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Pinnacle boss weighs sale options

May 20, 2008 7:00 PM

Gaming Insider by Phil Hevener | Pinnacle Entertainment CEO Dan Lee may be hoping to attract potential suitors or joint venture partners as he considers likely routes to the future for the Las Vegas-based company.

Would he consider a joint venture partner for the development of his Atlantic City Sands property, a project he has said may not get off the ground for a couple of years?

Would he sell the entire company?

Lee’s response to the joint venture question: "I’m sure we’d consider it at the appropriate time, but the appropriate time is probably two years away … if I went and found a partner, who do you find as a partner?

"If I partnered with Steve Wynn and then found out Sheldon Adelson wanted to buy Pinnacle to have a network to feed into the Venetian because he doesn’t have one today, and he needs one because he has to compete with CityCenter, well, he’s not going to want to buy Pinnacle if we have a partnership in Atlantic City with Steve Wynn … We’ll see what the credit markets are at the time and whether there’s an appropriate partner. Or frankly, we’ll see if it even makes sense to go ahead in Atlantic City. But at the appropriate time, we’d look at that (a joint venture)."

Then there is Wynn who has already shown an ability to make money in Atlantic City, a gaming destination that continues to intrigue him. Lee was Wynn’s CFO for a number of years and for most of that time Wynn appeared to be impressed with the work Lee was doing for him.

Wynn has mostly talked about his fascination with Bader Field, although he did at one time offer to buy the Sands site. That may have been an effort to make a point at a time when Lee was threatening to drop the Sands project if Wynn got the Bader acreage without a chance for competitive bidding by other parties.

Lee has probably not forgotten Wynn saying that he would buy the Sands acreage if Lee and Pinnacle wanted to exit Atlantic City.

Adelson and his people have previously said they’ll pass on Atlantic City; most industry watchers figure the Sands boss has no inclination to take on the casino unions.

But it is a fact that strategies can change even though the Sands strategists seem to have their hands full with all that they’re focused on in Macau and Singapore. On the other hand, Adelson’s senior executive staff is loaded with people who have lots of Atlantic City experience.

These executives include the likes of Bill Weidner, who ran the Atlantic City Sands for a number of years.

Lee did not appear to be leaning toward any particular possibility, saying that it is in the company’s best interests to focus for the moment on its several projects in the south and middle America. Its projected casino in Baton Rouge can be built for a fraction of the two billion or more required to compete with major new Atlantic City resorts.

Deal brewing for
Las Vegas Trop?

  The Tropicana resorts in both Las Vegas and Atlantic City will probably both be sold by the time the beleaguered Bill Yung III finishes dealing with what amounts to a full court press by regulators and creditors.

Yung has appealed the New Jersey ruling, but the fact there’s been nothing said by Nevada officials about their review of the New Jersey decision in December to yank the Trop’s license suggests a willingness to not make him fight for licenses on two fronts. It also allows Yung to keep his options open.

In New Jersey, Tropicana officials misled state regulators and that is usually a hanging crime in every jurisdiction. Although Nevada sent agents east to review transcripts and talk with key people, they’ve taken no action.

You’d imagine MGM would like to own this property. Its heavy spending on Strip acquisitions the last eight years suggests a view that you can never have too much land. I remember when Kirk Kerkorian overpaid for the New York-New York acreage just because he wanted to keep it out of Steve Wynn’s hands.

Planet Hollywood has recently appeared to be the most likely buyer of the East Coast Trop. The company also operates on the Las Vegas Strip, at the site of the old Aladdin, a bad luck location if there ever was one.

Assuming the Planet Hollywood folks buy the Atlantic City Tropicana, they would probably love to get their hands on the Trop’s Strip acreage as well. The 34 acres at the corner of the Strip and Tropicana continues to increase in value, thanks to the willingness of MGM Mirage to spend heavily upgrading its resorts on three sides of Tropicana.

Somebody with access to money will jump at the Trop.

Perhaps that somebody will be Colony Capital, one of the four known bidders for the Atlantic City Tropicana. Colony made an early offer for the LV Trop and is the only one of the four licensed in both states.

Some kind of deal appears likely. It is just a matter of time