pacomartin
pacomartin
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June 22nd, 2010 at 1:54:29 PM permalink
A Las Vegas Sun Article on the Rio speculates that Penn National offered $450 million for the property and that several other companies have made offers. Why the deal fell through is uncertain. The property is believed to have been worth as much as $1 billion at one point.

Harrah's supposedly need the money after it's Planet hollywood Purchase a few months ago, and no longer sees the property as important to it's future Las Vegas growth. It's position across the interstate makes it more difficult to do integrated promotions and future development with the rest of their casinos.
DeMango
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June 22nd, 2010 at 2:27:53 PM permalink
It lost half of it's value when Harrah's bought it. Guilt by association: lousy games, lousy odds, declining maintenance, just cruising on past reputation.
When a rock is thrown into a pack of dogs, the one that yells the loudest is the one who got hit.
pacomartin
pacomartin
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June 22nd, 2010 at 3:09:55 PM permalink
It was Harrah's Entertainment Corporation second acquisition in Las Vegas (after the Holiday Hotel in 1992 which became Harrah's Las Vegas). Rio cost $888 million in 1999.

It will be interesting to see what they get for the property, but it may be a lot less than 1/2.
reno
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June 22nd, 2010 at 7:42:27 PM permalink
Quote: pacomartin

It was Harrah's Entertainment Corporation second acquisition in Las Vegas (after the Holiday Hotel in 1992 which became Harrah's Las Vegas). Rio cost $888 million in 1999.



So Harrah's paid $888 million and now might sell it for $450 million. So was it a $438 million mistake? Or was it profitable enough during the 11 years Harrah's owned it to pay for this $438 million mistake? How much did it earn during those 11 years?
bluefire
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June 22nd, 2010 at 10:14:56 PM permalink
Quote: reno

So Harrah's paid $888 million and now might sell it for $450 million. So was it a $438 million mistake? Or was it profitable enough during the 11 years Harrah's owned it to pay for this $438 million mistake? How much did it earn during those 11 years?



It's gonna be pretty hard to figure that out, given that Harrah's is private and the board lumps all the casinos together.
NicksGamingStuff
NicksGamingStuff
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June 22nd, 2010 at 11:12:17 PM permalink
I had a lousy experience at the Rio... Penn and Teller was great though! The gaming sucked!
cardshark
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June 23rd, 2010 at 6:09:16 AM permalink
Quote: pacomartin

A Las Vegas Sun Article on the Rio speculates that Penn National offered $450 million for the property and that several other companies have made offers. Why the deal fell through is uncertain. The property is believed to have been worth as much as $1 billion at one point.

Harrah's supposedly need the money after it's Planet hollywood Purchase a few months ago, and no longer sees the property as important to it's future Las Vegas growth. It's position across the interstate makes it more difficult to do integrated promotions and future development with the rest of their casinos.



I don't understand, why would Harrah's buy PH if it didn't fit their plans for future growth? Shouldn't they have figured out before they bought it that the property wouldn't be very important to them???
DJTeddyBear
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June 23rd, 2010 at 6:50:56 AM permalink
Quote: cardshark

Quote: pacomartin

A Las Vegas Sun Article on the Rio speculates that Penn National offered $450 million for the property and that several other companies have made offers. Why the deal fell through is uncertain. The property is believed to have been worth as much as $1 billion at one point.

Harrah's supposedly need the money after it's Planet hollywood Purchase a few months ago, and no longer sees the property as important to it's future Las Vegas growth. It's position across the interstate makes it more difficult to do integrated promotions and future development with the rest of their casinos.


I don't understand, why would Harrah's buy PH if it didn't fit their plans for future growth? Shouldn't they have figured out before they bought it that the property wouldn't be very important to them???


I think the property Paco referred to is the Rio. You seem to be referring to PH.
I invented a few casino games. Info: http://www.DaveMillerGaming.com/ ————————————————————————————————————— Superstitions are silly, childish, irrational rituals, born out of fear of the unknown. But how much does it cost to knock on wood? 😁
ruascott
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June 23rd, 2010 at 6:52:01 AM permalink
Quote: cardshark

Quote: pacomartin

A Las Vegas Sun Article on the Rio speculates that Penn National offered $450 million for the property and that several other companies have made offers. Why the deal fell through is uncertain. The property is believed to have been worth as much as $1 billion at one point.

Harrah's supposedly need the money after it's Planet hollywood Purchase a few months ago, and no longer sees the property as important to it's future Las Vegas growth. It's position across the interstate makes it more difficult to do integrated promotions and future development with the rest of their casinos.



I don't understand, why would Harrah's buy PH if it didn't fit their plans for future growth? Shouldn't they have figured out before they bought it that the property wouldn't be very important to them???



