It may be good time to buy, sell a casino

By Liz Benston, Las Vegas Sun
3 November 2008

LAS VEGAS, Nevada -- In the market for a casino?

Now might be just the time. Or, if the economy worsens, in several months, when some earnings-poor gaming companies have loans coming due and find it hard to refuse some cold hard cash.

With downturns come bargains and with bargains come deals — and rumors of deals.

Steve Wynn, who's got cash and personal wealth to spare, dispelled some rumors last week. There's enough on his plate, with the opening of his Encore resorts in Las Vegas and Macau, to keep him from being tempted to pick up any casinos, he said.

MGM Mirage Chief Executive Terry Lanni wouldn't say much when asked whether he would sell off any pieces of the casino empire for some quick cash. (The company has $1.3 billion in loans due next year but launched a bond offering last week that may take out the loans.)

The company has a fiduciary duty to consider any and all offers, Lanni said. Oh, and yes, there have been offers.

Boyd Gaming, which put its $5 billion Echelon resort on hold amid the downturn, doesn't seem to be in a buying or selling mood. Shelving Echelon left the company with more than $2 billion on its major bank loan.

Chief Executive Keith Smith said Boyd, which recently purchased more than $100 million of the company's bonds, would "capitalize on growth opportunities should they arise."

Harrah's Entertainment and Station Casinos, which both went private in highly leveraged buyouts several months ago, could sell property or vacant land, if only because they have a smaller cushion of cash at their disposal.

Still, it's unclear how many deep-pocket buyers will emerge during an economic downturn with no end in sight.

•••

A nonprofit health advocate that fights for smokefree workplace laws is taking aim at the casino industry with an ad campaign appealing directly to decision makers.

The ads, funded by the Robert Wood Johnson Foundation and running in gaming trade publications, come as Atlantic City officials delay a smoking ban there for fear of accelerating business losses to the downturn and to Pennsylvania casinos.

One ad features poker pro Tom McEvoy, who is part of a fledgling group, Gamblers Against Secondhand Smoke, attempting to gain support for a complete smoking ban in Nevada. In the ad McEvoy says, "My definition of winning? Live to play another day."

Jonathan Polansky, whose company, Onbeyond, created the ads, says they are intended to ease an "inevitable" transition to a complete smoking ban in Nevada.

The foundation funded similar, testimonial-type ads in restaurant industry publications that helped business owners realize their fears about losing business were overblown, Polansky said. The ads featured restaurant owners who explained how such bans saved them money, decreased liability and improved workers' health.

"The gaming industry is run by bottom line-oriented people who aren't going to be sentimental about the image of a cigarette hanging out of someone's mouth at the roulette wheel," he said. "That's not going to wash in the long run."

•••

After years of raking in profits by running mid-priced restaurants, some locals casinos are finding more of a sure thing in renting space to national chains.

Americans, after all, find comfort in big, familiar brands.

Starting in October, Boyd Gaming began replacing coffee shops and other restaurants at its Gold Coast, Sam's Town and Suncoast properties with TGI Friday's restaurants. Sam's Town added a Dunkin' Donuts months ago and the Orleans, which has a popular TGI Friday's, will add a Fuddruckers, Sbarro and Baskin-Robbins this fall. More national and local chains are ahead for Boyd-owned properties.

"We made a strategic decision to target some national brands because we think that's what the customer wants," Boyd Gaming Chief Financial Officer Paul Chakmak said last week.

Plus, he said, casinos benefit from the chain's national advertising, which brings people into the properties.

Farming out these restaurants has yielded a significant savings in operating costs, he added.

Station Casinos will open its Aliante Station casino next month with a TGI Friday's as well as a Dunkin' Donuts. Aliante also will have local chains Villa Fresh Italian Kitchen and Capriotti's as well as a Panda Express, Rubio's Mexican Grill and Johnny Rockets.


Related Links
Nevada Online Gambling
Boyd Gaming Gaming Vendor Information


Copyright © Las Vegas Sun. Inc. Republished with permission.
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