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New Orleans deal struck

Jan 17, 2001 2:42 AM

HARRAH’S MAKES DEAL! Harrah’s Entertainment’s (HET) New Orleans casino ”” perhaps leaning on the adage that money makes the mare go ”” appears to have gotten all of its creditors and tax collectors to agree on concessions totaling more than a half billion dollars. Ever since the land-based casino declared bankruptcy, it became obvious that if the casino stops, so does the money.

Now comes word of a drastic state tax cut (from $100 million to $50 million for the first year); the City of New Orleans will give up $5 million of its $20 million cut from the casino; $519.4 million in casino debt is lifted from the balance sheet by converting 24% of it into stock of questionable value and erasing the rest.

When the deal is finalized, the casino will be left with $124.5 million in debt. A far cry from the $1.1 billion it has incurred since its opening.

Finally, the request to let the casino operate restaurants is still alive.

The bankruptcy court must approve the plan. Under the new deal, HET must give up more of its credit claim and take it in stock in the new company. And, it will recover less than 46% of what it has loaned the casino, while Deutsche Bank will retain 98.5% of its investment in the company.

BETTING ON THE HOUSE! If you listen to Bear Stearns, you might want to make a play on Churchill Downs Inc. (CHDN). The shares of the racetrack company are trading at about 7.8X and 7.3X the analyst’s 2000 and 2001 EBITDA estimates of $63.4 million and $74.6 million respectively.

The Wall Street firm sees an asset value of between $35-$36 per share.

Churchill Downs has developed one of the strongest brand names within the industry. It has been done to gain increased broadcast exposure on television and ”” more importantly ”” increased distribution of its simulcast network.

CHDN closed Friday at 12 13/16, down 11/16 ”” nearly 10 points below Bear Stearns’ target.

NO NAME/NO GAIN! The nickname (Fighting Sioux) stays and so does Ralph Engelstad’s multimillion-dollar pledge to build a hockey arena for the University of North Dakota.

It seems as if educators there decided to drop the nickname until Engelstad wrote a blunt letter. If the nickname and logo were dropped, he would halt construction of the hockey arena, cut off its heat, absorb more than $35 million in expenses and allow the building to deteriorate.

The educators held a cram session and voted 8-0 to keep the nickname and logo. Both had drawn objections from American Indian students and tribal officials, who considered them offensive.

TAKE BACK YOUR MINK! Former Celtics coach Rick Pitino has delayed a planned trip to see the Running Rebels this week. He’s asking for a little time. The coach had planned to spend this week at the home of UNLV Athletic Director Charles Cavagnaro, as reported in Gaming Today last week.

In the meantime, rumors persist that Pitino may still have UCLA on his mind.

SCRATCH HARRODS! The upscale English retailer will not be setting up shop at Mandalay Bay as had been speculated.

Glen Schaeffer, CFO of Mandalay Resorts (MBG), told investors last week it will detail its plans for a major new shopping complex connecting Mandalay Bay and Luxor in a few months.

At the same time, he ruled out earlier speculation about Harrods setting up shop at Mandalay Bay. The well-known firm is owned by Mohamed Al Fayed, father of the late Dodi Fayed, fiancé of the late Princess Diana. The company also has an online gaming site.

Schaeffer said that, apart from the retail project, Mandalay has no other plans for new casino developments in the immediate future. Much of the estimated $300 million in free cash flow it expects to generate in 2001 will be used to buy back stock, Schaeffer explained.

BACK IN CAESARS PINSTRIPES! Highly respected casino executive Jim Bradshaw is the new senior vice president of Caesars World marketing. He and Kent Donovan left top marketing spots at the Las Vegas Hilton to join up with Dean Harrold’s team at Caesars.

SOUTH OF THE BORDER! If you want to bet on who will win Oscars, travel South of the Border to Mexico, where bookmakers have established "Gladiator" as an even money choice to walk away with the Best Picture award. Russell Crowe, who stars in the movie, is also even money to be Best Actor. Joan Allen ("The Contender") is even money as Best Actress.

If the line is accurate, it looks like a field day for chalk players.

HOLD THE PHONE! New Jersey racetracks have been ordered to stop taking phone bets. The State Attorney General’s Office argues that such an act violates state and federal laws.

ROOTING FOR CARL? Slot players in Atlantic City are getting a better bang for their buck now that Carl Icahn has loosened up the machines at the Sands casino.

"However," said a pipe, "if you’re looking for loose slots, the Las Vegas Strip is still the place to go. The payout averages 94.1% on Las Vegas Blvd., compared to 91.8% at the seashore."

FATHER AND SON! Nicholas Ribis Jr. has been retained as an advertising consultant by Resorts, Atlantic City’s first hotel-casino. Ribis’ father, Nicholas Ribis, was once Donald Trump’s right-hand man at Trump casinos in the seashore city. At the time, the son was vice president of advertising at Trump Taj Mahal. His father left The Donald to take up with Colony Capital LLC and was instrumental in getting Colony to negotiate the pending sale of Resorts to the company.

DID YOU KNOW? In Las Vegas, most dealers pool their tips. Not so at most California casinos. There, dealers go directly south with their tokes.

A HORSE BY ANY OTHER NAME . . . Leave it to horse owners to keep in step with current events. The Jockey Club, which keeps count of official horse names, told about three new ones that have been registered: Count The Chads, Florida Recount and Tooclosetocall.

Are there any more? "We’re still counting them," said The Jockey Club.