Yearly Gaming Abstract for Vegas strip

The gaming abstract is released yearly, and is the only Nevada Gaming Commission document that deals with non-gaming revenue as well as gaming revenue. It is also the only document that includes expenses and net income. Fiscal years end in June.

On the Vegas strip the drop in gaming revenue is actually seen to be a minor relative to drops in rooming, food, and entertainment. Only alcohol is increasing in sales, as casinos raise prices and minimize free drinks in an effort to stave off the drain.

General and Administrative or the front office expenses are growing out of control as interest on massive real estate deals and buyouts grows. Also the corporations are writing down billions of dollars worth of property which is now deemed to be overvalued. The figures for 1990 are shown to make a comparison to more balanced business levels.

Fiscal year 2008 was the last year with a net income instead of a loss.

$millions	1990		2008	2009	2010
Gaming	$2,279		$6,266	$5,330	$5,167
Rooms	$662		$4,070	$3,370	$3,106
Food	$441		$2,321	$2,066	$2,013
Beverage	$238		$826	$847	$910
Other	$319		$2,311	$2,170	$2,061
Revenue Total	$3,939		$15,794	$13,784	$13,258
Cost of sale	$286		$1,070	$971	$972
Departments	$2,071		$7,865	$7,465	$7,284
General & Admin	$1,224		$6,149	$9,510	$7,572
Expenses Total	$3,581		$15,085	$17,946	$15,828
Net income (loss)	$358		$709	$(4,163)	$(2,571)

It makes you wonder if owners and managers had just let profitable casinos (like Hard Rock) alone, instead of loading them up with new towers, renovated casinos, and massive debt, if they would now be turning a modest profit instead of staving off bankruptcy.

Quote: pacomartin

It makes you wonder if owners and managers had just let profitable casinos (like Hard Rock) alone, instead of loading them up with new towers, renovated casinos, and massive debt, if they would now be turning a modest profit instead of staving off bankruptcy.

The problem becomes one of keeping up with the Jones'. Things like hotels get old and tired and people won't want to stay there.

My first trip to Las Vegas was staying downtown at the Golden Nuggett in 2005. It was OK, but downtown felt old and tired compared to the strip. Our next stay was at Caesars Palace and we stayed in the newer Forum towers and thought that was great. The next stay was at Harrah's across the street and it definitely felt worn out. Our next trip was back to Caesars, but this time they upgraded us to a Palace Tower Suite -- separate living room, separate bedroom, and two sets of bathrooms; the largest hotel room we've ever stayed in -- but again it felt old with a 1970's style heat lamp in the bathroom and a 27" tube TV. Since that time we've stayed 3 times at the Wynn where the rooms are all fresh and the whole hotel has a much better feel to us.

I guess ultimately it becomes a race between falling revenues due to the property aging versus keeping costs low and squeezing out profit by avoiding expenses like renovation. Eventually you will have to renovate, but timing and the scope of the renovation is key.

Paco:

I'm not sure about this:

Quote: Paco

On the Vegas strip the drop in gaming revenue is actually seen to be a minor relative to drops in rooming, food, and entertainment. Only alcohol is increasing in sales, as casinos raise prices and minimize free drinks in an effort to stave off the drain.

$millions 1990 % Sales 2008 % Sales 2009 % Sales 2010 % Sales
Gaming $2,279 57.86% $6,266 39.67% $5,330 38.67% $5,167 38.97%
Rooms $662 16.81% $4,070 25.77% $3,370 24.45% $3,106 23.43%
Food $441 11.20% $2,321 14.70% $2,066 14.99% $2,013 15.18%
Beverage $238 6.04% $826 5.23% $847 6.14% $910 6.86%
Other $319 8.10% $2,311 14.63% $2,170 15.74% $2,061 15.55%
Revenue Total $3,939 $15,794 $13,784 $13,258

Cost of sale $286 7.26% $1,070 6.77% $971 7.04% $972 7.33%
Departments $2,071 52.58% $7,865 49.80% $7,465 54.16% $7,284 54.94%
General & Admin $1,224 31.07% $6,149 38.93% $9,510 68.99% $7,572 57.11%
Expenses Total $3,581 90.91% $15,085 95.51% $17,946 130.19% $15,828 119.38%

Net income (loss) $358 9.09% $709 4.49% ($4,163) -30.20% $(2,571 -19.38%

(sorry, in "create post" everything lines up, when it posts, it slides to the left...)