It was the Rio that doesn't fit with their future growth, not PH.
cardshark
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June 23rd, 2010 at 7:04:36 AM permalink
Quote: ruascott



It was the Rio that doesn't fit with their future growth, not PH.



Yup, I see where I went wrong now. Thanks for setting me straight.
Nareed
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June 23rd, 2010 at 7:36:01 AM permalink
I stayed at the Rio last May and I think I may have gambled all of $20 there.

It's a very nice hotel, but the minimums are too high for my low roller tastes, and 3-card poker has the 6 card bonus sucker bet, I mean side bet. So every day I'd just get breakfast and then hop on the free shuttle to the Strip.

So, if they sell the Rio will the new management keep the free Strip shuttles running?
Donald Trump is a fucking criminal
Doc
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June 23rd, 2010 at 8:26:33 AM permalink
Quote: Nareed

So, if they sell the Rio will the new management keep the free Strip shuttles running?

Why would new owners want to do that? It would seem like spending money to truck your source of casino revenue over to someone else's establishment. I suspect they would do everything possible to convince you that the only thing really attractive about the strip is the view of it from the Rio's rooftop night club.
Nareed
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June 23rd, 2010 at 8:36:11 AM permalink
Quote: Doc

Why would new owners want to do that? It would seem like spending money to truck your source of casino revenue over to someone else's establishment.



But it would also draw in people from the Strip. Back in 08 I used the free shuttle to go see the Penn & Teller show.

Sam's Town runs shuttles to the Strip and Downton. Other off-Strip properties also run shuttles, albeit fewer than Sam's or Rio.
Donald Trump is a fucking criminal
pacomartin
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June 23rd, 2010 at 1:44:42 PM permalink
Quote: reno

So Harrah's paid $888 million and now might sell it for $450 million. So was it a $438 million mistake? Or was it profitable enough during the 11 years Harrah's owned it to pay for this $438 million mistake? How much did it earn during those 11 years?



You can probably ball park the figure. It is a casino that earns a minimum of $72 million a year in gaming revenue (that's a category that used by the gaming commission to set requirements for cashier bankroll). However Imperial Palace also makes over $72 million.

Harrah's made $1.5 billion in gaming revenue in CY2009 at it's Vegas properties, and almost $2 billion in CY2007. Allowing a guesstimate of $400 million for Ceasars that is roughly $150-$200 million per property for Harrah's, Flamingo, Imperial Palace, Bally's, Paris, and Rio.

So Rio probably has roughly $150 million per year in gaming revenue, and possibly $100 million in non-gaming revenue because it has a lot of clubs, restaurants and a stage show (in 2009).

The MGM properties Circus Circus make $200 million, and the Monte Carlo, Excalibur, NY/NY all makes between $215-$220 million per year (total revenue) in 2009.

So Rio probably made $2.5-$3.0 billion in revenue over the past 11 year ownership.

It's unlikely that the property has been a white elephant, or they would have tried to unload it in 2005 when Harrah's purchased Ceasars Entertainment. It may be making a profit even today. But Harrah's is desperate to reduce some of it's expensive debt. They also need capital to further integrate their properties. They have proposed giant ferris wheels, outdoor pedestrian zones, sports arenas, and obviously the Harrah-wide buffet pass to try and get people to spend all their money in Harrah-Land.

Rio also appeals to a younger demographic than the other properties. They may want to concentrate all their efforts for this group in Planet Hollywood. If the Hard Rock numbers are any indication it is actually difficult to make a profit on young people. Seemingly they drop a bundle on dining, clubs, and concerts, but it is not nearly as profitable as the middle aged gamblers. There are not as many hard core slot junkies and immobile asians playing baccarat like they were doing heart surgery.

When MGM corporation bought the Mirage Group in 2000 they swore on a stack of bibles that they were not going to sell the original Golden Nugget downtown. Within two years they had negotiated a sales agreement. Same way with the Laughlin properties which they sold to Marnell. Marnell used them to get his license so he could open the M Resort. MGM also dumped the Primm properties (but kept the golf course).
Tiltpoul
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June 23rd, 2010 at 4:08:45 PM permalink
I was not aware of the Rio selloff, so this was news to me.

What do you anticipate will happen to the WSOP? Will it be transferred to Caesars? It seems like Rio has a LOT of space for them to hold the tournament, side games and what not.
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pacomartin
pacomartin
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June 23rd, 2010 at 4:42:21 PM permalink
Quote: Tiltpoul

I was not aware of the Rio selloff, so this was news to me.

What do you anticipate will happen to the WSOP? Will it be transferred to Caesars? It seems like Rio has a LOT of space for them to hold the tournament, side games and what not.



Harrah's is not admitting to anything, but it is considered an open secret by the media. WSOP may move to Ceasars or to Planet Hollywood.
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