Caesar's going bankrupt?

Well, Caesar's expected 'earnings' are now more negative for ONE YEAR than its entire market capitalization. It's expected to lose about a billion this year and the entire company is 'worth' 800 million. How long can this company survive?

NEW YORK (AP) -- Standard & Poor's lowered its outlook for Caesars Entertainment Wednesday, citing the casino's weaker-than-expected operating performance. The ratings agency said that Las Vegas in particular has been a disappointment. S&P said that it had expected Las Vegas would improve this year and build momentum heading into 2013, but it hasn't lived up to those expectations.

Credit analyst Melissa Long said that meager business in Las Vegas is reflective of a softening economic environment in the U.S. Gaming revenue on the Las Vegas Strip fell 6.4 percent in the second quarter, Long said.

S&P maintained the ratings for Caesars Entertainment Corp. and subsidiary Caesars Entertainment Operating Co. Inc. This includes the "B-", or junk, corporate credit rating. yahoo finance

Quote: SOOPOO

Well, Caesar's expected 'earnings' are now more negative for ONE YEAR than its entire market capitalization. It's expected to lose about a billion this year and the entire company is 'worth' 800 million. How long can this company survive?

Personally, I believe Vegas gets something akin to a free pass from the investment community. Maybe the Wall Street set views it is a playground for when they themselves want to get away. And thus...they somehow say and do things to keep it alive that they would not do for most other 'industry.'. As long as Adelson and Wynn stay flush, I suspect CZR will retain its ability to find funding. With an individual casino sale here and there (i.e. St. Louis) to keep the wolves at bay...

I wish I understood finance. Maybe then I could convince people to keep investing money in me while I continue to lose money.

Fitch Ratings suggests that they will be forced to sell Caesars Interactive which includes the WSOP. They are $20 billion in debt. They are going to have to sell more properties to stay afloat. If they sold their share of the interactive (Rock Gaming owns some of it) then they could sell Rio too.

Maybe they can sell the Ferris Wheels. Oh yeah.... they are "vaporware".

I took a quickie glance at CZRs balance sheet. It's been worse. They have a huge amount of depreciation factored into their income(loss) statement. I suspect that when a property becomes fully depreciated, they'll sell it because they can't write off the depreciation against taxes anymore. I think I may buy a few hundred shares and see where it goes. It can't go any worse than my purchase of Citibank in early 2008.

Quote: s2dbaker

I took a quickie glance at CZRs balance sheet. It's been worse. They have a huge amount of depreciation factored into their income(loss) statement. I suspect that when a property becomes fully depreciated, they'll sell it because they can't write off the depreciation against taxes anymore. I think I may buy a few hundred shares and see where it goes. It can't go any worse than my purchase of Citibank in early 2008.

The problem Caesars is going to run into with selling properties is finding buyers who want those particular properties. Right now, Penn is the only group actively picking up properties, most of which they will convert into the venerable (and terribly boring) Hollywood brand.

I maintain Caesars would have packaged Harrah's St Louis, Kansas City and Metropolis into a nice offer IF Penn didn't already have two properties in the KC-area (both of which are doing better than Harrah's KC) and three Illinois properties (including one, Argosy Alton, that they can't sell fast enough). Unfortunately for Harrah's, they will have a hard time finding anybody who will take the other two dead weight properties.

Outside of the Horseshoe and Caesars brands, CET would sell off any of their old namesake properties in a heartbeat. No current operating Harrah's-branded casino "owns" its market if it has competition (save New Orleans, but is there any true competition there). Harrah's AC is okay for them, and Harrah's Tunica is a resort with huge room inventory that they need.

Quote: Tiltpoul

I maintain Caesars would have packaged Harrah's St Louis, Kansas City and Metropolis into a nice offer IF Penn didn't already have two properties in the KC-area (both of which are doing better than Harrah's KC) and three Illinois properties (including one, Argosy Alton, that they can't sell fast enough). Unfortunately for Harrah's, they will have a hard time finding anybody who will take the other two dead weight properties.

