pacomartin
pacomartin
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November 15th, 2010 at 1:11:33 AM permalink
As most of you know MGM Resorts decided to sell their half of the Borgata resort in AC rather than argue with the NJ gaming commission about their dealings with Patsy Ho. They sold their half to Leonard Green & Partners, a buyout firm that manages about $9 billion MGM Resorts said this month it received an offer for its 50 percent Borgata stake that will generate proceeds of about $250 million.

Harrah's and Borgata which are the two AC casinos that are not in town or on the boardwalk have seen their gaming revenue drop a lot less than the other resorts.

Yearly percentage drop from 2006 to 2009 (gaming revenue only).

Harrah's | -1.4%
Borgata | -2.0%
Trump Taj Mahal | -5.5%
Caesars | -6.1%
Showboat | -9.7%
Bally's AC | -11.2%
Tropicana | -11.9%
Resorts | -12.2%
Trump Plaza | -12.4%
Trump Marina | -14.2%
AC Hilton | -16.5%
-----
ATLANTIC CITY | -8.0%

For the first half of 2010, unlike Vegas, gaming revenue still continues to drop at 7.68%. Borgata at 7.11%.

Borgata brings in almost $700 million in gaming revenue a year, and it is the only resort with a substantial non-gaming revenue. Most of the other AC resorts don't make any money on non-gaming revenue.

I am surprised that Boyd passed on the opportunity to buy the entire resort. They he the right of first refusal.

Theories are that AC is so anathema at Wall Street that any investment there would hurt Boyd's stock. Another theory is that they are also being prepared to be taken over by another party, and that is occupying their time.
FleaStiff
FleaStiff
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November 15th, 2010 at 4:36:35 AM permalink
Quote: pacomartin

their dealings with Patsy Ho.

Pansy Ho?

"Borgata brings in almost $700 million in gaming revenue a year, and it is the only resort with a substantial non-gaming revenue. Most of the other AC resorts don't make any money on non-gaming revenue.
I am surprised that Boyd passed on the opportunity to buy the entire resort. They he the right of first refusal."

Perhaps the divestiture is only on paper and the stock is merely being parked.
toastcmu
toastcmu
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November 15th, 2010 at 4:51:17 AM permalink
Quote: pacomartin

Theories are that AC is so anathema at Wall Street that any investment there would hurt Boyd's stock. Another theory is that they are also being prepared to be taken over by another party, and that is occupying their time.



I thought another theory floated out there was that MGM was requiring Boyd to assume 100% of the debt associated with Borgata if they bought out the other 50%, which is why they refused. One stat which I found amusing was that Trump Marina had a revenue increase last month, but when you're at the bottom, I suppose you will have an occassional minor increase.

-B
SanchoPanza
SanchoPanza
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November 15th, 2010 at 6:38:23 AM permalink
Quote: pacomartin

AC Hilton | -16.5%


Any word on Landry's taking over?

Also, Trump Marina is in the same district as Borgata and Harrah's Resort.
ElectricDreams
ElectricDreams
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November 15th, 2010 at 7:06:49 AM permalink
Could it be because Boyd Gaming is trying to reduce debt? Although, I would think buying a profitable casino would certainly be a way to do that...
teddys
teddys
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November 15th, 2010 at 7:53:31 AM permalink
The is kind of tangential to the topic, but did anyone else notice from the revenue reports that Harrah's AC lost money on craps this month? On a $6m drop? That's unfathomable...
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
SanchoPanza
SanchoPanza
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November 15th, 2010 at 7:55:32 AM permalink
Quote: teddys

That's unfathomable...


The last couple of times I've been there, including last week, the two regularly open tables were running pretty strongly. And I'm a don't bettor.
FleaStiff
FleaStiff
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November 15th, 2010 at 8:06:59 AM permalink
Quote: teddys

The is kind of tangential to the topic, but did anyone else notice from the revenue reports that Harrah's AC lost money on craps this month? On a $6m drop? That's unfathomable...

So I guess that means craps players should go there rather than other casinos? A dice cheating team perhaps? A lucky high roller?
pacomartin
pacomartin
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November 15th, 2010 at 6:46:00 PM permalink
Quote: ElectricDreams

Could it be because Boyd Gaming is trying to reduce debt? Although, I would think buying a profitable casino would certainly be a way to do that...



I know that they are trying to reduce debt, but they have also been looking for investment opportunities to use the line of credit they secured for the Echelon. They tried to purchase Station Assets, and were very interested in the M Resort.

The M Resort went for about #1/4 billion, the same price as half the Borgata. I would think that the Borgata would be a better investment especially since Boyd is already the managing partner. Even half the Borgata has to have higher revenue that all of the M Resort.
ElectricDreams
ElectricDreams
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November 16th, 2010 at 7:31:44 AM permalink
Quote: pacomartin

Quote: ElectricDreams

Could it be because Boyd Gaming is trying to reduce debt? Although, I would think buying a profitable casino would certainly be a way to do that...



I know that they are trying to reduce debt, but they have also been looking for investment opportunities to use the line of credit they secured for the Echelon. They tried to purchase Station Assets, and were very interested in the M Resort.

The M Resort went for about #1/4 billion, the same price as half the Borgata. I would think that the Borgata would be a better investment especially since Boyd is already the managing partner. Even half the Borgata has to have higher revenue that all of the M Resort.



That's a good point. I didn't know they tried to buy Station Assets.

That's a strange thing to do, express interest in expanding and then turn down something like the Borgata. They must have specifically not liked something about the Borgata, I guess? Or maybe AC in general?

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