Vegas Gang #115 – November 20th, 2014

This time on the show:

– Massachusetts is a Go
– Atlantic City: Revel and the Taj Mahal
– Caesars Entertainment and Debt Load
– SLS, Rob Oseland and Andrew Pascal

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** Sure Bets **

Chuckmonster – Pink Floyd “The Endless River”
Dr. Dave – Jeopardy Tournament of Champions | Glenn Fleischmann
Hunter – Fearless Genius

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6 thoughts on “Vegas Gang #115 – November 20th, 2014

  1. I can’t believe Hunter is old enough to have sat at Woolworth’s lunch counter with his mom.

  2. The reason that Woolworth’s may now be a sporting goods store in Santa Barbara is that the company is now Foot Locker. They opened shoe stores as they were closing Woolworth’s.

    Which leads to questions about Circus Circus. Their days may be numbered. MGM breaks out the EBITDA of their casinos. By this metric Circus Circus is easily the least profitable of their Las Vegas properties. EBITDA was 16 million in 2013. The Luxor was second from the bottom at 61 million. Out of that 16 million they have to pay for capital expenditures at Circus Circus so the cash run of MGM has got to be close to zero.

    In Cesar’s third quarter conference call Loveman said that management closed Tunica Harrah’s even though it had positive cash flow. Loveman deemed it a success because cash flow had increased by more at Tunica Horseshoe than Cesar’s than gave up at Harrah’s.

    So Cesar’s went ahead and closed the Showboat, which in 2013 had EBITDA of 45 million. In the conference call Loveman said that the other Cesar’s properties in Atlantic City would retain at least half the business of the Showboat and that would allow total company profits to increase.

    Using that logic, MGM could easily decide that they can push enough of the Circus Circus business into other properties and make more money off a smaller footprint. If you are running a hotel 80% full and you can increase your occupancy by 10% those extra room nights are almost total profit. Variable costs are relatively low.

    As for the legacy of Gary Loveman the man believes that because he has a degree from MIT he is a genius. He has no self awareness. I know this because I have seen pictures of his latest hairpiece.

  3. You guys mentioned MGM Springfield as an example of the kind of big resort that’s getting tougher and tougher to stay viable in today’s economy. For a while now I’ve been looking at the map of Massachusetts and surrounding states, wondering who’s going to be driving to this place and keeping the 125,000 sf of gaming space busy.

    As best as I can tell, Hartford CT is the only metro area that will have Springfield MA as its closest gaming destination. (about 30 minutes drive to Springfield vs 1 hour to Foxwoods). Worcester MA will have a slightly shorter drive to Boston. Everywhere else of significance (and I’m including places like Worcester as significant) has a shorter drive to a different casino.

    Springfield locals? How many are there? I just went to Zillow to see where the wealthy neighborhoods are. Springfield doesn’t have any. I used to drive through there in the mid 90s. Main street was a ghost town, and there were billboards, even back then, saying things like “Casino coming soon!”. Springfield has been a candidate town for a casino for a long time – back when there was no regional competition and Atlantic City was your only alternative.

    I guess what I’m saying is, who the hell is going to keep this place open?

  4. Great show guys, welcome back Chuck. The New Yorker article about to many casinos in the northeastern part of the United States makes a lot of sense. The I-95 corridor from Boston to Washington DC has lots of casinos now and more in the near future. I would assume the population is around 55 to 60 million people in that general area so there are plenty of casinos already but the states want tax revenue so they build more. I live in Chicago and Illinois and all the states around Illinois have casinos so this market is also saturated.

    Chuck thanks for the explanation of Caesars Entertainment shell game. They are over $20 billion dollars in debt and have been deep in debt for at least 4 years or longer. Now on to the REIT to waste more time. Mr. Loveman has just called Felix the Cat
    to see what is in his Magic Bag of Tricks.

    Maybe Caesars Entertainment should sell a casino in Las Vegas to pay off some creditors. The Rio is an obvious choice but this could have happened years ago and for some reason Caesars Entertainmenet still has it. Planet Hollywood and Harrahs are on the ends of their land bank of casinos on the Strip (thanks Dr. Schwartz) so then maybe one of them gets put on the auction block. This was probably part of the reason why Phil Ruffin was able to purchase Traesure Island from MGM Resorts International.

    Planet Hollywood is newer so Caesars Entertainment could keep that and sell Harrahs. These creditors and debt holders are going to want some money soon so they better start making some suggestions to Mr. Loveman before he leaves for Brigadoon.

  5. I think gaming in Springfiled will do well.

    According to Wikipedia the Hartford metropolitan area has a population of 1.2 million and the Springfield area 700,000.

    Also, while places like Worcester and New Haven might be closer to other casinos it might be easier to drive to Springfield. I would guess that it will not be easy to get into the new Boston casino and the parking will be a pain in the ass.

    I read the St. Louis casinos do about 1.1 billion in a metro population 2.8 million. As long as the Springfield casino does above about 400 million it should be fine.

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