Is the Rio on Maloof’s radar screen?

Jan 23, 2007 5:32 AM

Let’s put the Palms high on the list of companies well-positioned to deal for the Rio, assuming Harrah’s decides to sell the hotel and casino.

That’s the thinking of a couple executives outside either company who claim the possibility has received a more than casual study.

Such insights aside, it is hard to say if the hard-partying Maloof brothers would be willing to slow their schedule of star-studded bashes and Playboy Mansion soirees long enough to consider a deal, but they could bring to the table something almost no one else has.

Its proximity with a capital "P" is a nice start if you’re giving thought to the possibilities. The Palms is just across the street, a short tram or monorail ride away from the Rio with its well-maintained amenities and 90-something acres of real estate ripe for development.

Boyd Gaming also has good proximity to the Rio, and knows something about marketing difficult causes. Boyd has the popular locals-oriented Gold Coast across the street from the Rio and also owns several downtown casinos.

But Boyd probably has its hands full elsewhere, what with the sprawling $4 billion Echelon Place project occupying large chunks of its corporate attention span for the next several years.

So let’s focus on the Maloofs, who are known to use the Rio’s plush Palazzo Suites as something of a hangout.

And should the stiff-necked rulers of the NBA ever decide to take a deep breath and adopt the morality of mere mortals, the Maloofs’ Sacramento Kings might look very nice in a new sports stadium on some of the Rio acreage.

Harrah’s Chairman Gary Loveman has previously said the Rio might be available to a potential buyer offering a big enough number since it is a mile to the west of what the company considers its "core" holdings — three of the corners at the Strip and Flamingo.

But astute potential buyers realize there is more to purchasing the Rio than simply offering a lot of money.

The driving power of the Total Rewards marketing program is one of the biggest reasons the Rio generated estimated EBITDA (pre-tax cash flow) of about $150 million.

That’s before we get to the World Series of Poker and the torrent of incremental revenue it has bought through the front door

Take away the revenue generated by the World Series each of the last two years, and the power of Total Rewards that works off a database of some 40 million names and what do you have?

A nice hotel and casino a mile from the center of Strip action with no real draw considering all there is on the Strip.

That’s the role in which the Rio was stuck when Harrah’s bought out Marnell about seven years ago. Between the time of the Rio’s opening in 1991 and that buyout a flood of major openings and expansions along the Strip had made it more difficult than ever to get people off the Strip unless an owner was catering to the locals market.

On second thought, perhaps there is no company better suited for the foreseeable future to generating big numbers at the Rio than Harrah’s Entertainment.

Except, perhaps, an operation like the Palms, which has used a lot of imagination and marketing savvy to create success on West Flamingo a mile west of the Strip.

Can’t you imagine Howie Mandell turning toward the cameras, arching an eyebrow as the Maloof brothers huddle, Mandell asking, "What will it be . . . deal or no deal?"