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‘Big 4’ in running for Aladdin’s stalking horse

Oct 8, 2002 7:06 AM

   Contrary to media hype about Colony Capital, Pinnacle Gaming and Marriott International landing the Aladdin, sources say the smart money is still on the Strip’s Big Four.

   “Colony and Pinnacle are coming in at a very high price, which they cannot afford. One of the big players on the Strip will come in and take it away,’’ an industry insider told GamingToday last week.

   Pinnacle’s Dan Lee hinted at the same thing last month when he downplayed rumors of his company’s run at the debt-ridden Aladdin. A casual look at Pinnacle’s balance sheet suggests that it’s in no position to be a “stalking horse” in any Strip sweepstakes.

   But the betting line is far from clear when it comes to picking a favorite.

   Park Place, which holds 25 percent of Aladdin’s junk bonds, has said repeatedly that it is not interested in buying Paris’ next door neighbor. MGM Mirage appears to have its hands full, as does Mandalay Resorts, which is heading south, not north, on Las Vegas Boulevard.

   That leaves Harrah’s.

    “The turnaround at the Rio has been nothing short of phenomenal. Their cash flow is running $100 million. Forty to 50 percent of its rooms are filled through Harrah’s own network,’’ said the industry source.

    “They’re kicking butt. But without a major property on the Strip, they’re just not taken seriously here.’’

   At Global Gaming Expo last month, newly installed CEO Gary Loveman pooh-poohed the notion that Harrah’s might expand its position in Las Vegas. “We can’t get the kind of margins there that we’re getting elsewhere,’’ he stated.

   But observers say Loveman’s remarks could be a misdirection play. In fact, Harrah’s is the most aggressively acquisitive company among the Big Four. And it clearly has the assets to take on — and turn around -- a billion-dollar property.

   “Something is in the works at the Aladdin, and it doesn’t involve Colony or Pinnacle,’’ said one well-connected gaming property broker. When asked if that meant one of the major casino operators was in the hunt, the broker said he has been asked not to names . . . yet.

   Gaming legend Burton Cohen figures it will take $20 million to fix the Aladdin’s user-unfriendly front entrance. But even with that relatively modest outlay, he said he would be surprised if one of the big boys made a serious bid.

    “Don’t get me wrong. It’s a great property and a great location. But the other guys have their own projects,’’ Cohen said. 

   And for whoever is interested, Cohen has a piece of advice. “I’d dump the Aladdin name. Too much confusion.’’