{"id":743,"date":"2008-08-12T15:47:00","date_gmt":"2008-08-12T23:47:00","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/blogs\/dmckee\/index.cfm\/2008\/8\/12\/This-is-news-plus-StationHarrahsEchelon-notes"},"modified":"2008-08-12T15:47:00","modified_gmt":"2008-08-12T23:47:00","slug":"this-is-news-plus-stationharrahsechelon-notes","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/this-is-news-plus-stationharrahsechelon-notes\/","title":{"rendered":"This is news?; plus Station\/Harrah's\/Echelon notes"},"content":{"rendered":"

Way back when Vestin Group<\/strong> made a loan to the Castaways<\/strong> that exceeded the doomed casino's appraised value (as revealed by a Vestin-commissioned<\/em> appraisal that miraculously emerged when the Castaways filed for bankruptcy*), I did some digging into Vestin's financials. As of late 2003\/early 2004, roughly one in four of Vestin's high-interest\/high-risk loans was non-performing. There was some other odd stuff going on, too, but Greenspun Media<\/strong> — my main freelance outlet at the time — ultimately didn't want to hear about it.<\/p>\n

Flash forward four-plus years and Greenspun's crosstown rival is belatedly discovering that it's the same old same-old<\/a> at Vestin. Which, had a few daily-paper business reporters done their jobs sooner, might have saved a Vestin investor or two from taking it in the shorts. I wonder if they're still on the hook for Vernon Downs<\/strong>, that long-suffering racino in upstate New York into which Vestin threw tens of millions of dollars?<\/p>\n

* — the loan was initially made on the basis of a Castaways-supplied appraisal whose valuation was contingent upon a series of contingencies all falling into place.<\/em><\/p>\n

Station Casinos<\/strong> isn't staggering under its newly acquired debt burden the way that Harrahs' Entertainment<\/strong> has been (see sidebar<\/a>). While Station picked a bad time to lever up and one layoff is usually one too many — at least if you've ever been in those shoes — it's commendable that Station is concentrating its economies at the corporate level, rather than taking it out on customer service. The same cannot be said of some rival firms.<\/p>\n

Speaking of Harrah's<\/strong>, it's actually getting some reporters to buy into its spin<\/a> that a doubling of its debt-servicing costs (to $468 million) wasn't the reason it lost almost $98 million last quarter.<\/p>\n

Let's see … You go from being $237.5 million in the black, this time last year, to $97.6 million in the red — a $335 million-plus swing, roughly $235 million of which is gobbled up by increased interest payments on your $29.7 billion debt load<\/strong> — and that's not your main problem? (cough<\/em>baloneycough<\/em>)<\/p>\n

After beating up<\/strong> on the Dogpatch Daily<\/em>, I'd like to make partial amends by pointing out an excellent piece of enterprise reporting that raises additional questions about Boyd Gaming<\/strong>'s due diligence when assembling its Echelon team. The problem? An excessively leveraged General Growth Properties<\/strong>. (Too much debt? Where have I heard that before?)<\/p>\n

"A closer look at General Growth then could have shown potential for trouble down the road," writes Benjamin Spillman<\/strong> of Boyd's May 2007 recruitment of GGP. One of his sources, BoomBustBlog.com<\/strong> continues to keep tabs on insider transactions at GGP<\/a> which, says blogger Reggie Middleton<\/strong> "smack of desperation on the part of the CEO and CFO."<\/p>\n

The gracefulness with which Boyd extracted itself from a deteriorating situation at Echelon might not have been necessary had the company been a little choosier on the way in. Maybe Morgans Hotel Group<\/strong> and GGP were the best dance partners Boyd could find; or perhaps it noted Morgans' limited borrowing capacity and GGP's heavily encumbered balance sheet, then hoped for the best.<\/p>\n

In the end, it was that choice of partners that would let Echelon down. Morgans squandered money on the Hard Rock Hotel & Casino<\/strong> (the phrase "mid-life crisis" suggests itself) it should have been putting toward less-sexy Echelon, and GGP's business model clearly wasn't built for adversity. KVBC-TV recently described the company's Shoppes at Palazzo<\/strong> as "struggling," so we may see some additional fallout ripple down the Strip. Let's hope not.<\/p>\n","protected":false},"excerpt":{"rendered":"

Way back when Vestin Group made a loan to the Castaways that exceeded the doomed casino's appraised value (as revealed by a Vestin-commissioned appraisal that miraculously emerged when the Castaways filed for bankruptcy*), I did some digging into Vestin's financials. … 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":[60,7,102,57,9,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/743"}],"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=743"}],"version-history":[{"count":0,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/743\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=743"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=743"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=743"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}