Las Vegas Casino Death Watch
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Last updated: January 15, 2015
As the company's namesake once said, "Alea iacta est".
Caesars Entertainment Corporation officially placed it's largest
subsidiary, called Caesars Entertainment Operating Company, into
bankruptcy. CEOC includes many of the US-based casinos operting under
the Caesars brand name, but only Caesars' Palace in Las Vegas, as well
as $18.4 billion in debt. Caesars claims that 80% of the company's
senior bondholders have agreed to a pre-packaged bankruptcy, which is
a pretty impressive number, and they hope to get this done quickly
and emerge from bankruptcy late in 2015. However, there are those
debt holders who feel they are being left out in the cold by this
plan, as well as those who question the legitimacy of the structuring
moves the company made leading up to this situation. There's a great
deal to be ironed out, and new news on this story will be coming
Oh, the shock of it all!
announces that it plans to file for bankruptcy in January. Okay, maybe
it's what just about everyone expected. So, what's going to happen? Well,
the first thing is that the casinos in Las Vegas will remain open, and
everyone's Total Rewards points will be safe. It's possible that there
will be some layoffs and/or that a couple of underperforming properties
around the country will be closed down. It's also possible that one or
more properties will be sold off, but from the customer perspective,
we expect few changes. If you're a debt holder, on the other hand,
we expect things to be complicated. Call it a gut feeling, but given
the acrimony that already exists between management, and the first and
second tier debt holders, we don't think this will be a pre-packaged
deal that will get rubber-stamped by some bankruptcy judge, but
sometimes these things can get political, and if that happens, all bets
sale of the Cosmopolitan to the Blackstone Group received approval
from the Gaming Commission. So, the $1.73 billion sale is finalized.
The key question is, what changes are coming to a place that has a lot
going for it, but hasn't yet been able to find a way to make money?
In any case, we wish the new management team good luck.
At last, our long city-wide nightmare is over.
Resorts and Perini Building Co. have resolved their construction
defect case. In the mean time, the demolition of the Harmon
continues, with the linked article indicating that this process
should be finished by summer.
Hot on the heels of news of the inevitability of Caesars reorganization
comes news that
company will have layoffs. The good news for the employees, such as
it is, is that they plan to lay off less than 1% of their workforce.
However, such small layoffs mean they're not really saving a lot of
money here. Also, of course, nobody wants them to cut staff to the
point where it damages their operations. In the great scheme of
things, something like this was probably necessary, even though it
doesn't mean a whole lot to the bottom line. That will be small
comfort to those who are losing their jobs.
The seemingly inevitable impending Caesars bankruptcy seems even more
Caesars reportedly reaching an agreement on a restructuring plan with
key creditors. The Bloomberg report indicates that Chapter 11 may
take effect as early as mid-January 2015. The market thinks this will
happen, and, frankly, at this point it's hard to imagine a plausible
scenario where a reorganization doesn't occur. Once again, we do not
expect that Caesars' properties, especially those in Las Vegas, will
close or that their day-to-day operation will be significantly impacted.
We do think it's possible that some Caesars' assets may be sold off to
other companies, but we have no idea right now what something like that
might look like.
Name Change: On October 30
Quad officially becomes the Linq. Or wait, is it the other way
around? No, we typed it right the first time. It's hard to remember.
The name change reflects the tighter integration between the hotel and
the nearby Linq Promenade and all it has to offer. From the linked
article, our favorite quote from Robin Leach is, "This is no lipstick
on a pig transaction." If you have to point that out... . It is,
certainly, a big upgrade, though, from the Imperial Palace days.
Katsilometes of the Las Vegas Sun reports that there is a planned
demolition of the Clarion nee Greek Isles nee Debbie Reynolds nee
Paddlewheel casino on January 13 at 12:01AM. This event hasn't
been confirmed, and assuming it goes off as planned, it's not going
a landmark event, like the implosion of the former Landmark which
was located across the street. However, it's what passes for an
implosion these days. In the mean time, nobody breathe too hard
near the building.
Howard Stutz at the RJ reports that
is talking to creditors about the company's debt. We compare this to
a 5 year old girl talking to her parents about getting a pony. The money
quote: "The move comes a day after an analyst told Bloomberg News the
company could be taking steps to file bankruptcy as soon as January."
owners of the Riviera tell the Gaming Commission that they might
spend $100M on renovations on the property. Of course, We might
spend $100M on upgrading the LV Revealed offices, but that doesn't seem
all that likely. Of course, the newly shuffled ownership is making
changes and spending some money on the place, but we're not convinced
this proposed $100M is going to show up.
