Gamers eye ‘throw-offs’
from casino mergers

Oct 5, 2004 12:22 PM

Station Casinos and Golden Nugget owners Tim Poster and Tom Breitling are among the growing groups of deep-pocketed interests waiting to see what opportunities may be available as the gaming industry’s two major mergers move forward.

Both Station and the Nugget owners are said to have an interest in the Caesars Tahoe property that Harrah’s will have once its acquisition of Caesars Entertainment is completed.

Why wouldn’t Harrah’s want to keep Caesars Tahoe? It’s possible it will, but the real estate lease there makes it likely Caesars will be sold. Besides, Harrah’s has always been the big revenue producer at the lake. It was once the state’s only five-star casino hotel.

It’s unlikely Harrah’s would want two such high-end properties in the northern Nevada resort area. Caesars Tahoe would seem to represent an attractive addition to both the current Nugget and Station holdings.

Tahoe would be a nice complement to the toney Golden Nugget, as Poster and Breitling have worked to position it. They’re anxious to expand, whether it be at the Fremont Street property or elsewhere. Poster confirms he would like to have had a shot at the Atlantic City Hilton (the former Golden Nugget), but says that, one way or another, things are going to happen.

Station has had a super success with its Northern California tribal casino near Sacramento and Tahoe would seem to offer good cross-marketing possibilities, something of a natural bridge between its casinos in two states.

MGM Mirage has had "very preliminary" conversations with groups that appear to have an interest in the properties it might want to sell as regulators examine MGM’s proposed purchase of the Mandalay Resort Group.

"The fact is," says a well-connected source. "There’s a lot more speculation than there is substance right now. MGM is probably not going to sell anything until it’s known whether this will be necessary . . . people are seeing likely deals where there is nothing."

For instance, he says, "I read in one of the papers that Harrah’s might want to sell the Rio. That’s not going to happen. Anything is for sale if the price is right, but there is no reason for a company that wants to be in the casino business in Las Vegas to sell the Rio."

Colony Capital has been the most obvious acquirer of casino properties "spun off" by activities of MGM and the Harrah’s acquisition of Caesars.

Industry watchers remain sharply divided, however, on whether Colony wants to step up to the plate, so to speak, and become a significant operator, or remain content to acquire real estate that will at some point be sold to other interests.

A Caesars executive who did not want to be identified by name says, "I’m betting on Colony to sell at some point. The $70 million it’s talked about spending over there at the Las Vegas Hilton won’t do much more than buy new carpet and refurbish the rooms."

Riviera in the crosshairs

Although not yet part of any merger, the Riviera continues getting lots of attention. Touring groups of interested investors are almost bumping into each other as hotel executives prepare an upcoming 50th birthday bash.

"The price is right, I like it," says the chief operating officer with a company that has taken a close look at the Riv.

Speculation is running high that an interested party will soon make a bid on the Riv. One interested party likes the Riv’s property, which extends all the way from the Strip to Paradise, and would like to build a new resort there.

China boom busts Vegas gamers

China’s booming economy has put a costly crimp in the building plans of some Las Vegas casino companies.

The raw materials of construction projects — everything from wood to cement are in short supply. They’re a lot more expensive even when they are available.

"You go to cities like Beijing and Shanghai and you’ll see the steel and cement there," says a senor executive with a gaming company who offered some commentary with the promise of anonymity.

Among the projects delayed by this shortage: the South Coast, being built by the Coast Casinos division of Boyd Gaming. It was not known several days ago what kind of delay or cost increases the project may be facing.

But there are delays.

Another executive explained, "The Chinese are coming in and buying as much as several years of production from some companies," said another executive. The Chinese are exporting much less and importing more than they once did.

A fourth executive, also speaking on the condition he not be identified, said, "Anyone planning on building in Macau is looking at price increases."

Harrah’s Entertainment spokesman Gary Thompson says, "We joke about the construction crane being the state bird in Nevada, but in China it has become the national bird."