A legend passes; Packer flops in Vegas (again)

Before we get back to business, a few brief mentions. First, let us have a moment of silence for Strip icon and former Las Vegas casino owner Debbie Reynolds, victim of a fatal stroke.  Coming as it did a day after the passing of daughter Carrie Fisher, it can be legitimately said that Reynolds died of grief.

I should also like to thank all of those who wrote in to wish me well during my recent illness. Your support means more to me than I can adequately say.

November was moderately negative for the Las Vegas Strip, down 3.5%. Strip casinos grossed $517 million and suffered from a 23% plunge in baccarat win, on 23% less money wagered. Strip casinos were somewhat luckier at other table games, down 4% on 9.5% less betting. (Tighter holds were credited.)  But a 2% increase in slot revenue was of no avail, with win down 3%. JP Morgan analyst Joseph Greff, however, hailed the sixth straight month of increased slot handle as “an encouraging sign.”

Compared to a booming November 2015 (+15%), locals numbers could not help but look anemic, up 1% overall. Slot revenue, up 5%, drove the increase, although coin-in was flat. Table revenue got hammered, down 18%, as 13.5% less money was wagered. Downtown ($5 million) was 5% down, while Laughlin ($40 million) gained 6%. Boulder Strip ($73 million) was up 3%, North Las Vegas ($23 million) ceded 9% while outlying Clark County (a robust $97 million) gained 2%. Upstate, Reno ($46 million) was reliable, up 3%, while Lake Tahoe ($16 million) gained almost 13%. All other markets were flattish.

* Was anyone surprised when James Packer fled Alon, his latest in a series of flops in the Las Vegas market? This casino project looked like vaporware from the get-go and with Packer retrenching on all fronts, particularly non-Australian ones, Alon seemed sure to be on the chopping block. Considering that Crown Resorts was the project’s main prop, we’re inclined to declare Alon D.O.A. However, President Andrew Pascal is trying to spin the new, Packer-less scenario as a great investment opportunity. “The project is still viable, it’s very compelling, it provides compelling returns and I would say in some cases, it might open up and create new opportunities where there were prospective investors that we talked to in the past that were potentially looking to come into the project but because they couldn’t come in in a more meaningful way, they elected not to.” Couldn’t “come in a more meaningful way” because of Packer’s presence? In plain English, Pascal is saying he has a great bridge in Brooklyn for you.

Now let’s not forget that Alon was having trouble getting capitalized before Packer turned tail and ran. Nevertheless, Pascal thinks investors will be beating down the doors. “Everything about it supports that there is a really significant opportunity here. Las Vegas is very exciting with record visitation and record revenues and we believe that our site and how it’s positioned on the Strip are ideal and we think the concept that we have for the resort and how we have it positioned is perfect for where the market is and where we think the market’s going,” he chirped. (When Wynn Las Vegas dealers were at odds with management, they hated Steve Wynn but respected him, For Pascal, they had nothing but contempt.) Never mind that Alon exists only as some literally sketchy renderings filed with Clark County officials.

Packer’s exit coincides with a planned (additional) selldown of his Melco Crown Entertainment position to 14%. He’s also got a headache in the form in the continuing peril of The Crown 18, at the mercy of Chinese jurisprudence for allegedly marketing to high-rollers in mainland China. If someone as wealthy as Packer thinks Alon is too expensive for his wallet, what are the chances Pascal can find another sap to keep this project alive?

* As Oscar Wilde‘s termagant Lady Bracknell might say, to have one electrical fire at The Rio may be regarded as a misfortune. To have two in two days looks like carelessness. As its dilapidated exterior appearance indicates, The Rio has been the redheaded stepchild of Caesars Entertainment‘s Vegas portfolio. Now that the company is nearly emergent from bankruptcy, perhaps some revenue could be put toward making The Rio a hotel where one feels safe staying.