When you look at the numbers on a percentage basis, they have all declined at about the same rates. Maybe the amounts seem bigger, but the declines are consistent across the numbers. The surprising part is how much more of the revenue pie the other things besides gaming is NOW compared to 1990.

The percentage increase in G&A is telling. And has something to do with interest, and possibly the write off of intangibles, but there has to be more to it. And if I am running a large Gaming company, if I write down my intangibles in a bad year, then in a good years, I am going to be making serious coin.

SFB

Quote: helpmespock

The problem becomes one of keeping up with the Jones'. Things like hotels get old and tired and people won't want to stay there.

My first trip to Las Vegas was staying downtown at the Golden Nuggett in 2005.

I don't know when you stayed, but in January 2005 Tim Poster and Tom Breitling agreed to sell the Golden Nugget to Landry's Restaurant for about $320 million ($100 million more than they paid for it in 2003). Landry's Restaurant added another $300 million in improvements to try to make it look like a strip resort.

The long and short of it was that the Golden Nugget may have looked old and tired, but it was a money making enterprise in 2003 when MGM Mirage sold it. Now it's a massive money sink with huge interest payments due on hundreds of millions of dollars in financing for the improvements.

Of course, what happened to Golden Nugget is tiddleywinks compared to the billion dollar loss that Goldman Sachs took on purchasing the Stratosphere. I mean, the place was built as budget hotel with a profitable eye catching tower next door. Did they think that they were going to renovate the place, and people would spend $400 a night to stay next to fleabag bordellos and fast food places?

I added 2006 into the table for the Vegas strip. Revenue was not at a peak, but the Wynn Resort was just completed. The companies were just beginning their massive borrowing spree to build the palaces that opened a few years later. G&A expenses were under control, and net income for the strip was over a billion dollars.

$millions	1990		2006	2007	2008	2009	2010
Gaming	$2,279		$6,041	$6,491	$6,266	$5,330	$5,167
Rooms	$662		$3,849	$4,082	$4,070	$3,370	$3,106
Food	$441		$2,146	$2,179	$2,321	$2,066	$2,013
Beverage	$238		$823	$890	$826	$847	$910
Other	$319		$2,079	$2,181	$2,311	$2,170	$2,061
Revenue Total	$3,939		$14,937	$15,823	$15,794	$13,784	$13,258
Cost of sale	$286		$1,027	$1,089	$1,070	$971	$972
Departments	$2,071		$7,410	$7,884	$7,865	$7,465	$7,284
General & Admin	$1,224		$5,251	$5,189	$6,149	$9,510	$7,572
Expenses Total	$3,581		$13,688	$14,162	$15,085	$17,946	$15,828
Net income (loss)	$358		$1,249	$1,661	$709	$(4,163)	$(2,571)

Quote: SFB

When you look at the numbers on a percentage basis, they have all declined at about the same rates. Maybe the amounts seem bigger, but the declines are consistent across the numbers. The surprising part is how much more of the revenue pie the other things besides gaming is NOW compared to 1990.

The percentage increase in G&A is telling. And has something to do with interest, and possibly the write off of intangibles, but there has to be more to it. And if I am running a large Gaming company, if I write down my intangibles in a bad year, then in a good years, I am going to be making serious coin.

SFB

To your first point, yes on a percentage basis they are similar. But in the last decade as the strip business became more and more about rooms, food, drinks and shows, 1% of non-gaming is more important than 1% of gaming.

Another important point is that the casinos are more likely to have dramatic improvements in efficiency every year as automation is introduced. More slots, video blackjack, ticket in/ticket out machines, no more buckets of coins, much more reliable slot machines, fewer cashiers, etc. It is more difficult to introduce those kinds of efficiencies into hotels & restaurants (cleaning beds, waiting tables).

The state of Nevada casino departments employed 44,470 people in 2010, down from 52,307 people in 1990 despite a massive increase in the number of casinos. The "hotel rooms" department of the casino employed 29,300 people in 2010, up from 19,467 in 1990.