Outside of the Horseshoe and Caesars brands, CET would sell off any of their old namesake properties in a heartbeat. No current operating Harrah's-branded casino "owns" its market if it has competition (save New Orleans, but is there any true competition there). Harrah's AC is okay for them, and Harrah's Tunica is a resort with huge room inventory that they need.

Not to hijack the thread, but I have to agree with you here. I did a great circle drive recently to rack up some Great Race check-ins (up to 16 now, woo hoo! St. Louis-Metropolis-Tunica-Louisville). In St. Louis, Harrah's has done absolutely nothing to update their property. The hotel and casino are completely and totally blah. Really needs a makeover (but keep the good video poker paytables, please). Metropolis for some reason has a superior hotel and hotel facilities, but once you get onto the boat it is a crowded dump. The town is probably the worst casino town I've ever been in. I thought the Tunica property was excellent, specifically the Veranda and Terrace hotels. Landscaping made it feel like I was on the 15th hole at Augusta National or something. Just really relaxing. The Harrah's casino closed the Toby Keith's restaurant and the South Porch Cafe. No eating options besides the food court, steakhouse, and buffet. Shameful, really. Horseshoe has a new burger bar and decent buffet. Got a comp to there and Starbucks (mocha!) Really nothing at Roadhouse. Again, no reinvestment. Louisville has a new Asian restaurant that looks to be independently owned. Didn't get a chance to try it. DID get a lovely $20 comp to JB's cafe after a little bit of blackjack play in high limit. Harrah's is really being left in the dust.

Quote: s2dbaker

It can't go any worse than my purchase of Citibank in early 2008.

I'm honestly sorry to hear that, but at least you didn't buy it a couple years earlier at 400.


How awesome would it be if the strip became a sincere free market? I mean it's more likely that someone would buy up their strip properties to continue the duopoly, but it would be really cool if we started to see more gimmicks like Riviera's 1000x odds.

Quote: ahiromu

I'm honestly sorry to hear that, but at least you didn't buy it a couple years earlier at 400.


How awesome would it be if the strip became a sincere free market? I mean it's more likely that someone would buy up their strip properties to continue the duopoly, but it would be really cool if we started to see more gimmickslike Riviera's 1000x odds.

I don't think Riv's 1000x odds or their single zero roulette lasted a month. The most obvious property sale potentials to me in Las Vegas are going to be Rio and Planet Hollywood. If WSOP goes then Rio is expendable. I see no way they break up their legacy properties or the ones acquired from Park Place, especially with Linq coming. I think that would take a BK.

Quote: ahiromu

I'm honestly sorry to hear that, but at least you didn't buy it a couple years earlier at 400.

Thank you, I've gotten over it :)

Quote: ahiromu

How awesome would it be if the strip became a sincere free market? I mean it's more likely that someone would buy up their strip properties to continue the duopoly, but it would be really cool if we started to see more gimmicks like Riviera's 1000x odds.

I don't know how I feel about that. I like being able to gamble in Atlantic City and trade that in for Free stuff in Vegas ( and still get the free stuff in AC ). If every hotel were an indie then I don't think I could get the choices that are offered to me now. I'm planning a trip to Vegas for the Super Bowl weekend and I can get Flamingo, IP, Ballys, or Harrahs for free, Paris or Rio for cheap and Caesars and PH for reasonable discounts. Without Total Rewards, I wouldn't have that much choice.

Quote: Pokeraddict

The most obvious property sale potentials to me in Las Vegas are going to be Rio and Planet Hollywood. If WSOP goes then Rio is expendable.

This property already is expendable... Harrah's has sought to sell the property for a few years now; unfortunately, the land is no longer worth what it used to be, and no casino operator wants Rio in its current state (a strange mix of a locals casino mixed with high end Strip amenities). WSOP could easily be moved to Caesars or another venue; Rio does have the most space for the events though.

As for PH, it's not leaving the CET family. They just bought that a few years ago at a fire sale price, revamped the place, and it's most likely one of the better performing Strip properties they have. Besides, the only obvious buyer (Penn National, with their Hollywood brand) isn't interested in a Strip property, especially at that location.

