Colony Capital to unify players’ clubs

Aug 30, 2005 3:14 AM

A unified players club linking all of the six Colony Capital casinos will get a lot of attention as the executive in charge of these casinos sets up headquarters in Las Vegas next month.

Roger Wagner, the chief of operations at the three Colony subsidiaries that collectively own six casinos from Atlantic City to Las Vegas, says the single-card players club will be "a priority" as he settles in at the Las Vegas Hilton, Colony’s corporate headquarters.

Wagner, the former president of Horseshoe Gaming, says we can also expect eventual unification of these Colony subsidiaries into one company, although the timing of this action is uncertain.

Colony has rapidly climbed the gaming ladder, with its acquisition of the Hilton from Caesars and the purchase of casinos in Indiana, Mississippi and Atlantic City.

Wagner said he has spent much of his time on the road recently, shaking hands, familiarizing himself with properties and explaining the Colony approach to the future.

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Don’t look for Boyd Gaming to overhaul its players club by linking its games to those at the former Coast Casinos, at least not any time soon.

The reason: The Coast and Boyd casinos are on different computer systems and both slot programs are successful enough that the high cost of a change-over would not be worthwhile.

Similarly, Harrah’s and MGM Mirage were quick to announce extensions of their players’ clubs when they bought Caesars and Mandalay, respectively.

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It’s no secret that land for casino development is at an all-time high, just look at those ambitious entrepreneurs and heavyweight investors who are bent on accumulating real estate.

Thus, the Harrah’s purchase of the Imperial Palace for what amounts to $20 million an acre may work to the advantage of other companies that have something to sell.

Boyd Gaming officials, for instance, may really be puzzling over what they can to do with the four acres on which the Barbary Coast sits.

But why do anything? Speculators would just sit on it until someone offers $50 million an acre.

The same reasoning could apply to the 34 acres on which the Tropicana sits at the corner of Trop and the Strip. In light of the $20 million an acre spent for the "landlocked" IP, imagine what the big thinkers at Aztar Corporation believe their property to be worth.

Aztar appears to be counting on a sale, especially since the price of construction has shot upward since it considered spending $750 million on a resort that would have New York-New York or Treasure Island as its economic model.

Let’s face it, three quarters of a billion dollars just won’t go as far as it used to, and no one knows that better than the companies led by people who want to buy, build or sell.

Harrah’s pays $375 million for 18.5 acres of IP real estate and Steve Wynn paid less than $300 million for 200 acres of Desert Inn property.

What do you suppose Boyd Gaming figures it might eventually get for the four very choice acres on which the Barbary Coast sits?

A local gaming industry veteran who, like a lot of others, has watched real estate prices imitate the escalating price of oil, thinks those four acres might go for up to $50 million an acre.

Out of the question? Perhaps.

But, as my friend was saying, "If you’re master planning the future of Harrah’s it is difficult to imagine four more important acres anywhere."

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The stretching of the Las Vegas Strip to the south continues, inspired by a lot of surrounding construction and the upcoming opening of Boyd Gaming’s impressive South Coast complex some five miles south of Tropicana. Station Casinos is interested in property even further to the south at Las Vegas Boulevard and Cactus. There are unconfirmed deals of similar interest by other developers. Stay tuned.

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Capital spending by Harrah’s next year should total $1.4 billion, maybe $1.5 billion, much of that money being earmarked for projects in Las Vegas and Atlantic City.

Chief Financial Officer Charles Atwood says this figure does not include anything for Singapore, should the company be selected to build there.

Chief Operating Officer Tim Wilmott adds, "I think we have lots of opportunity to invest for great returns. We have lots of places to get them and capital spending is a great opportunity for growth for us."

The projects are not well defined yet, perhaps because the company is still looking for real estate in some cases.