No salad days for Caesars, Park Place

November 06, 2001 5:06 AM
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Writing off $29 million in Aladdin junk bonds, Park Place Entertainment hunk-ered down for a tough third quarter.

The world’s largest casino company reported that profits slumped to $17 million, or 6 cents a share, for the period ending Sept. 30. That was a far cry from the $68 million posted a year ago.

Particularly hard hit were Park Place’s Las Vegas properties:

”” Caesars Palace, heavily dependent on table games and high rollers, generated quarterly cash flow of just $3 million, down sharply from last year’s $26 million.

”” Paris/Bally’s reported EBITDA of $30 million compared with $46 million in the third quarter of 2000.

”” Flamingo Las Vegas posted cash flow of $20 million vs. $25 million last year.

”” The Las Vegas Hilton recorded an EBITDA loss of $5 million compared with a loss of $1 million a year ago.

Overall, cash flow for Park Place’s Nevada properties was off 50 percent. But the company’s other casinos helped staunch the bleeding. Quarter-over-quarter EBITDA growth was reported at both Caesars Indiana and Grand Gulfport, and relatively strong cash flows were posted in Atlantic City.

CEO Tom Gallagher said things seem to be turning around here, too. The company experienced positive trends in Las Vegas during the first four weeks of October. Occupancy levels exceeded 95 percent each weekend in October, with the average daily rate down just 3 percent. However, weekday occupancy was approximately 84 percent vs. last year’s occupancy of 95 percent. Average daily rates were down about 5 percent.

Table volumes were up approximately 13 percent during the first four weeks of October at the company’s Strip casinos while slot volumes were down about 7 percent.

The discouraging news was compounded by ongoing problems at the Aladdin, next door to Paris/Bally’s. Park Place — holder of one-third of Aladdin’s bonds ”” has been rumored as a likely suitor for the bankrupt property. But Gallagher threw cold water on that speculation.

“The bottom line is, don’t hold your breath on this one,’’ he said.

On the positive side of the ledger, Park Place opened a 500-room hotel tower in late August at Caesars Indiana, sold its underperforming Flamingo Reno and paid down $75 million debt.

Analysts applauded Park Place’s decision to halt or scale back expansion plans in Las Vegas until tourist traffic can justify those expenditures.