Quote: Pokeraddict

I see no way they break up their legacy properties or the ones acquired from Park Place, especially with Linq coming. I think that would take a BK.

I'm not so sure of that. CET has worked harder and harder to distance itself from the Harrah's branded properties. Given its location, Harrah's seems like an easy sell. It seems crazy to think that they would sell that property over the dump that is Imperial Palace or any of the other ones, but they've done it before and will probably do it again soon. Harrah's LV doesn't really add anything to the footprint, except some proximity to the Convention Center and a lot of hotel rooms. In Vegas, they don't need the rooms, and really the convention business isn't their primary audience, so it's a sell-able commodity.

Quote: teddys

In St. Louis, Harrah's has done absolutely nothing to update their property. The hotel and casino are completely and totally blah. Really needs a makeover (but keep the good video poker paytables, please).

Oh don't worry teddys; it will be getting a makeover soon... unfortunately, it will look like all the other sterile Hollywood properties that are all identical. And that good VP is LIKELY to be gone, though that's not a guarantee.

Quote: teddys

Metropolis for some reason has a superior hotel and hotel facilities, but once you get onto the boat it is a crowded dump. The town is probably the worst casino town I've ever been in.

Yeah, Metropolis is a sad place for a casino. When your bread and butter customers are from Paducah, Kentucky, you know you're in trouble.

Quote: teddys

I thought the Tunica property was excellent, specifically the Veranda and Terrace hotels. Landscaping made it feel like I was on the 15th hole at Augusta National or something. Just really relaxing. The Harrah's casino closed the Toby Keith's restaurant and the South Porch Cafe. No eating options besides the food court, steakhouse, and buffet. Shameful, really.

Harrah's is nothing like the old Grand Casino. Unfortunately, I miss Grand, even though it was in dire need of a face lift that it got when CET came into the picture. They somehow took a large casino and made it small, then got rid of everything that made it special. Why they cut the food options is beyond me as well...

Quote: teddys

Horseshoe has a new burger bar and decent buffet. Got a comp to there and Starbucks (mocha!) Really nothing at Roadhouse. Again, no reinvestment.

Roadhouse actually got a LOT of an investment, and in my opinion, it paid off. The old Sheraton was really boring and worn down. They spruced it up by making it a complete dive, with an uber-classy hotel. Remember, Harrah's Entertainment (at the time) only kept Sheraton BECAUSE of the hotel. It was going to converted to a Rio under the original business plan, until they realized that was nearly impossible to do with the outside of the hotel. If it would have made business sense, they probably would have shuttered the casino and kept the room inventory, but the casino actually doesn't do too bad for them. They get the overflow of traffic from Horseshoe and Gold Strike, and they've marketed themselves as less pretentious. Honestly, it's my favorite place in Tunica.

Quote: teddys

Louisville has a new Asian restaurant that looks to be independently owned. Didn't get a chance to try it. DID get a lovely $20 comp to JB's cafe after a little bit of blackjack play in high limit. Harrah's is really being left in the dust.

Was the $20 comp worth the ridiculous wait and so-so food you got at JB's? I love HSI, but that cafe is the WORST.

Yeah, Harrah's is going the way of the Dodo. I anticipate there will be very few Harrah's left when it's all said and done... mainly Rincon, New Orleans, Atlantic City and North Carolina. Maybe Tunica and Las Vegas will survive...

Quote: Tiltpoul

I love HSI, but that cafe is the WORST.

Yeah, Harrah's is going the way of the Dodo. I anticipate there will be very few Harrah's left when it's all said and done... mainly Rincon, New Orleans, Atlantic City and North Carolina. Maybe Tunica and Las Vegas will survive...

I concur in part and dissent in part.

Concurrence - Rincon, AC, and Cherokee play well as Harrah's casinos. Most of the food at JBs is average at best

Dissent - New Orleans could be a Caesars easily enough (or maybe a Horseshoe). Ak-Chin seems to me like it's as safe as Rincon or Cherokee. I like the burgers at JB's. I wish it was possible to get one a little less well-done, but I like a charred outside and they do that very well.

