Caesars saga lacks clarity but possibilities abound

Nov 3, 2015 3:09 AM

A room full of lawyers is probably necessary to follow the various threads that tell the story of all that’s going on within Caesars Entertainment at the moment.

And they would almost certainly trip over the mish-mash of carefully calculated fine print. Efforts to translate it all into layman-type terms have been known to leave ordinary minds saying, huh? The company is a big bowl of alphabet soup. It’s like wandering into a fog. Clarity disappears in the swirling mist of legalese.

Fortunately, none of it has anything to do with the average customer’s desire to hang out at a blackjack table sipping a free drink.

We know one of its myriad units, Caesars Entertainment Operating Company, is mired in a complex bankruptcy proceeding. It may be months before this saga plays out. Some of the thirty-something properties owned by this troubled division are being offered for sale, if only to get a sense of their value to others.

But what won’t be bought by any of the prospective shoppers will be access to the Total Rewards database with its forty-five million or so names, give or take a few million. It’s been a vital part of the toolbox enabling the company to drive customers this way and that through good times and bad.

Caesars Palace, the flagship resort on the Las Vegas Strip that long ago became one of the world’s best known gaming resort brands, is among the properties owned by the bankrupt unit.

But wait a minute. Wasn’t there a story in recent days that detailed the massive renovation of the original hotel tower at Caesars?

Yes, I believe there was. Where is that money coming from? Hmmmm.

The same story also pointed out that another of the Caesars Palace towers is owned by one of the parent company’s other divisions and is not included in the bankruptcy.

Meanwhile, down on the Gulf Coast, the Harrah’s property in Biloxi is ready to launch a $14 million renovation of its hotel tower this month. The renovation will be complete by mid-spring and will include the redesign of all 494 hotel rooms. Harrah’s was once a stand-alone company but is now one of the Caesars brands.

But turn the spotlight a degree or two in another direction and it looks as though things have never been better. The Caesars social gaming and online efforts have the look of market leaders.

And in Atlantic City, the Harrah’s marina hotel and casino has completed a convention center that is already bringing a new spark of life to local efforts to expand the city’s customer base.

The Caesars Entertainment unit is struggling under a mountain of debt even as properties and divisions have been moved (bought or sold) to one division or another. How might they be impacted by the bankruptcy case that is before judges in New York and Chicago?

I’m not sure and it is apparent other people feel the same way.

The parent company continues to be controlled by private equity groups with access to sufficient spending power to produce all kinds of creative remedies to issues with a mind-numbing complexity.

No wonder the holders of some of the junior debt continue to ask a lot of questions and grumble about the answers they’re getting.

Prompted by a question from a friend, I was wondering if there has been any new thought given to buying into one of the current Macau operators who have had it up to here, so to speak, with the micro-managing of government bureaucrats.

It is certainly true that the rules of the game have changed since Macau was opened to casino owners besides Stanley Ho.

Steve Wynn no longer speaks in rapturous tones about the thoughtful attitudes of Chinese officials overseeing the casino business.

The rise of the Chinese middle class and its desire to gain access to the good life could be a miracle cure-all for what ails Caesars and its various units, if they can find an affordable niche. The company has the ability to make something big happen, and considering the growing frustration that is evident among the half-dozen groups with casino licenses, there may be the basis for a deal.

These merger and acquisition possibilities are always simmering in the casino business and can turn the bankruptcy issues into yesterday’s news as Las Vegas continues the long climb back toward good health.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: [email protected].