Harrah’s puts plans to raze IP on hold

August 07, 2007 3:40 AM
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The Imperial Palace may not go away any time soon. That’s all subject to change, of course, in the rapidly evolving world of casino deals.

But look at what’s happening.

Harrah’s has decided to spend the millions necessary to make the IP’s slots part of the company’s computerized Total Rewards program. Nothing like this was expected in August 2005, when Harrah’s agreed to pay $370 million for the Imperial Palace’s 18.5 acres of real estate between Harrah’s Las Vegas and the Flamingo.

Harrah’s higher-ups did nothing then to discourage speculation that the nothing-special IP with its odd configuration of rooms and public areas would be razed as part of a grand neighborhood re-development scheme.

Few IP employees would have been willing to bet as much as a dollar that they would still be working there three years later.

But Harrah’s strategists may have come to a conclusion similar to the one that has taken root at MGM: Las Vegas Strip real estate may be worth too much to sell to anyone ”¦ for the moment, anyway.

Massive redevelopment plans were probably re-evaluated when two private equity groups agreed a year ago to pay $17 billion for Harrah’s. Maybe some of the properties in the Harrah’s stable of casinos would be sold to satisfy the expectations of the new owners who would want to quickly pay down debt as they remodel the company.

That’s what supposedly well-connected people were saying

But the era of easy debt seems to have come to a crashing halt during recent weeks, and Harrah’s executives may have come to the conclusion it will be difficult (maybe even impossible) to get the kind of deals for which they might have been hoping.

So it appears the IP is here to stay ”¦ at least for a while.

All this could change in a hurry if, for instance, Sheldon Adelson decides expanding the Venetian’s footprint to the south toward Harrah’s Las Vegas and the IP is worth whatever it might cost.

Sound outrageous?

Well who could have imagined anyone paying more than $30 million an acre for land on the Las Vegas Strip as some buyers have done recently?

Wynn eyes Atlantic City 

Bill Gormley is trying to work some Atlantic City magic on behalf of Steve Wynn.

The well-connected former New Jersey state senator who was one of the gaming industry’s best friends during years in the Legislature until his resignation this past February, is being asked to lend his assistance to efforts to get the former Bader Airport acreage opened for redevelopment as, among other things, a site for casinos.

Wynn wants to put his arms around the former airport a few blocks from the Boardwalk casino (the former Golden Nugget that is now the Atlantic City Hilton) he once owned. Wynn believes he can work some magic with the site, assuming he can get Gormley (and probably others) to get Gov. Jon Corzine involved in the decision-making process.

It won’t be easy. Gaming executives such as Pinnacle CEO Dan Lee, who once worked for Wynn, are adamantly opposed to opening Bader to casinos until other sites on the Boardwalk and marina that are already zoned for casinos been fully developed. Backers of a casino project that will be headed by former Wynn executive Kevin DeSanctis appear reluctant to pull the trigger on their big project without knowing what might be possible at Bader.

MGM is also opposed to the use of Bader at this point, but after years of discussing projects that never materialized, MGM may have pretty much exhausted its ability to be heard on the subject of Bader.

Wynn has not had much of anything to say publicly about Bader recently, but it is no secret that getting a prime development site in Atlantic City remains high on his list of things to do. And Wynn’s casino industry competitors do not want to see a repeat of what happened when Wynn persuaded the city to give him more than a hundred acres in the marina area.

Wynn’s successful campaign was pretty much unopposed at that time. Maybe no one figured he could get it on.

But DeSanctis says, "If it looked like that sort of thing was going to happen again, I’m pretty sure some other people would show up wanting to talk about it."