Other comments - Two properties in Tahoe is 1 too many. Harrah's Reno isn't a nice property. Joliet kind of sucks. Shreveport (Louisiana Downs) is a STRANGE property, given the proximity to Horseshoe Bossier and the lack of table games. The Asian place at HSI is above average. It's asinine to have it dark on Monday and Tuesday (but not as unbelievably utterly spectacularly stupid as having the sports bar closed on monday nights during football season), but it's very good. I'm a little shocked/surprised that they opened an authentic asian restaurant at the exact instant that they removed the Pai Gow tiles table, but I suppose that's why I don't work in casino management.

Quote:

This property already is expendable... Harrah's has sought to sell the property for a few years now

They have always denied this rumor and no potential buyer has ever come forward. There is no other place to have WSOP. Caesars Palace has more convention space by almost double but they don't have the parking or any other of the needed areas to cater to this event. Rio is the perfect place for it and anywhere else would have tremendous problems comparable to Venetian before Palazzo was built.

Quote:

WSOP could easily be moved to Caesars or another venue; Rio does have the most space for the events though.

Neither is true. Rio does not have the most space for it. In fact, it has outgrown Rio. For several years portable trailers have had to be brought in for both table space and bathrooms (although tables in trailers were eventually dropped for a variety of safety reasons). Games are played on the casino floor and in the year round poker room now. It is a complete mess.

The fact it has outgrown Rio is just another reason to expect a sale of the interactive business. If CET sold Rio they would have to sell Caesars Interactive unless they would be willing to lease space in a casino that could accommodate it. That then defeats the purpose of owning it.

Poker players are already fed up with CET and how they run the tournament, if they moved it to Caesars Palace or any other strip property with poor parking, long walks, crowds, poor smoking areas, and lack of amenities the reserved Rio convention center offers, I think it would damage the brand beyond repair and you would see someone else come along and take that business.

Keep in mind CET does not own the entire WSOP brand or the interactives. That presents a whole different dilemma.

Perhaps Harrahs would be a brand to sell on the other end. I just don't see that being worth taking away from it. The sale of that property probably does not help much in the big picture. IP is in the midst of a remodel and rebrand. I don't see them selling that either. If they did have that intention, why are they building linq? Linq is another reason I fail to see Harrahs being a viable sale option. They have to do something though.

I don't understand why a WSOP sale would have to go with a Rio sale. Is there another well known tournament that people would go to? I'll trust the statements here that space just isn't available at other properties. However, I don't see why they couldn't just split it up between 2 properties for the first few days/weeks. I assume even right now when you sign up, you are told which room table you need to show up at. I don't see why changing the property would affect that much. Obviously it would be an annoyance to some, I just don't see people quitting the tournaments for that reason. It still is the most well known tournament.



On other casinos around the US.

Bossier City - I liked this one. I don't think I would ever stay there, but this has more to do with me refusing to pay the $250-$350 avg weekend night rate.

Tunica - I've only gone to the roadhouse. I would prefer a few other restaurant options I guess, but overall, I've enjoyed going there a few times and would easily go back.

Biloxi - The sole reason I will ever go back here is to do the Great Race if they continue to do it. That casino was completely dead at midnight on a Saturday night. Now I don't expect it to be full, but 3 other properties I went to later that evening all had more people in them.

New Orleans - Once I finally found out that they had a parking garage, it became a much better casino to me. This is easily equal to the top CET casinos in Vegas.



I fully expect Vegas to be profitable again. It just may take a lot longer than people expect. This is just one of those things that does awful with a bad economy.

Quote: Pokeraddict

They have always denied this rumor and no potential buyer has ever come forward.

It's like in football when a coach is about to get fired... the manager will say "No, we're happy with the way things are going. We aren't going to fire the coach." Then two days later, BAM, he's fired. CET will "deny" the fact they are wanting to unload Rio, but the only real benefit to the company is the WSOP and the high-end villas on the property.

