Northern Nevada casinos

How financially healthy are the northern outstate Nevada casinos? If I don't drive the I-80 corridor when I'm in Reno in 2 weeks, do I risk anything by waiting a year or two to do it?

I've no idea but if they do go under then you probably haven't missed much. I know there was one bankruptcy in or near Sparks awhile ago and a few of the Reno casinos are viewed as real-estate plays rather than casinos right now. Casinos in smaller towns tend to be more viable because they invest less in attractions and have no local competition.

Quote: rdw4potus

How financially healthy are the northern outstate Nevada casinos? If I don't drive the I-80 corridor when I'm in Reno in 2 weeks, do I risk anything by waiting a year or two to do it?

Eastern Nevada (Elko county) are the most profitable region in the state. They don't have competition with visitors from Utah, and Jackpot is designed to bring day trippers in from Idaho. The Montego Bay, Peppermill Wendover and Rainbow show excellent returns.

Southern Lake Tahoe took some of the worst hits in the state resulting in one casino being turned into a strip club. It is very unlikely that Harvey's will close, although the Lakeside Inn is vulnerable.

Northern Lake Tahoe is pretty decimated since it is the most vulnerable to the Indian casinos in Sacramento.

The high power Reno trio, Peppermill, Atlantis, and Harrah's downtown are doing relatively well, and are not going to close. A lot of money was invested in Peppermill and Atlantis.

Eldorado, Silver Legacy, Circus Circus, Grand Sierra, and John Ascagua's Nugget in Sparks have lost a huge amount of revenue, but they keep chugging along in some kind of condition. Reno only had operational loss of 1.6% in fiscal year 2010, while Lake Tahoe had a loss of 24.7%.

Quote: pacomartin

Reno only had operational loss of 1.6% in fiscal year 2010, while Lake Tahoe had a loss of 24.7%.

How does any casino operate at a loss? Like MGM and others.
I've had several businesses and I had to make a profit or I
was done. One month of a 25% loss, let alone a year, and
I would have been toast.

Quote: EvenBob

How does any casino operate at a loss? Like MGM and others. I've had several businesses and I had to make a profit or I was done. One month of a 25% loss, let alone a year, and I would have been toast.

I've asked that question several times myself. MGM Resorts has been near the bottom of the fortune 500 for several years in a row.

There was a movie in the late '80s called Rosalie Goes Shopping with the tagline When You're $100,000 In Debt, It's Your Problem. When You're $1,000,000 In Debt... It's The Bank's. It was about a big boned German woman who can't say no to any whim of her family's. She is juggling her debt using one credit card to pay off another until she gets a personal computer. IBM PC's were still relatively new. She learns how to borrow money like a corporation and enlists the frightened bank staff into covering up her gargantuan debt.




At the end of the Reagan era when this movies was made, the million dollars in the tagline still seemed like a lot of money for personal debt. Reagan began his presidency with the federal debt at a historic low of 33.2% of GDP and drove it up over 50% where it was during the Kennedy administration. People were shocked, but the level of personal and corporate indebtedness was just beginning. The federal debt is now over 100% of GDP.

I'd say the Reno-area casinos that seem most in trouble are the Circus Circus, Sands Regency, Siena and Boomtown (in Verdi). The Siena actually reopened earlier this year and looks really sharp inside, but that part of downtown sees no traffic. Fitzgeralds downtown and Silver Club out in Sparks have closed since the recession started. As implied earlier, Reno's recession seemed to start earlier than Vegas's due to the Indian gambling in California. So maybe most of the hurt is out of the way by now.

I've always thought the Silver Legacy was the nicest downtown property (at least it is when the Siena's not operating) and believe MGM would keep it over Circus Circus. It seems like they're deferring maintenance at CC to say the least. As for the Cal Neva... there's room in every market for a fleabag casino.

The Atlantis is attached to the convention center and the Peppermill always seems busy when I'm there. The Peppermill conpleted an expansion about a year ago, and now there's this weird clash between their older garishy but fun neon-and-mirrors motif and the new part that tries to be like the Venetian. Grand Sierra announced an expansion last week, so it seems they're safe too. They sold a lot of their rooms as condos at the top of the bubble, which turned out to be smart (for them).