Railroad Pass is changing hands. This is a small casino (11,000 square
feet of casino space, 120 hotel rooms) between the Boulder Strip and
Boulder City. It is being sold by MGM Resorts to Joe DeSimone, a local
buisinessman with no previous casino experience. We don't know what
his plans are for this place other than it sounds like he wants to
keep it open.
Railroad Pass isn't exactly the swankiest joint in town, but it does
have some history. It is the oldest continually operated casino in
Nevada, and received the second casino license issued by the state.
Could there possibly be an implosion in Las Vegas' near future?
Las Vegas Sun reports that the Clarion (formerly the Greek Isles, and
before that the Debbie Reynolds Hollywood Hotel, and before that
the Paddlewheel, and before that the Royal Americana, and before
that the Royal Inn) is closing down. What, you don't know about
this place? Well, it's on Convention Center Drive, east of Las
Vegas Boulevard. It's small, with about 200 rooms and 7000 square
feet of gaming, and hasn't had table games in years. What, you
knew it existed but didn't know that as of yesterday it was still
open? We're sure you're not alone. We don't know what will happen
to it, but the article speculates that it might be torn down or
imploded. Of course, nobody is giving any official word, much less
a time table, but we can hope.
opens on the site of the former Sahara. We at LV Revealed are not
exactly squarely in owner SBE's target demographic, but the place
does have some intriguing amenities. In any case, as always, we
wish the new owners luck.
Periodically, we see shareholder lawsuits, where people who own shares
in a company or corporate bonds sue that company for lying or mismanagement
or whatnot, but it's pretty uncommon to see a company sue the folks who
hold its equity. Be that as it may,
exactly what Caesars is doing. They claim that their bond holders
are hindering the company's efforts to restructure their debt and are
pushing the company into default. The bondholders, on the other hand,
are claiming that Caesars is transferring assets to subsidiaries in
order to create a protected company with the best pieces with the
intention to declare bankruptcy on the unprotected part with the
worst assets and most of the debt.
Okay, we rarely track closings here that aren't of the "whole property"
type, but we think this one is kind of special. As the Death Watch
is a home for those who wish to remember the old Las Vegas, we think
our readers will want to know.
Flame Steakhouse at the El Cortez is due to close at the end of August
and be replaced by Siegel's, a 24 hour restaurant. This is a
real piece of old Las Vegas. It may not be the best or most up-to-date
restaurant, but it's one of the last and best throwbacks to the concept
of the old Las Vegas steakhouse at reasonable prices. Get the steaks,
some french onion soup, an iceberg wedge, some standard steakhouse sides,
and a nice red wine and you're set. Visit if you get a chance before
it becomes yet another memory.
You know that big blank patch of land across the street from The Wynn
that used to be the New Frontier? The one that has sat idle for years?
Well, nobody is moving heavy equipment to the site yet, but
are reasons to think that the wheels are finally in motion that will
lead to development there. James Packer is looking at getting back
into Las Vegas, and (a) is talking to folks about developing a property
there and (b) now owns part of the debt on the property itself. We
expect there's still a lot to be ironed out before folks start digging
holes, but at least there are real reasons to think something might
happen there in our lifetimes. As they say, a journey of installing
a couple thousand slot machines begins with a single step.
we have some more information on the now former LVH. First, it will
apparently be called Westgate Las Vegas Resort & Casino. We'll be
making updates to the LV Revealed web site in the near future. Second,
200 rooms are expected to be converted to time shares, so this is unlikely
to have a huge effect on how the property is run. Third, the Westgate
folks seem serious about making a real go at returning the property to,
well, maybe not its former glory, but at least to a much better state
than it is now. In any case, while it is run down, there's a lot to
like about this property, and we wish the new owners well.
is going to rename the Quad, formerly the Imperial Palace, as Linq
Hotel & Casino, leveraging their nearby promenade. It will
transition to the new name between now and October 30. Caesars also
says they'll invest a couple hundred million in revamping it. So,
for those of you who want to rush to grab your Quad themed memorabilia
before this august incarnation of this property is gone, you better
get a move on.
official, Westgate has, indeed, purchased the LVH. The purchase
price is reported to be in the $150 to $170 million range. We don't
know how this will affect the operation of this property, but we
expect some changes are coming.
We've been hearing rumors about this for a while, but have been uncertain
about at what point to discuss it here.
appears that the LVH is in the process of being sold to Westgate
Resorts, although nobody involved in the process is willing to
talk about it publically. The sale price is rumored to be in the
$150 million range, just over half what it sold for in 2004. If
Westgate does close the deal, we expect the place to go time share.
Cosmopolitan has been sold to the Blackstone Group. The sale price
is $1.73 billion. The sale has not yet been approved by the Nevada
Gaming Commission. Once this is finalized, we expect some changes at
the property, but nothing that will alter its fundamental character.
