When will the new shape of Harrah’s become apparent?
Probably months from now, about the time new owners and the managers who are still in place begin their rounds of the state regulatory bodies that must approve the $27 billion buyout by two equity funds that will turn the publicly traded casino giant into a private company.
Harrah’s Senior V-P Jan Jones said the first question out of the mouths of these officials will be something like, what are you selling, keeping or developing?
Which means that the company’s chief "deciders" have a lot of work to do, a lot of deciding.
CEO Gary Loveman and his staff have said, for instance, that the Rio is a "non-core asset" and might therefore be sold, if someone were to step up to the plate and offer a big enough figure.
But getting that big figure might not be so easy without the drawing power of Harrah’s World Series of Poker and the Total Rewards marketing program.
With the new owners intent on creating all the value possible from the long list of Harrah’s assets, previous statements and assumptions about future development possibilities will quite possibly go by the boards. This could include some of the development promised for Las Vegas, Atlantic City and casinos in Mississippi and Indiana.
In Las Vegas, the Imperial Palace has already said it is accepting business through the end of 2008.
"It’s a new day in more ways than one at Harrah’s," said one of the former corporate officials who was terminated a couple weeks ago.
And here’s another question: Does Harrah’s want to continue paying the $50-$60 million a year that it now gives Louisiana to maintain an exclusive in New Orleans? How soon will New Orleans once again become the sort of travel destination where it is worth having an exclusive.
Even now, there are hints some strategists within the company would just as soon focus on the company’s property in Biloxi, Mississippi, where there is a business climate much more conducive to expansion.
As for Illinois, this is one of those good news-bad news situations, the good news being that Illinois includes the huge Chicago market, the bad news being that Chicago is in Illinois. It’s a state where lawmakers have generally treated casinos like a questionable industry that is best dealt with by taxing it into extinction.
Among those Illinois problems is the still unresolved effort by several casino companies challenging a state law that slapped an additional tax on casinos serving the Chicago market to benefit racetracks.
These are just a few of the factors to be studied as Loveman and company decide how to create value in a business environment that will not have all those public market pressures.
"Does Harrah’s want to continue to be all things to all people with casinos in everyplace that allows gambling?" said an executive with another company who says he may have an interest in buying one or more of those properties. "I don’t think so."
Stanley Ho’s daughter Pansy Ho may meet with New Jersey gaming officials in the next week or two as she strives to satisfy the questions asked by regulators reviewing her proposed Macau joint venture with MGM Mirage.
That was the "rumor " out of New Jersey late last week, although no one with either the Casino Control Commission or Division of Gaming Enforcement was commenting on the record.
Neither the DGE nor the Gaming Control Board in Nevada have the authority to order Pansy Ho to sit down with them. She is not a licensee in either state.
But MGM is licensed, and because the company wants to do everything it can to win approval in both states, it would probably encourage its Macau partner to make herself available. DGE and GCG staffers have become familiar figures in the Macau-Hong Kong area.