I think the three large South Tahoe properties will be safe in the long run because of the ski resorts.

Quote: pacomartin

When You're $1,000,000 In Debt... It's The Bank's.]

Reminds me of the Beverly Hillbillies. The Clampett's were the biggest
depositor's in Mr Drysdale's bank, so every problem they had, was his
problem. His fortunes depended on how they managed their fortune.
It must be the same for casinos, the banks who hold the notes have to
constantly figure out ways to fudge numbers and borrow and move
money around so they doors stay open.

Most casino debt has changed hands numeorus times since the bubble collapsed and is now held by hedge funds and private equity firms, who scooped it up at maybe 20-40 cents on the dollar. Same goes for much of the real estate if it was financed separately.

I can think of a lot of reasons why firms would tolerate an operating loss:

* The earnings are seasonal, or a recently completed expansion is still in ramp-up phase
* The company expects to raise cash by selling assets (perhaps underperforming ones)
* Actual earnings may be positive due to tax credits and other writeups
* Some cost in the last quarter was temporarily high -- this happens often with airlines and fuel

Of course you still have to be sufficiently capitlized to withstand these cash losses and stay in business. OTOH it's not uncommon to see companies that are cash-flow positive but report negative EPS due to heavy depreciation (etc.) expenses.

Quote: 7outlineaway

I've always thought the Silver Legacy was the nicest downtown property (at least it is when the Siena's not operating) and believe MGM would keep it over Circus Circus. It seems like they're deferring maintenance at CC to say the least. As for the Cal Neva... there's room in every market for a fleabag casino.

I think the three large South Tahoe properties will be safe in the long run because of the ski resorts.

The Silver Legacy is only half owned by MGM. Circus circus is fully owned by MGM. Grand Sierra was originally an MGM property when it opened, but they sold out a long time ago.

You may be correct about the three big ones, Harvey's, Montbleau, and Lakeside Inn . The Horizon Casino only has slots now. They closed Bill's Casino and sold it to a strip club the last I heard.

Tahoe made $343 milion in FY2006, and just over $200 million in just completed fiscal year. That's a drop of 41%.

In contrast Reno made $775 million in FY2006, and $546 million in the fiscal year completed June 31, 2011. Comparatively they are down only 30%. Sparks is down 29%

Elko county is within 1% of their FY2006 revenue. Of course it is a smaller market.

Everything in Elko, Jackpot, and West Wendover will be there for a while. (Maybe not the Red Garter in W. Wendover). Winnemucca's casino mix may change; not sure it's such a small market.

Horizon in Tahoe is strictly a real estate play now. They have completely punted on the casino and hotel.

Quote: pacomartin

When You're $100,000 In Debt, It's Your Problem. When You're $1,000,000 In Debt... It's The Bank's.

Shamelessly stolen from Robert Heinlein: "If you owe a dollar, the bank owns you. If you owe a million, you own the bank."

Quote:

Reagan began his presidency with the federal debt at a historic low of 33.2% of GDP and drove it up over 50% where it was during the Kennedy administration. People were shocked, but the level of personal and corporate indebtedness was just beginning.

Not to let Reagan off the hook, but every bit of that debt was approved, and much of it proposed, by the Democratic-controlled Congress.

Quote: Nareed

Not to let Reagan off the hook, but every bit of that debt was approved, and much of it proposed, by the Democratic-controlled Congress.

It may be an oversimplification, but it is popularly believed that Reagan made USA the only superpower by simply using the national debt to outspend the USSR, forcing them off the pedestal. I remember USSR still conducting major naval trials in the North Sea involving over a hundred ships as late as 1985.

Now there is the fear of being unseated as the only super power by our debt.

Election Year	Debt % GDP
1980	33%
1984	41%
1988	52%
1992	64%
1996	67%
2000	57%
2004	63%
2008	69%
2012 estimate	105%