To your second point, yes indeed the companies wrote down massively in the year 2009. But it's not all roses, as their assets are greatly reduced and they will have a much harder time borrowing money in the future. Interest is a big part of the G&A as they borrowed massively to cover mergers and buyouts (which don't improve the value of the assets by a lot).

Wow.

So nearly $ 7 billion in losses in 2009 & 2010 ?

How many previous years of profit does that wipe-out overall ?

Quote: JohnnyQ

Wow.

So nearly $ 7 billion in losses in 2009 & 2010 ?

How many previous years of profit does that wipe-out overall ?

All the profit since 1999. The reported loss of $1/4 billion after 9/11 was considered unprecedented and horrific at the time.

Quote: pacomartin

I don't know when you stayed, but in January 2005 Tim Poster and Tom Breitling agreed to sell the Golden Nugget to Landry's Restaurant for about $320 million ($100 million more than they paid for it in 2003). Landry's Restaurant added another $300 million in improvements to try to make it look like a strip resort.

The long and short of it was that the Golden Nugget may have looked old and tired, but it was a money making enterprise in 2003 when MGM Mirage sold it. Now it's a massive money sink with huge interest payments due on hundreds of millions of dollars in financing for the improvements.

We were there in May 2005 and I remember the talk about the sale at the time and people having high hopes that it was going to rejuvinate the downtown.

Quote: pacomartin

Of course, what happened to Golden Nugget is tiddleywinks compared to the billion dollar loss that Goldman Sachs took on purchasing the Stratosphere. I mean, the place was built as budget hotel with a profitable eye catching tower next door. Did they think that they were going to renovate the place, and people would spend $400 a night to stay next to fleabag bordellos and fast food places?

This is a good point -- you can't turn a sow's ear into a silk purse, but it does lend itself to my point about the timing an scope of a renovation. Spending money when the market itself it growing may pay off even if you don't increase your relative market share. However I think your numbers clearly show that Las Vegas has over-extended itself and that all their expenditures were based on the market continuing increase. Now that overall revenues are shrinking Las Vegas is in trouble.

The old addage about debit is coming home to roost in Las Vegas -- increasing debt in good times makes your highs higher, but when things go badly it makes the lows lower.

I'm curious -- there are properties that did not renovate during the boom times right? How are they doing? Are they profitable? Is their relative market share increasing or shrinking?

Quote: helpmespock

I'm curious -- there are properties that did not renovate during the boom times right? How are they doing? Are they profitable? Is their relative market share increasing or shrinking?

Well it's not just renovation, many properties were resold at record amounts of money in anticipation of future renovations. Prime examples would be the Sahara Resort, the Stratosphere, and the Ceasars properties which were bought en mass by Harrah's Entertainment Group, and the Mandalay Bay properties (MB, Luxor, Excalibur, Circus Circus in Vegas and Reno) which were bought by MGM Resorts, Hard Rock Casino bought by Morgan Hotels, and Station Casinos taking the company private. The New Frontier was bought by El-Elad for $1.3 billion and torn down for a planned new resort based on the Plaza Hotel.

The three Boyd properties in downtown Las Vegas, have not been sold in over 20 years, and have minimal renovations done every year. They increased market share downtown (by marginal percentage points), but they were able to cut costs to actually boost their EBIDTA. While non spectacular properties they increase cash flow to the company reeling from the debacle caused by tearing down the Stardust Casino on the strip and replacing it with incomplete buildings that already cost $1/2 billion.

MGM Resorts makes most of their profit from the MGM Grand. The old Mirage Resort is still one of the most profitable resorts in the group. They did spend some money on renovations to prepare for the 20th anniversary, but it paid off. The black hole known as City Center will probably sink the company eventually.

Excalibur is one of the highest grossing resorts for MGM on a percentage basis. The operating costs of Excalibur are almost on par with that of Circus Circus, but people are willing to spend a lot more to stay at Excalibur for the location. Circus Circus is too isolated and too close to adult strip clubs for a family resort.

I am actually anticipating, and looking forward to with great joy, the total demise of 50% or more of Vegas Strip properties within the next five years.

