Looking like death warmed over, Caesars Entertainment CEO Gary Loveman took time from promoting the opening of Horseshoe Cleveland to try and spin the unloading of Harrah’s Maryland Heights as another brilliant masterstroke, rather than more evidence of the shambles into which he’s put a once-proud company. “Putting aside our status as a levered company,” he pontificated, as though roughly $20 billion in debt were but a minor inconvenience. What a card! Doesn’t that deadpan sense of humor just slay you?
Loveman was careful to fertilize the b.s. with a few seeds of truth, as when he told reporter Howard Stutz that sometime rival, sometime benefactor Penn National Gaming paid him “a handsome price” for Maryland Heights and that the market was “over-saturated.” He also confirmed previous newspaper reports that Caesars is holding a Mother’s Day sale on casino assets, although for some “the demand for those … were [sic] not sufficient.” In other words, he’s stuck with casinos nobody else wants — at least not at full price. Failing to unload things like Bally’s Wild Wild West and Showboat when pigeons like Colony Capital and Columbia Sussex were flapping about, begging to be plucked clean was an easily foreseeable mistake that can never be made good. Loveman chose to be a hoarder in a seller’s market, which is why he’s selling a lucrative asset rather than a redundant one. (The MGM Mirage/Mandalay Resort Group takeover, by contrast, was an example of targeting a company whose assets where complimentary, not duplicative.)
Which is how he finds himself trying to spin getting out of St. Louis as another canny stratagem. Yes, the market is currently maxed out — but it was a $911 million market last year, of which Caesars owned 29%. Loveman’s trading that in for 20% of Cincinnati and Cleveland (less, once racinos kick into gear), plus the $0.33 cents on the dollars that he and Dan Gilbert get to split, once the State of Maryland finishes robbing them blind. In light of these factors, I can’t fathom how Fitch Ratings Service analyst Michael Paladino reaches the daffy conclusion that Caesars is trading in a St. Louis presence for “higher-return investment.”
Once upon a time, before Loveman’s imbecilic LBO — and it was he who initiated it — the once-proud Harrah’s Entertainment could have gone into Ohio and Maryland, and probably even Florida, and done it all on its own dime (and enjoying all the revenue). None of this junior-partner crap. But Loveman is now reduced to being lugged around the Eastern Seaboard on Gilbert’s shoulders. That certainly gives the lie to tumescent bluster like, “We are so much bigger than anybody else in the United States.”