Station forecasts growth, expansion

Nov 4, 2003 6:47 AM

Station Casinos is bullish on its operations in Southern Nevada as well as the growing gaming market in California.

In a conference call last week, Station officials announced it will spend $110 million to expand Green Valley Ranch Station, adding nearly 300 guest rooms and 25,000 square feet of casino space.

"We look forward to expanding our Four Diamond property to meet the demand, which has been exceptional," said Glenn C. Christenson, Station’s executive vice president and chief financial officer.

Christenson said that the project also will include more meeting space and an expanded spa facility. He added the work would begin within the next few weeks and should be completed in late 2004.

Green Valley Ranch Station in Henderson opened two years ago as Stations’ upscale, "boutique" style property. The low-line resort features a Mediterranean ambiance with a cozy casino and full slate of top flight restaurants.

Christenson was also optimistic about Station’s casino operations in California. The Nevada gaming company operates a casino in Thunder Valley near Sacramento for the United Auburn tribe, for which it receives about 25 percent of the casino revenues as a management fee.

Thunder Valley opened to much fanfare last June and so far has lived up to expectations. In its quarterly report, Station received management fees of about $18.2 million, which projects to about $75 million a year.

Although tribal casinos don’t make public their actual gaming revenues, the math would indicate Thunder Valley would earn about $300 million in annual revenue (four times the management fee), which would be on par with Bellagio’s annual gaming revenue!

"Thunder Valley has continued its exceptional performance," Christenson said. "Working in partnership with the tribe, we have developed the premier gaming and entertainment property in Northern California."

Thunder Valley casino closely resembles its Nevada counterparts with nearly 2,000 slot machines, 111 table games, a 500-seat bingo parlor, 500-seat buffet, two specialty restaurants and a food court.

Station is also working with another tribe, the Federated Indians of Graton Rancheria in Sonoma County, to develop a casino that it would also manage.

But local opposition has so far stalled the efforts.

Nevertheless, Station is optimistic the project will get untracked and the casino will be built.

"We’re making progress on the Rohnert Park site," Christenson said. "This site is arguably one of the best in the country."

Rohnert Park is located in Sonoma County, within 75 miles of San Francisco.

Station has already advanced more than $12 million toward the project, including $3.5 million in this quarter, to secure real estate. It expects to advance another $35 million to $40 million, of which all but $10 million will be repaid by the tribe.

Among the "red tape" items that Station officials are trying to untangle is an environmental impact study, which they’ve already begun, signing a gaming compact with state officials, and getting management approval from the National Indian Gaming Commission.

Because of the high profit margins associated with managing tribal casinos in California, Station officials said they plan to continue to expand that part of their business.