{"id":694,"date":"2009-04-03T16:05:00","date_gmt":"2009-04-04T00:05:00","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/blogs\/dmckee\/index.cfm\/2009\/4\/3\/Leper-Colony"},"modified":"2009-04-03T16:05:00","modified_gmt":"2009-04-04T00:05:00","slug":"leper-colony","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/leper-colony\/","title":{"rendered":"Leper Colony"},"content":{"rendered":"

Or, in lieu of "Atlantic City Death Watch VII," maybe "Colony Death Watch." Scarcely had S&G<\/em> dubbed Colony Capital<\/strong>'s East Coast casino portfolio "Colony Crapital" than came affirmation<\/a> in the form of the latest set of numbers from the Boardwalk.<\/p>\n

First, the good news<\/strong>. Everyone in Atlantic City reported a profitable operating margin last year as well as a gross operating profit. As the Press of Atlantic City<\/em> explains<\/a>, "Net income, however, is not considered as important as gross operating profit, which is seen as the best way to measure a casino’s financial strength." <\/span><\/p>\n

For instance, Harrah's Entertainment<\/strong> had the two best operating margins in the city (at Caesars A.C.<\/strong> and Harrah's Marina<\/strong>) and four of the top five. In gross operating profit, the Harrah's-owned quartet held the #2-3 and #6 spots, bested only by Borgata<\/strong> (#1, of course) and Trump Taj Mahal<\/strong>. However, thanks to some accounting jiggery-pokery back at corporate HQ, all four posted year-end losses — some of them gargantuan, like the -$355 million charged against Caesars. Only Boyd Gaming<\/strong>'s Borgata reported a profitable 2008. In terms of revenue, it was so far ahead of everybody else — by $280 million — it's not even funny.<\/p>\n

<\/span><\/p>\n

For Harrah's Marina<\/strong>, the good news was triplefold. Not only did it have the smallest diminution of gross operating profit (-1%), it was also the sole casino to record an increase — 8.5% — in revenue.<\/span><\/p>\n

Harrah's operational skill aside, UNLV's David Schwartz<\/strong> found another silver lining<\/a>. To wit, <\/span>"I’m surprised that gross gaming revenues fell by only 7.1%. For all of the belly-aching about the partial smoking ban and competition from Pennsylvania, Atlantic City’s gaming win<\/em> actually declined less than Nevada’s, which shrank by about 10%. People are still willing to come to Atlantic City; they are just gambling less.<\/em>" [Emphasis added.]<\/p>\n

Now for the bad news<\/strong>. The two lepers in the A.C. colony are — you guessed it — Resorts Atlantic City<\/strong> and the Hilton<\/strong>. Those two Colony Capital casinos posted extraordinarily dismal numbers, even by last year's low standards. Their operating profit margins were less than 2%, against a market average of 21%, and their gross operating profit was $6.3 million … combined. In a year when the average Atlantic City casino saw a gross operating profits fall 25%, Colony's duo crash-dove -88% and -89%, respectively.<\/span><\/p>\n

Compare this to Trump Marina<\/strong>. Even in a semi-orphaned state, as its sale dragged on (and on), the future Margaritaville<\/strong> garnered superior operating profit margin — 7.5% — and a far bigger operating profit on the smallest revenue base in the market. It reported gross operating profit of $15 million on revenues of $195 million. Somebody's doing something right and it's not Colony's Atlantic City braintrust.<\/span><\/p>\n

Does Colony know how to pick 'em or what? And is MGM Mirage<\/strong> sure it wants to get into bed with these guys? They're starting to make James Packer<\/strong> look like a sagacious casino mogul. As for the Hilton, which used to be Steve Wynn<\/strong>'s Atlantic City Golden Nugget<\/strong>, suffice to say it's seen better days.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Or, in lieu of "Atlantic City Death Watch VII," maybe "Colony Death Watch." Scarcely had S&G dubbed Colony Capital's East Coast casino portfolio "Colony Crapital" than came affirmation in the form of the latest set of numbers from the Boardwalk. … 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":[23,60,3,42,14,7,96,11,32],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/694"}],"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=694"}],"version-history":[{"count":0,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/694\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=694"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=694"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=694"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}