Boyd Gaming Corporation (BYD) checked out its Mississippi neighbor, Isle of Capri-Tunica, and saw value. So, Monday, the two companies announced an agreement whereby Boyd would acquire all of the non-gaming assets of its neighbor. Involved in the $7.5 million will be a 227-room hotel and two theaters.
Isle of Capri officials announced earlier this year that the board of directors had decided to sell or close its Tunica operation, in addition to selling its Lady Luck Hotel/Casino in Downtown Las Vegas. On July 18, the company said it had an agreement to sell Lady Luck to AMX Nevada LLC.
Boyd said it expected the Isle of Capri-Tunica Casino would close its operations when the non-assets purchase closes sometime within the next 60 days.
As for Isle of Capri, this will close the books on two mistakes made in 2000. The first was the purchase of Lade Luck Hotel/Casino in Downtown Las Vegas. The second was the construction of the hotel at its Tunica location. During the most recent reporting period, the company took an impairment charge of $59.2 million for the two properties, saying it would not be able to recover the net book value of either property. They listed the post-impairment value of the properties as $21.5 million.
In the highly-competitive Tunica, Miss., gaming area, the Isle of Capri property sits right next to Boyd’s Sam’s Town — Tunica. Just south of these casinos is the Harrah’s Casino and further south in Mhoon Landing is the Hollywood Casino, whose owner, Hollywood Gaming Inc. (HWD), has placed itself on the auction block.
Other casinos in the area, all with marketing programs attempting to entice the residents of nearby Memphis, Tenn., are the Horseshoe, Fitzgerald’s , Bally’s, Gold Strike and Grand Casino.
In announcing the Isle of Capri-Tunica purchase, Bill Boyd, chairman and CEO of Boyd Gaming, said he hoped it would help Sam’s Town attract some of the Isle’s customers following its close, and that it would offer the opportunity to utilize the additional hotel rooms and theaters during Sam’s Town’s peak periods or for special events.
He’s been referred to as the "Donald Trump" of Chicago because of his real estate activity but he’s been more of a mystery man when it comes to the casino industry.
Neil Bluhm, president of JMB Realty in Chicago and identified by Forbes magazine as America’s 320th richest man with personal net worth of $800 million, has been identified by the Chicago Daily Herald as the latest pursuer of Illinois’s 10th gaming license.
Because of the controversy regarding the Emerald Group’s efforts to relocated its license to the Chicago suburb of Rosemont, Ill., license pursuers have had to seek other locations for the riverboat berth. Sensing the dispute, Bluhm acquired an 8-acre site in Des Plaines last December. The property, formerly owned by Xerox Corp, is located near Rosemont.
Now that efforts to seek ownership of that license have intensified, Bluhm has been working with the Des Plaines community leaders seeking support of the casino suggestion. Last week, the town’s aldermen voted 7-1 to continue the casino negotiations.
Bluhm, who owns the Four Seasons Hotel and Ritz-Carlton Hotel in Chicago, is no stranger to gaming, although neither Illinois nor Nevada have any records indicating that he has ever applied for a gaming license in their jurisdictions.
However, Bluhm is one of five stakeholders in Casino Niagara, the Ontario casino that was first opened by Larry Woolf and his Navagante Group. After some 18 months of successful operation, the operating license was turned over to the Hyatt Hotel family and their fellow investors, including Bluhm. The current operators are building a permanent $800 million entertainment complex that will include a Hyatt hotel, a theater, an entertainment center, retail shops and a six-story parking complex. The casino will have 200,00 square feet of gaming space with 3,000 slot machines and 150 table games.
Chicago real estate officials said it would not be surprising that Bluhm with his JMB Realty investment and his interests as a principal in the Walton Street Capital firm with $1.1 billion in real estate holdings, would be interested in a gaming venture.
Others reportedly interested in the Illinois gaming license are MGM MIRAGE Inc.(MGG), whose early interest in acquiring the license from the Emerald Group was shot down by state regulators; Mandalay Resort Group (MBG), and Park Place Entertainment Corp. (PPE). Complicating the license acquisition is the recent action of the legislature that has increased the state tax to a figure that could reach as high as 50%.
Obviously the high tax rate has caused license pursuers to rethink their positions. On Monday, when Tom Gallagher, president and CEO of Park Place Entertainment was asked about the company’s interest in the license, he referred to the recent tax increase and said his company would be interested "only if it makes sense."
Pennsylvania Gov. Mark Schweiker was far too busy with the rescue efforts of the nine trapped miners to have much concern for a Canadian Indian organization and its interest in building a casino. Instead, his subordinates listened for about an hour to the Indian proposal and adjourned. After the session, they said there was little interest in the plan at the present time.
Fitch Ratings has affirmed the credit ratings on Boyd Gaming’s senior unsecured notes and has raised the rating on the company’s senior subordinated notes.