Quote: Pokeraddict

There is no other place to have WSOP. Caesars Palace has more convention space by almost double but they don't have the parking or any other of the needed areas to cater to this event. Rio is the perfect place for it and anywhere else would have tremendous problems comparable to Venetian before Palazzo was built...

It is a complete mess...

Poker players are already fed up with CET and how they run the tournament, if they moved it to Caesars Palace or any other strip property with poor parking, long walks, crowds, poor smoking areas, and lack of amenities the reserved Rio convention center offers, I think it would damage the brand beyond repair and you would see someone else come along and take that business.

So Rio isn't the perfect place, it's just seems like the best space that CET has. There could be some validity in that statement. However, while parking isn't ideal at Caesars, it can't be worse than Rio during the San Gennaro festival, where I had to park over at Gold Coast, even though I was staying at the hotel. I agree with soulhunt that they could split it between two (or even three properties), moving final tables into Caesars. There are ways of making it work, and if they could sell Rio, they'd figure it out.

Quote: Pokeraddict

Keep in mind CET does not own the entire WSOP brand or the interactives. That presents a whole different dilemma.

No, but it's probably (and sadly) their most valuable commodity. The long-term potential of CET without a Macau property is gone, so their casinos will only generate a finite amount of money. However, even after the internet poker went away, the WSOP has grown (or at least not declined as much as expected)

Quote: soulhunt79

Bossier City - I liked this one. I don't think I would ever stay there, but this has more to do with me refusing to pay the $250-$350 avg weekend night rate.

Bossier City is a Horseshoe, which I don't think CET will ever unload, except the two in Ohio which technically aren't 100% owned by CET. I didn't realize those hotel rates were that high, but that doesn't surprise me as much.

Quote: soulhunt79

I fully expect Vegas to be profitable again. It just may take a lot longer than people expect. This is just one of those things that does awful with a bad economy.

You are quite the optimist! Vegas can not be profitable the way it is now, especially for CET. They own too many aging casinos that will require too many renovations and changes to ever turn a true profit. There will have to be some downsizing of casinos (more so than those that have already closed), and the focus is going to have to change from gambling mecca to entertainment district (which it almost has). Whether the public buys into it is the $64,000 dollar question.

Aging casinos can be profitable for a very long time as they age even more.

I just don't see how any of the various constituent parts of the Evil Empire will be in bankruptcy proceedings without all the properties being brought in once the Evil Empire defaults on some massive payment somewhere.

Quote: FleaStiff

Aging casinos can be profitable for a very long time as they age even more..

Only if that means cleaning the damn mold out of the bathrooms at Bally's.

Quote: SanchoPanza

Only if that means cleaning the damn mold out of the bathrooms at Bally's.

They have to realize things like this.

If you are going to be an upscale shopping/entertainment destination, then you have to attract an upscale clientele who will not accept conditions such as this.

If you are going to have dingy properties, then you are going to have to offer better games, or at least give those rooms away for free. You can't charge $77 a night for IP (this weekend's TR rate I was quoted) and have 6-5 blackjack and 8/5 JoB.

Vegas used to have a monopoly on gambling/gaming/whatever it's called these days and even though they offered decent games and comps they still made money. They can offer better games and promotions than your local casino and people would make it a point to get out there for the better games, especially if they can make a vacation out of it with either a nice room at a decent price or a free lesser room. The LA crowd will still fill the clubs. People who don't gamble 24/7 will still shop and dine. People who do gamble 24/7 will still lose.

Quote: FleaStiff

Aging casinos can be profitable for a very long time as they age even more.

I just don't see how any of the various constituent parts of the Evil Empire willgo BK, be in bankruptcy proceedings without all the properties being brought in once the Evil Empire defaults on some massive payment somewhere.

Unless they are structured as wholy owned subsidiaries, and even then, BK is supposed to be an all-or-nothing process.

If go BK, hopefully they break it into little pieces and we get innovation and competition. I still stand by a limit of 2 strip properties per owner would be good for the market.

Quote: AZDuffman

I still stand by a limit of 2 strip properties per owner would be good for the market.

