IP on the block?

Aug 16, 2005 6:24 AM

Harrah’s purchase of the Imperial Palace appeared "close to being a done deal" as of several days ago, according to sources with a sense of what’s happening.

But, sources added, nothing should be taken for granted until everything is finalized. Big deals are as much about ego, desire and stamina as they are the size of the offer.

The roughly 20 acres that the IP owns between the Strip and Koval Lane south of Harrah’s Las Vegas could be crucial to future development as the company works to raise its Strip profile.

This combination of the properties has long made sense to anyone looking at the configuration of real estate parcels along this section of the Strip. The late IP founder and developer Richard Engelstad was interested in a sale long before his death two years ago.

A sale would probably also include the Imperial Palace on Mississippi’s Golf Coast. No big deal for Harrah’s since it is already licensed there.

Harrah’s is apparently committed to developing around the four acres occupied by the Barbary Coast, property that owner Boyd Gaming shows little interest (for the moment) in selling, terming it a "long term strategic asset," whatever that means.

casino shuffling
in downtown Vegas

Additional downtown consolidation is expected with Binion’s Gaming Hall possibly playing a pivotal role.

"They’ve been beating the bushes looking for a buyer," says a source familiar with MTR Gaming, the West Virginia-based company that bought the landmark Binion’s from Harrah’s Entertainment more than a year ago and has spent a lot of money complying with requirements of the deal that essentially stripped the Fremont Street property of its most important features — the World Series of Poker and the "Horseshoe" brand.

These latter two assets were retained by Harrah’s.

It’s been a tough go for MTR since their purchase. The company has not had much luck regaining momentum at the 50-year-old landmark casino founded by the late Benny Binion. MTR also faces pressure in its home state as the impact of racinos and video lottery terminals expands.

I checked with a second source for further confirmation about MTR’s plans and was told, "They’d probably like to sell the entire company."

MTR has made some astute moves to build some long term appeal into Binion’s with the announcement of plans to launch a major televised poker tournament next year.

Boyd Gaming or Landry’s Restaurants (which is buying the Golden Nugget) appear to be the most likely purchasers of the Binion’s operation. Landry’s Chairman Tilman Fertitta has reportedly concluded the current Nugget footprint does not offer enough space to accomplish everything he has in mind.

So what does Fertitta have in mind for the Nugget? Hard to say, but it is clear he believes in the future of the gaming business and the appeal of the Nugget name. He’s already bought a lot of property in the Houston and Galveston (Texas) areas that would benefit from the eventual legalization of gaming.

Casinos are a certainty in Texas, if not this year, eventually.

Landry’s operates more than 300 restaurants nationally. They include Joe’s Crab Shack and Rainforest Café brands. Landry’s is publicly traded and its chairman is the cousin of Station Casinos Chairman Frank Fertitta III.

As for Boyd Gaming, all of its downtown hotels and casinos from Main Street Station to the Fremont could be connected if Boyd owned all that MTR is supposedly interested in selling.

But Boyd may not have the appetite for such a deal at the moment, considering its officials have stressed several other priorities, such as redevelopment of the 63-acre Stardust tract, and expansion of Atlantic City’s Borgata.

Hilton upgrades

The Las Vegas Hilton has been targeted for more than $31 million in capital spending this year as Colony Capital finally gets around to fulfilling its promise of improvements at the resort it bought more than a year ago from Caesars Entertainment.

Colony is even assembling a corporate headquarters team led by former Horseshoe Gaming president Roger Wagner who tells me he expects to supervise the string of Colony-owned resorts from the Las Vegas Hilton.

I caught up with Wagner in Atlantic City over the weekend. He’s been on the job with Colony for about six weeks but has spent most of that time familiarizing himself with the people and facilities at the casinos Colony recently bought from Harrah’s and Caesars. These include properties in Tunica, Atlantic City and East Chicago, Indiana.

"I’ve been spending most of my time with the new places since Rudy (Las Vegas Hilton President Rudy Prieto) has things very much under control at the Hilton," Wagner said. "But the Hilton is going to be corporate headquarters for everything we’re putting together."

Wagner’s current title is chief operating officer of each of the three Colony entities that collectively own six casinos. It’s expected that these entities will eventually be consolidated into one.

Work in progress at the Hilton includes a new casino bar, improvements at the front entrance and a general rehabbing of rooms that had fallen way behind schedule as Caesars put the property up for sale and stopped spending on improvements.