The Hard Rock has until June 2 to make a $44.3 million payment,
it doesn't appear that they have it. Actually, this was
due on March 1, but wasn't paid then. Foreclosure by its lender
seems to be a real possibility at this point. We don't think
that will significantly affect the operation of the property
in the short term, and we certainly don't think it will close,
but if this happens it wouldn't be a good sign by any means.
On Nevada Week in Review
Howard Stutz reported that Deutsche Bank is actively shopping the
Cosmopolitan. Word is that James Packer, son of the the late
legendary casino owner and gambler Kerry Packer, is interested.
The Cosmopolitan hasn't turned a profit in any quarter since
it opened, so we'd expect a new owner to make some changes. But
there are many things that everyone seems to like about the place,
so we don't expect a demolition or anything close to that.
Stutz also writes on the story in the
Vegas Review Journal.
Cromwell officially opens it's gaming floor today, with some hotel
rooms available for select guests tonight and general booking available
starting May 21. So, stop on by while it still has that new casino
smell. As always, we wish this new venture good luck.
From the No Real News Here Department,
hear what will happen to the Harmon. There will be no implosion
for this monmument to enthusiasm over of good sense. It
will slowly be dismantled, floor by floor, over the course of more
than a year.
Okay, we basically already knew this. What would be news is if we
knew when they were going to start. Honestly, just not a very good
article, in our opinion.
From the Pretty Much Beating a Dead Horse Department,
& Poors has lowered its credit rating for Caesars Entertainment
from CCC+ to CCC-, which isn't just a "junk" rating, but pretty
close to the "I can't find a sanitation crew willing to take this
thing off my curb" territory. The article also indicates that S&P
believes that some sort of reorganization has become more likely,
although they don't seem to indicate how likely. Worse, they call
Caesars' capital structure "unsustainable". Without an additional
infusion of cash or sell-off of assets, they may not make it to
the end of 2015 without having to file for bankruptcy.
Gaughan has passed away. We can't call it a tragedy when a man who
was working well into his 80s dies at 93, but it's still a sad day.
Mr. Gaughan as much as anyone shaped the evolution of Las Vegas, especially
downtown. As much a gambling pioneer as he was, what impressed me most
about him was his decency. It may be a cliche to say that we're unlikely
to see someone like Mr. Gaughan again, but it's true. He left an
indelible and positive mark on this town, and his influence will be
have more on the recent financial moves by Caesars. This is an
examination of the moves that Caesars made last week. The analysts
quoted in the article and much of Stutz' commentary on the subject
echos ours. Bottom line: Besides raising some capital to keep the
operation running, another plausible reason for making the move is
to keep some key assets, such as Caesars Interactive, separate in
case the bulk of the company has to file for bankruptcy some day.
From the Way Inside Baseball Department,
is selling some of its casinos to another company with Caesars in its
name. To wit, Bally's Las Vegas, the Quad, Harrah's New Orleans,
and the not-yet-reopened casino now named the Cromwell will be sold for
$2.2 billion to Caesars Growth Partners. It seems that Caesars owners
Apollo and TPG own the majority of Caesars Growth Partners, but not all
of it, so this deal allows them to raise some desperately needed cash.
As a consequence of this, debt rating organization Moody's
announced it's looking carefully at the big Caesars and is considering
downgrading its ratings depending on whether it spends the money
raised by these shenanigans wisely or not.
We'd explain all the implications of this move to you, except that it's
all very complicated involving tax laws, and carried interest, and
depreciation and all that, which is to say, we don't really understand
it all either. But, if it seems to you to be reminiscent of someone
rearranging deck chairs, let's just say you're not alone. Again, we
don't think that an implosion of Caesars is imminent, but it has been
a long time since we've been optimistic about the long term financial
health of Caesars as a company.
We have a projected opening date for the SLS,
Day weekend, 2014. Not being night club types, we're not really
the target demo for the property, but some of the restaurants look
intriguing. In any case, we wish them luck and applaud what we hope
is the beginning of a revitalization of the north Strip.
From the "Here We Go Again" department,
judge has issued an order requiring a delay in demolition of the Harmon
tower. It would also not surprise us in the least if some other
judge issues an order contravening this one. It certainly wouldn't
surprise us if the legal system keeps batting this thing back and
forth like a slightly bored cat for the rest of the year. If we
watch this saga long enough, something might actually happen!
We have a new name for Bill's Gamblin' Hall or Gansevoort Las Vegas
or whatever you want to call the former Barbary Coast.
you ready for "The Cromwell"? Howard Stutz' article at the RJ
says they'll start accepting reservations on February 24, although
they haven't announced an opening day. We thought the idea when
Caesars dumped Gansevoort as a partner was to find another partner?
We don't see any sign of one. We're curious as to why? Did no one
want to parter with Caesars on this?