Big government interfering with the free market? That reeks of COMMUNISM!!!!!!11111!!!!!!

" How long can this company survive? " How long have the AIRLINES lasted ? Have they ever made a profit ?

Quote: buzzpaff

" How long can this company survive? " How long have the AIRLINES lasted ? Have they ever made a profit ?

Airlines, aggragate since the Wright Brothers, have not. But they are not the same owners. Someone keeps loaning them money, then taking the stock when the default happens. Look at USAir alone for examples of this.

It's funny how we say things like "The only way to win at roulette is to own the casino" then we read stories about casinos going bankrupt. I guess the only winning move is not to play...

Quote: FinsRule

It's funny how we say things like "The only way to win at roulette is to own the casino" then we read stories about casinos going bankrupt. I guess the only winning move is not to play...

Or not to borrow how many billion on an LBO to buy the casino!

Where is the Central States Teamsters Pension Fund when you need it?

" Where is the Central States Teamsters Pension Fund when you need it? "

Glad too see I am not the only one who misses Jimmy !

Quote: AZDuffman

Or not to borrow how many billion on an LBO to buy the casino!

The Willis Tower (formerly Sears Tower) in Chicago is on the market for $1.5 billion. The building has twice the square footage as the Empire State Building. The casino business can be very profitable, but these fantastic sums that were being spent on construction are difficult to pay back under any circumstances.

I ask you, which is more likely to pay off in the long run, a $1.5B spent buying the Willis Tower, or $1.5B on Project Linq?

Quote: SOOPOO

Well, Caesar's expected 'earnings' are now more negative for ONE YEAR than its entire market capitalization. It's expected to lose about a billion this year and the entire company is 'worth' 800 million. How long can this company survive?

I'm not saying that Caesars is a strong company, none of my money will be invested in CZR, but it should be noted that the float is only about 25 million of the 125 million shares outstanding, so in this case market cap isn't necessarily a great metric of what the company is actually worth.

Quote: Miles1

I'm not saying that Caesars is a strong company, none of my money will be invested in CZR, but it should be noted that the float is only about 25 million of the 125 million shares outstanding, so in this case market cap isn't necessarily a great metric of what the company is actually worth.

Maybe I don't understand, but in our 'efficient market', the current market capitalization is EXACTLY what the company is actually worth. If it is 'really' worth more then people will be buying shares raising the price. If it is worth less than people would be selling and the price goes down. Please explain how market cap does not define the company's worth? I would understand if there was no liquidity, but there is plenty of trading action on CZR.

The leveraged buy out is what killed them. If you include the debt assumption the company was brought private for $27.4 billion. Just under half of that was debt assumption. The company has lost about 97% of its value since.

Quote: SOOPOO

Maybe I don't understand, but in our 'efficient market', the current market capitalization is EXACTLY what the company is actually worth. If it is 'really' worth more then people will be buying shares raising the price. If it is worth less than people would be selling and the price goes down. Please explain how market cap does not define the company's worth? I would understand if there was no liquidity, but there is plenty of trading action on CZR.

Agree with you here Soopoo, the amount of float vs. stock outstanding is irrelevant to the value of the company.

About the only way you could argue differently is if there was some short term issue that needed time for the efficient market to absorb. Facebook's buy side pressure at IPO comes to mind in that there was way too much initial buzz vs. the offering. Granted this doesn't mean the value of the company wasn't fairly stated right after the IPO started trading when the stock price was at $45, I am just saying that sometimes the efficient market takes time for all its participants to figure out what they really think a company is worth after the honeymoon period.

When those additional 1 billion plus shares of FB employee stock comes off restriction, there is going to be another short term, albeit opposite to the IPO, reaction in FB stock. Again this doesn't discount what the efficient market is doing to value at the time, I just believe that sometimes in the short term, when extreme conditions arise, there may be some lag between long term market efficient value and what the short term market efficient value a company has in the midst of the extreme short term circumstances.

Quote: FinsRule

It's funny how we say things like "The only way to win at roulette is to own the casino" then we read stories about casinos going bankrupt. I guess the only winning move is not to play...

