Harrah’s Entertainment finally won an integral piece to its Las Vegas Strip puzzle when Boyd Gaming agreed to trade its Barbary Coast Hotel and Casino in a tax-deferred deal for approximately 24 contiguous acres of Las Vegas Strip property just north of the Stardust.
The land that Boyd is to receive is located directly to the north of its 63-acre Echelon Place development site.
Boyd Gaming expects to recognize a non-cash gain of approximately $280 million in the quarter in which the transaction closes and plans to begin reporting the results of operations from Barbary Coast in "discontinued operations" in the third quarter 2006.
The transaction is subject to customary closing conditions, including receipt of regulatory approvals, and is expected to close in the first quarter 2007.
"This agreement provides additional Las Vegas Strip development opportunities for our company and is strategically located next to Echelon Place," said Bill Boyd, chairman and chief executive officer of Boyd Gaming. "We are especially excited about the prospect of having 87 contiguous acres on the Las Vegas Strip. The additional acreage provides us with the opportunity to develop future phases related to our Echelon project, as well as extending our strategic growth pipeline well into the next decade."
For Harrah’s, the acquisition of the Barbary Coast will have substantially completed its land assemblage goals for Las Vegas, and considerably strengthens the company’s ability to create a destination experience within the Las Vegas market.
"The site we control, some 350 acres, is of unprecedented proportion at one of the most famous intersections in the world," said Charles L. Atwood, vice chairman of the board for Harrah’s. "This large site is intended to give us many years of development potential and the flexibility to grow our future earnings without undue interruption of our current earnings stream. The fact that our total site will have a cost of approximately $13 million per acre on average is strong evidence of our intention to develop this opportunity with a keen eye toward excellent returns on investment."
The 350 acres that Atwood alluded to encompasses the area between Paris Las Vegas to the south, Harrah’s Las Vegas to the north, Koval Avenue to the east and the Rio to the west.
Insiders said the departure of Michael Gaughan from Boyd Gaming may have expedited the deal with Harrah’s. Gaughan has a long history with the Barbary Coast, especially with its use as a poker chip in the game of Strip Monopoly.