These companies deserve to fail/implode. They developed a greedy and shortsighted business strategy based on no longer being content to shear the sheep, but killing them instead--on the dubious premise that there are an infinite number of sheep. Then, inter-property collusion, as well as the massive takeovers and consolidation of Strip properties, effectively prevented any one property from deviating from that stupid and flawed strategy.

$12 grilled cheese sandwiches in the coffee shop, $299 rooms, and $25 minimums at the tables was never a sustainable business model, but the Second Great Depression has made it not just unsustainable, but disastrous. I recommend short selling the stock of every company with a major presence on the Las Vegas Strip, as I would for any company run by delusional lobotomized baboons.

Quote: mkl654321

$12 grilled cheese sandwiches in the coffee shop, $299 rooms, and $25 minimums at the tables was never a sustainable business model, but the Second Great Depression has made it not just unsustainable, but disastrous.

From 1990 to 2010 on the Vegas strip
Gaming Revenue increased 127%
Food Revenue increased 369%
Beverage Revenue increased 356%
Other (entertainment and retail) increased 282%


Annual visitors were about 18 million in 1989 before they opened the Mirage, and peaked at 39 million in 2007. So people must like it.

Profit (loss) in $ millions since Mirage opened for Vegas strip from all revenue sources as report to Gaming Commission.

1990	$358	2000	$185
1991	$313	2001	$388
1992	$397	2002	$(224)
1993	$594	2003	$514
1994	$610	2004	$1,026
1995	$765	2005	$1,152
1996	$974	2006	$1,249
1997	$906	2007	$1,661
1998	$803	2008	$709
1999	$538	2009	$(4,163)
		2010	$(2,571)

Quote: pacomartin

From 1990 to 2010 on the Vegas strip
Gaming Revenue increased 127%
Food Revenue increased 369%
Beverage Revenue increased 356%
Other (entertainment and retail) increased 282%

Those numbers would have to be adjusted for:

Inflation
The sheer increase in the number of casinos/rooms/etc. in the last twenty years
The huge increase in the population of the Vegas Valley in the last twenty years

I wouldn't be surprised at all if PROPORTIONATELY, Vegas casino property revenue has been dropping like a brick for the last five or so years.

Quote: mkl654321

Those numbers would have to be adjusted for:

Inflation
The sheer increase in the number of casinos/rooms/etc. in the last twenty years
The huge increase in the population of the Vegas Valley in the last twenty years

I wouldn't be surprised at all if PROPORTIONATELY, Vegas casino property revenue has been dropping like a brick for the last five or so years.

Wouldn't we also have to assume the rip-offs on room and food? For example, a man has $3000 for his vegas trip. 1990, perhaps $500 for rm and eats, $2500 to gamble. Now, $1500 for rm and eats, $1500 to gamble.

My friend, Phil Basser, a Harrahs pit boss since the '70's said it best, 'these clowns have no clue, we need the 'families' running this town again.'

My first vegas trip was in 92. I had a grand, cost me $106 for 5 nights at the sahara. Less than a bill for food. Room comped for a $5 craps player...those were the days......

Quote: avargov

My first vegas trip was in 92. I had a grand, cost me $106 for 5 nights at the sahara. Less than a bill for food. Room comped for a $5 craps player...those were the days......

Here are the averages as published in the Abstract. You will note that the ratio of strip prices to downtown grow over time. Also notice that alcohol sales have gone up during the recession.

In 1990 food sales per room was the same for downtown as the strip.

	1990	2006	2007	2008	2010
Strip
Average Room Rate	$56.05	$137.05	$146.25	$149.00	$112.20
Average Food Sales/Room	$37.34	$76.39	$78.07	$84.97	$72.72
Average Beverage Sales/Room	$20.13	$29.29	$31.90	$30.25	$32.85
Downtown
Average Room Rate	$37.84	$70.49	$58.74	$61.96	$48.00
Average Food Sales/Room	$35.99	$48.01	$49.96	$51.40	$48.44
Average Beverage Sales/Room	$16.91	$18.63	$20.35	$21.40	$23.11

Thanks for breaking that out. I think it clearly describes my point. Over the last 20 years, management has tried to make the hotels and eateries profit centers. That is fine I suppose in other markets. Vegas was built on gambling, and IMHO that is the only profit center they should focus on. All the rest should be used to make me want to gamble there. Mr. Bennett (before he died) received the majority of my bankroll for many years because of the reasonable room rates and discounted food.