An interesting point... I have always stated that LV should never bet on the Customer. Somehow, I think that is what happened. I do realize there is a useful life to design, and taste in decor. fashion if you will. It looks more and more like LV is not "in fashion" anymore. There are too many competitive sites opening, in differing regions. What gets me is that basically a handful of companies are very thinly spread with many buildings to maintain. What was once a tight market LV and AC is now in a majority of states on sovereign lands and gaming districts. In the quest to be everywhere for all things gambling, these small number of Companies have bet the house on the Player, and is having great difficulty paying the bills, even with the massive inflow of cheap $$$$$$$$$.

IMHO I think we look back on this era and think that other new companies should have been taking this separated and rather disjointed market focusing on the regional or even local aspect of the Customer base. From here, it looks like cookie-cutter ops and corporate mentality have drained the gaming business faster than Lake Mead. /MHO

" From here, it looks like cookie-cutter ops and corporate mentality have drained the gaming business "

A fool and his money are soon parted extends from players to owners.

Quote: Pokeraddict

The leveraged buy out is what killed them. If you include the debt assumption the company was brought private for $27.4 billion. Just under half of that was debt assumption. The company has lost about 97% of its value since.

They screwed up there. If I were lucky enough to be the Gordon Gekko (F Ross Johnson?) there I would have broken it up. Let Harrah's properties be their own franchise and brand. Sell off Caesars for cash to pay off debt, or spin it off with a good share of the bonds/debt assumed. Get management concentrated on just the one brand. Then eventually go public again as a leaner, higher ROI outfit.

Heck, I would even have tried to lease Flamingo to an operations group and keep ownership of the land. There was so much possibility.

Quote: AZDuffman

Heck, I would even have tried to lease Flamingo to an operations group and keep ownership of the land. There was so much possibility.

Unfortunately for CET, they've done the opposite with their newest projects in Ohio. They're on the management side, which is debatable how successful they are at that, while someone else owns the building and land (Dan Gilbert). I still think once Gilbert feels comfortable that he could hire the right people to do the same thing, he'll buy out CET's share and convert the place into his own. Horseshoe Cleveland only feels like a Horseshoe in name; they don't have any of the other defining features (like a JB's Cafe, a Village Square or Paula Deen buffet).

I'm not sure that selling Caesars as a brand would be a good idea. I don't think Caesars or Horseshoe by themselves is the problem; the problem is they are in a lot of markets with over 30% of their inventory centered in two flailing markets (LV and AC). They have almost 10% located in Tunica, which isn't in quite the bad position, but it ain't great there either. Then they have about 6-7 casinos across the country with the Harrah's moniker that they need to sell or simply close (Kansas City, Metropolis, Joliet, Council Bluffs, Laughlin, one of the Tahoe's and Reno). Pare the company down to the best 15-20 properties, and even out of all of the places I mentioned, only Kansas City, Metropolis and Reno don't offer a nearby option in the group.

Quote: FinsRule

It's funny how we say things like "The only way to win at roulette is to own the casino" then we read stories about casinos going bankrupt. I guess the only winning move is not to play...

War Games?

Quote: Tiltpoul

Unfortunately for CET, they've done the opposite with their newest projects in Ohio. They're on the management side, which is debatable how successful they are at that, while someone else owns the building and land (Dan Gilbert). I still think once Gilbert feels comfortable that he could hire the right people to do the same thing, he'll buy out CET's share and convert the place into his own. Horseshoe Cleveland only feels like a Horseshoe in name; they don't have any of the other defining features (like a JB's Cafe, a Village Square or Paula Deen buffet).

Well, that could be a new way to split the company. IIRC, Marriot does not own most of their hotels, they just manage them. Owner gets profits and a real estate play and they get fees for running things. Though I do agree that they run less than a great property. In classic-auto terms I'd say they are an "Oldsmobile." Not bare-bones but not the class of any part of their industry in any way.

That is why I said split off Caesars. Hard to run a mainstream and luxury brand.

Quote: Mission146

War Games?

Wouldn't YOU rather play chess?

