Caesars Entertainment Finally (?) Going Public

Today Caesars Entertainment set it’s IPO price range in an effort to go public to raise funds.

NEW YORK (MarketWatch) — Casino operator Caesars Entertainment Corp. on Thursday said it plans to offer 1.8 million shares at an estimated price range of $8 to $10 a share in its upcoming initial public offering. Based on the midpoint of its estimated price range, Caesars will raise $16 million in its IPO. Caesars plans to trade on the Nasdaq under the symbol CZR.

Of course, this isn’t the first time Caesars has discussed going public.

Caesars previously filed for an IPO in October 2010, under Harrah’s Entertainment. That deal, estimated at $500 million, was delayed partly because of investor concerns about its debt.

That’s a huge difference in what Caesars is looking for by going public. $16 million for Caesars won’t cover many substantial costs or debt. I’m not sure what their plan is for this, but I don’t see any reason someone would invest in a company with so much debt and no plan.

I don’t think the costs of Project Linq have lessened. Maybe the money raised will go towards the timeshare owners that are supposedly in the way of the supposed Project Linq.

Dear The Linq: Show Me More Than A Picture

A lot has been made about the prospects of Caesars Entertainment building The Linq in Las Vegas this week. I’ve already said that Linq probably isn’t for me. The concept, if it comes to fruition, seems like it will be cool but I’ll believe when I see. I don’t see myself having any desire to visit more than once to see what it’s all about.

I’m not a mall person – I don’t shop at Abercrombie and Fitch for clothes or FYE for music and I don’t eat at Chili’s. It’s not me. I grew up in New York City and those places were not easily accessible for me and the people that frequent those stores are not the people I grew up with. To this day those are not the people I gravitate towards. However, for those people The Linq is likely to be heaven.

My first vision, if The Linq is actually completed, is of people drinking a sugar filled, almost boozeless, daiquiri out of a Ferris Wheel container they’re wearing around their neck. I envision it looking similar to a Flavor Flav watch chain.

I don’t get snarky here very often. It’s not my thing and I generally don’t like it. However, when it comes to mainstream media and corporate speak I am very cynical and often contrarian. Caesars says they will begin construction on The Linq in a month and have it completed in 2013. I’ll believe it when I see it.

Until work on The Linq begins, I’ll consider everything I see as just a rumor – kind of like the Octavious Tower at Caesars Palace being finished and open to the public. Until this project begins I’m declaring Ac2LV a Linq free zone – at least by me. Denver Gambler or someone else may have something to say about it, but I’ll keep my mouth shut until I see some action that I gives me faith I’m spending my time on something real .

I truly believe that The Linq can be a cool thing for a lot of people but I’m not going to waste space here for it until it’s more than just pictures and corporate speak. You can find info on Vegas Chatter, Vegas Tripping and Rate Vegas about The Linq.

What Do People Do at Cosmopolitan?

The Cosmopolitan of Las Vegas reported 2nd quarter earnings today and it gives a small look into how the casino earns it’s money.

Sequentially, results from the property’s casino declined from the first quarter. Gaming revenue in the second quarter of $28.2 million was down from $31 million.

Hotel revenue in the second quarter of $45.9 million was up from $34.4 million in the first quarter thanks to the extra rooms, strong room rates ($246 on average) and occupancy trends (91.4 percent on average).

Food and beverage revenue at the property, known for its restaurants and nightclub offerings, continued to generate the biggest chunk of revenue — $70.1 million in the second quarter v. $57.6 million in the first quarter.

So, people continue to stay and eat and drink at the casino but don’t gamble – in fact they’re gambling less than the quarter before. This is no surprise and from what I’ve seen it won’t be changing any time soon. The gaming promotions they’ve started are aimed at the small player and while that’s a good start, it’s not going to show any immediate effect. It looks as if they are changing some of their focus towards big players.

The company said the second quarter results included a $2 million charge to write off the value of a lounge, which will be demolished to make way for an additional high-limit gaming area. The 9,600-square-foot area will include 15 table games and is expected to be completed by November.

So they’re going to add high limit tables to a place where people don’t gamble. Does not seem like a smart move. I’ve never seen anyone playing in the high limits room, but I’m not at Cosmo 24-7 so what do I know. Maybe they’re playing between 3am and 5am like the high rollers in every other casino. Yes, I’m mocking.

I still don’t understand why the Cosmo won’t add a poker room. It’s another way to draw gamblers who will eventually play other games.

