Riv headed for auction?

Aug 17, 2004 4:51 AM

(This week GT christens a new Gaming Insider column penned by veteran Las Vegas journalist Phil Hevener.)

One of the Las Vegas Strip’s oldest resorts may be headed for the auction block.

That’s the Riviera, the cash-starved 54-year-old hotel and casino on 26 acres of prime real estate a short distance north of Wynn Las Vegas.

Jefferies & Co., the Riviera’s investment banker for a number of years, has been asked to explore a proposed auction of the entire company which includes a casino in Black Hawk, Colo., and the licensing opportunities available in Jefferson County near St. Louis, according to sources speaking with the promise of anonymity.

Riviera CFO Duane Krohn would not comment on the report except to confirm that Jefferies is the company’s longtime investment banker.

The auction proposal may be weeks away from coming together if it does at all since Riviera Holdings still considers itself "very much in the hunt" for the right to build the Jefferson County gambling hall.

The Riv’s cash problems have been evident for some time. Riviera Holdings Chairman Bill Westerman had previously said the company would welcome inquiries from investors interested in becoming involved in one of several opportunities the company has considered over the last year or so. That bid did not appear to attract significant interest.

But the auction plan, if it materializes, may be intended to take advantage of a hot market for Strip real estate and the Riv’s A-1 location as development continues near the north end of the Strip.

The Riviera’s main entrance is directly across the Strip from Circus Circus, one of the packages of Mandalay Resort Group casinos being purchased by MGM Mirage. Circus would almost certainly be targeted for extensive redevelopment, assuming the MGM deal is completed.

With good access from Paradise Road and the Las Vegas Hilton and Las Vegas Convention Center, there are also good opportunities for expanding the Riviera to take advantage of a strong convention market.

Riviera officials probably hoped Donald Trump’s purchase of about 10 percent of Riviera Holdings’ stock would grow into more than a passive investment, but that’s apparent all it was.

Trump sold his interested in April after receiving a Nevada gaming license. One Riviera official grumbled, "I’m not sure he ever visited the property."

The potential impact of California Indian casinos on Las Vegas’ No. 1 industry is not widely understood.

That’s the conclusion of a senior executive at a public company that has completed recent focus group studies to determine how people see the issue.

The executive says it is not widely understood that the ripple effect of continued expansion by tribal casinos could go a lot further than California having additional tax money.

Thousands of additional slots, he says, will be something of a breeding ground for total resort environments in that state to cut into the business Las Vegas has not previously had trouble attracting.

No wonder the biggest Las Vegas companies are hurriedly adding additional bulk and financial muscle.

Donald Trump’s plan to build a luxury high-rise condominium project on a piece of Phil Ruffin’s Frontier Hotel property opposite Wynn Las Vegas will probably not be affected by the prepackaged bankruptcy plan involving two of his Atlantic City properties.

"Donald appears to be doing well outside Atlantic City. He has casinos in Indiana and Southern California and his television show ("The Apprentice" on NBC) is getting him 50 to 100 million a year," says a source outside the Trump company.

The time has never been better for Trump to exploit his celebrity as a television star and the holder of a gaming license with an agreement to build on the Las Vegas Strip.