It's funny, but for most of Gary Loveman's 24 years at CEC, he has been lauded as the genius who brought a McDonald's like efficiency to the gaming business.

May 1998 – Gary Loveman joins the organization as Chief Operating Officer.
January 1, 1999 – Harrah's closed the purchase of the Rio All Suite Hotel and Casino and Rio Secco Golf course for $888 million giving the company a 2nd casino in Las Vegas. Later that year, the company moved its headquarters from Memphis, Tennessee to Las Vegas.

Quote: Pokeraddict

The leveraged buy out is what killed them. If you include the debt assumption the company was brought private for $27.4 billion. Just under half of that was debt assumption. The company has lost about 97% of its value since.

That's true, but that comment applies to thousands of corporations.

Quote: Mission146

War Games?

Maybe Caesars is actually operated by a WOPR machine...

The price has gone up from $6.42 (the time of posting this thread) to $7.19. Did you make your bet when this thread showed up? Not bad for a 12% growth in 2 days.

Quote: SOOPOO

Maybe I don't understand, but in our 'efficient market', the current market capitalization is EXACTLY what the company is actually worth. If it is 'really' worth more then people will be buying shares raising the price. If it is worth less than people would be selling and the price goes down. Please explain how market cap does not define the company's worth? I would understand if there was no liquidity, but there is plenty of trading action on CZR.

In general, float affects share price by increasing or decreasing volatility. The sentiment of those holding the restricted shares can't be taken in to account in calculating market capitalization. The hidden potential or value that may be seen by the management or holders of the restricted shares is not accounted for. The market capitalization is decided by the shares being traded, but if the float % is low, the minority is speaking for the majority and the majority may not agree.

I Respectfully have to disagree with a couple points. First, I believe in value investing, I don't buy the EMH (efficient market hypothesis) and I feel that I am in good company (Munger, Buffet etc). Second, in my opinion CZR's volume, around 250,000 shares a day average of trailing 3 months, is very low for a company of its size.

Market capitalization does not define an enterprise's value. When looking at the value, or worth of a company the amount of money it would take to recapitalize the company is a better metric of the value of the enterprise. market cap + debt - cash. There is obviously much more one must look at to properly measure value, like why it has debt, and in the case of companies like CZR who's debt is most likely real estate related, if the real estate is underwater.

The point of my original statement was just to point out that in my opinion one must be careful when saying CZR lost more $ than the entire value of the company, when with such a small float the company's market cap could increase or decrease by 50% tomorrow.

What relation do the shares have to sharing in profits? Dividends to be declared? I think with so much off the books debt or fears about off=book debts share prices no longer reflect dividends or earning power. Too much of the money seems to get siphoned off somewhere. Properties are dirty and grimy but value seems to persist despite obvious deferred maintenance.

Quote: FleaStiff

What relation do the shares have to sharing in profits? Dividends to be declared? I think with so much off the books debt or fears about off=book debts share prices no longer reflect dividends or earning power. Too much of the money seems to get siphoned off somewhere. Properties are dirty and grimy but value seems to persist despite obvious deferred maintenance.

I don't think CET has ever had a dividend. They certainly have not since going back public. Most companies that lose $1 billion a yesr do not pay dividends. I don't understand the rest of your question.

Believe it or not, I still think Loveman has a plan. Just not sure what it is.

Quote: Boz

Believe it or not, I still think Loveman has a plan. Just not sure what it is.

I would guess his plan is to make as much money for himself as possible, and stave off bankruptcy as long as possible, to accomplish his plan. As far as a plan for CET, who knows?

Quote: SOOPOO

I would guess his plan is to make as much money for himself as possible, and stave off bankruptcy as long as possible, to accomplish his plan. As far as a plan for CET, who knows?

If you read enough quarterly reports you find that when they are full of high praise for their executive decisions, often the improvement in performance is completely in line with the rest of the market. When performance sucks, the entire report is how bad the economy is doing.

Quote: Brutus

There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.

SOOPOO makes a good point IMHO... CET is a personal financial tool at this juncture.