Value for my money is what I looked, and still look, for. Perhaps Vegas will wake up one day and remember how their bread was buttered.

Quote: avargov

Thanks for breaking that out. I think it clearly describes my point. Over the last 20 years, management has tried to make the hotels and eateries profit centers.

Artificial city type places like "City Center" have almost universally failed around the world. They have built them in Tokyo, London, New Jersey (next to Holland Tunnel), and in Mexico City. Generally people like to see them and to visit temporarily, but they gravitate towards places that are not so structured.

It will be hard to imagine how they can turn around the place. The capital to build it was just so high. I understand it was budgeted at only $4 billion when they began the project.

Quote: pacomartin

Artificial city type places like "City Center" have almost universally failed around the world. They have built them in Tokyo, London, New Jersey (next to Holland Tunnel), and in Mexico City. Generally people like to see them and to visit temporarily, but they gravitate towards places that are not so structured.

Where in Mexico City? Offhand I can't think of any place. Oh, there are a lot of white elephants around, like the markets for street vendors (ridiculous from its inception), not to mention failed programs of all kinds, and even failed shopping malls.

As for City Center, it might have worked if 1) it had been nicely decorated and more pedestrian friendly and 2) there were some kind of attraction to draw people in. Even the tram to Bellagio and Monte Carlo are all messed up. I saw a lot of poeple become lost trying to find them.

The fix invovles heavy machinery and a few thousand pounds of high explosives, I'm afraid.

Quote: Nareed

Where in Mexico City? Offhand I can't think of any place.

IMHO Santa Fe is a failure in creating a livable environment. I know for shopping and office buildings it is very important, but they failed to create a place where people want to live.

Quote: pacomartin

IMHO Santa Fe is a failure in creating a livable environment. I know for shopping and office buildings it is very important, but they failed to create a place where people want to live.

Well, that's considerably bigger than a couple of city blocks. It's an entire area of the city.

Anwyay, people do live there. Not in the commercial/office areas, but nearby in parts still called Santa Fe. The problem is that it's too far from the rest of town, and through routes that are often badly congested. I pass by Santa Fe often, on the way to and from Toluca. Sometiems I can get stuck in traffic in the last kilometer of highway and the start of Reforma avenue for an hour or more, it's less than a 3 kilometer stretch. Really, the traffic is awful at certain times.

On the other hand Interlomas is working out pretty well. I live there, so I ought to know ;) It's mostly appartment buildings. There are 4 shopping malls, one hospital and a scattering of office buildings. Lots of car dealerships, too, and a commercial side street with lots of restaurants and other shops. There's even a casino of sorts (I've yet to go there).

The traffic has gotten worse over time, and the recent overpass fixes don't seem to be working. Still, I can count on making only 25 minutes to the office, about 7.5 miles away, most mornings (except tuesday), and around 30 minutes back home between 6 and 7 pm and past 8:30 pm.

I think I just hijacked the thread...

Is Interlomas in DF or in greater Mexico City?

Quote: pacomartin

Is Interlomas in DF or in greater Mexico City?

That architecure looks positively Stalinist--like the apartment blocks used to house people in the worker's paradise.

Quote: pacomartin

Is Interlomas in DF or in greater Mexico City?

Greater. It's in Huixquilucan, Mexico State. Say about 6 miles from the border to the Federal District.

That picture is the exit of the Cahamapa-Lecheria highway, a kind of belt road running around the city propper. On one end it meets the highway to Toluca, and the one to Queretaro in the other. My home is less than a mile away, and you could probably spot my building if you turned ninety degrees left. You can see it from farther back on the highway.

Oh, well, if you make a right where the road ends in the abckground, you'd see the Angeles hospital. You can't see it from here, but on the left side where the road ends they're building a huge shopping mall (I don't know why we need another one, but there it is). The photo is at least a year old, as you can't see the overpass connecting to the entrance for the highway, not even under construction (they just finished it a few weeks ago).