For as horribly as the Cosmo has marketed their casino to gamblers, I love it and will be back shortly for a bite to eat, a drink, a show and maybe a little video poker. As noted above, food and beverage is doing well. It’s easily their best feature and what keeps me coming back. Hopefully they get their stuff together so I can enjoy the place before they’re forced to see to Caesars or, more likely, MGM.

Hooters Files For Chapter 11

Hooters Casino filing for Chapter 11 bankruptcy protection comes as no surprise since the bondholders have been threatening foreclosure since earlier this year, but it finally went down yesterday.

The bankruptcy filing will likely halt the foreclosure on that date, although Canpartners can ask the Bankruptcy Court later for permission to foreclose.

Records indicate the property is encumbered by mortgage and bond debt totaling $162 million plus hundreds of thousands of dollars in trade claims. The initial filing didn’t fully disclose exactly how much is owed or exactly how much 155 East Tropicana feels the property is worth.

The Hooters bankruptcy aimed at blocking a foreclosure is in contrast to another recent Las Vegas gaming bankruptcy — Riviera Holdings Corp. — that was far friendlier.

Chapter 11 doesn’t mean out of business and the casino will remain open during the proceedings.  Last week I had a column at Vegas Chatter about best casinos by tier – cheap, mid-range, high end and Hooters came up a few times as a surprising cheap place to stay. I may have to expedite a trip there in case things get worse.

I don’t know much about this place other than a friend got pink eye after a 15 minute visit. I’ve had no desire to visit since. I don’t want pink eye.

 

George Maloof: Chairman of the Board of the Palms

Good thing Matt Goss isn’t at Palms any longer or George Maloof may not be able to tell people that he’s the Chairman of the board a la Frank Sinatra.  George Maloof sheds (spins?) a little more information about TGP Partners owning 98% of the Palms in a Vegas Inc. interview today.

What about all of the speculation that Caesars Entertainment is taking control of the Palms?

When TPG got involved (with Caesars Entertainment) a couple of years ago, speculation was now that they own part of Caesars Entertainment, Caesars would own part of the Palms. But that’s not true. It’s not at all true. It’s never been true…..

….Do you still have full authority to run the Palms?

I’m in a management agreement, you could say, as chairman of the board of the Palms. I still have that authority.

I’m a skeptic by nature and while the Maloof’s have run Palms since they built it I still find it hard to believe that TGP won’t have Caesars take some part of management of the property at some point.

It would be really interesting to see the Maloof face working with the Caesars brand.  It doesn’t mix today, but it may make both stronger in the long run. Maybe he chose the words “Chairman of the board” as some kind of a subliminal message (I know that’s a stretch).

Frank Sinatra "Nothing But The Best"
Frank Sinatra "Nothing But The Best"

Caesars Palace Remodel Option

Caesars Palace chose to work with Nobu to remodel the Centurion Tower and Appian Way.  I have an idea that I would like way better that would entail more work and would never have happened.

First, use the funds differently. Instead of paying for the remodel and any other costs with Nobu – Caesars could have created a desirable hotel room and remodeled the Centurion Tower themselves.

Caesars could have knocked out the walls between the small rooms and made large upscale rooms similar to what Wynn and Encore has with average room size of 600 – 800 square feet.

This would have also increased room rates by creating a better product and decreasing capacity slightly. This also may have decreased some of their tower renovation costs since they would be responsible for less TV’s, Beds, Bathroom materials, etc.  It cost Wynn, roughly, about $36,ooo to renovate each room (more for suites, less for resort rooms).

Second, they could have used some of the saved funds to lure new stores and restaurants to Appian Way or they could have relocated the food court and made more room for gambling on the gaming floor.

Yes, this would have created more work internally but it would have been an option to keep the integrity of the property.  This clearly isn’t important to Caesars corp. as they took the easy and quick way to do the job that may work short term but probably isn’t something that will stay long term.  This is how Caesars has been doing business forever so I wouldn’t expect more from them.

Caesars Palace – Appian Way and Nobu

Why would Caesars corp throw a new Asian theme (Nobu) in the middle of their Roman themed palace on the strip in Las Vegas?  Good question, but this move makes sense in a very Caesars way.

Caesars Palace is massive.  It’s expansive and confusing.  Besides MGM Grand there may not be a more poorly laid out property in Vegas.  What’s a company looking to breathe new life into it’s hodgepodge of a property to do?  Bring in some help.

