. With so many properties changing hands on short notice,\u00a0 expediting smooth transfers of management is clearly imperative.<\/p>\n

\"\"As for Morgans’ future, SeekingAlpha.com<\/strong> forecasts a bleak scenario — although its analysis of the company’s future (or lack of same) in Vegas went 100% awry. Extravagant executive compensation and burdensome debt — interest on Hard Rock-related loans exceeded cash flows — leave the hotelier deeply in the red. That’s even with lucky breaks like getting a sweetheart deal on a San Francisco<\/strong> hotel: a lower rent from the landlord, which just so happens to be a Morgans subsidiary. Even being shot of its Vegas misadventure, Morgans may not be out of the woods. In the meantime …<\/p>\n

So long, Morgans, and thanks for playing. I guess the house really does lose, every now and then.<\/p>\n","protected":false},"excerpt":{"rendered":"

Scheetz’s Folly, otherwise known as the Hard Rock Hotel & Casino, will soon be in new hands. After several addled years under Morgans Hotel Group, whose bright ideas included “building a hotel suite with an S&M theme and a human … 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":[60,34,28,102,57,9,38,146],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/5834"}],"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=5834"}],"version-history":[{"count":3,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/5834\/revisions"}],"predecessor-version":[{"id":21823,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/5834\/revisions\/21823"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=5834"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=5834"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=5834"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}