It must not easy to find a brand partner that can fit in with their Roman theme.  Nobu’s Asian theme may be a very far cry from what Caesars Palace was built on, but they are a partner that makes sense in the way Caesars operates.

The restaurant and lounge will be in 9,500 square feet at the base of the Nobu tower, near the existing Appian Way at Caesars Palace.

“Nobu’s distinctive brand will bring a new dimension to Caesars Palace and will be designed to attract first-time visitors. The re-branded hotel tower, restaurant and lounge will offer an experience unlike anything in Las Vegas, pairing exclusive accommodations with a resort famed for world-class entertainment, shopping and leisure experiences,” Caesars Palace President Gary Selesner said in a statement.

Pussy Cat Dolls, Sugar Factory and Kerry Simon are just a few outside brands that Caesars has used in their recent expansions. They aren’t keeping ideas in house to expand.  Using outside names and partners allows for further reach.  In simple form you now have the corporate marketing teams working with outside teams.  Maybe theirs strength in numbers.

So the center of Caesars Palace will be modernized with a hip, Asian theme.  Most of the rooms are tiny, so I don’t think this is about the rooms.  If Caesars really wanted to make a statement, they’d knock down walls and double the room size.

The real reason to bring Nobu on is to develop Appian Way, which is underdeveloped and lightly trafficked.  This might create overall theme confusion but this gives the square footage of Appian Way a chance for Caesars to see revenue they aren’t seeing now.  This is probably the least expensive way for Caesars to remodel this portion of the casino.

This likely allows Caesars to manage the hotel tower while Nobu will probably be bringing their name, celebrities and PR staff to the mix managing the Appian Way section.

This is similar to other major corporate partnerships for the most part.  Such as the other partnerships in things I enjoy (music, sports)  I don’t like it, I get it.

Las Vegas Air

A new airline, Las Vegas Air, is set to launch some time this year.  It only will fly from Las Vegas (duh) and New York City (JFK airport, specifically).  Here are some of the details:

LV Air plans to work with nine select hotel-casino properties in Las Vegas to offer a one-of-a-kind experience to customers by consolidating the strength of its nine properties.  LV Air preferred hotel-casino partners will allow customers to have the following inclusive services:

1. “Straight to room” baggage service
2. “Front Desk” check-in for flight departures
3. 24/7 concierge line
4. 24/7 smart phone accessible limo service between properties
5. Smart Phone RFID (recognition software) for VIP treatment ( as guest approaches 100 ft. guest photo will display on front desk/ limousine/ club host display for immediate recognition)
6. Consolidated buffet pricing
7. Consolidated show pricing
8. Restaurant seating preference
9. Night Club booth preference and fixed entry and bottle pricing
10.  Auto reminders, upgrade opportunities and last minute offerings on smart phones daily to all customers traveling on site and outbound

One of my favorite airlines was Midwest Express because they were all first class seats and offered free wine and fresh baked chocolate chip cookies.  Unfortunately, all of their flights went through Milwaukee and they’re no longer in business according to Wikipedia.

Las Vegas Air seems like a similar idea with plenty of cool ideas and entry points into the Las Vegas market.  I’m not sure this idea will ever happen, but I love it.  They seem to be partnering with a hotel chain that has 9 properties.  Caesars is closest with 8 properties, so maybe the Palms purchase rumors are true.

Now that I think of it this probably confirms the rumor and could be a great asset to Caesars if they do own the airline.  Looking further, if this is successful look for the airline to expand to Reno and some of the other casino markets after.  I don’t know the airport scene too well, so that will all depend on gate access.

Check Jaunted and Vegas Chatter if you’re looking for more info.

Wanna Buy the Hard Rock Hotel?

The Hard Rock Hotel and Casino in Las Vegas received a notice of foreclosure today by its lenders.  That’s the bad news.  What’s bad news for some can be opportunity for others.

The notice said prospective buyers have the opportunity to bid at a public auction for the lenders’ interest in the property. The auction is scheduled for 1 p.m. Las Vegas time Monday in front of the Supreme Court of the State of New York at 60 Centre Street in Manhattan.

So, will an outsider step up to the plate and buy the newly remodeled Hard Rock or will the lenders decide to hold onto their debt and keep the casino afloat so they can make money down the line when the economy improves?  I’m expecting the latter.  However, if you’re not cheap you can get in the game!