What’s for sale and what’s not for sale on the Strip as Eldorado-Caesars deal moves forward

June 25, 2019 10:43 PM
  • Howard Stutz, CDC Gaming Reports
June 25, 2019 10:43 PM
  • Howard Stutz, CDC Gaming Reports

Speculation about what Las Vegas Strip casinos operated by Caesars Entertainment might be for sale was rampant long before the words slipped out of the mouth of Eldorado Resorts CEO Tom Reeg early Monday morning.

Reno-based Eldorado is acquiring nine Caesars properties on or near the Strip as part of its $17.3 billion cash, stock and debt merger with Caesars. Eldorado – which has resorts in Reno, Lake Tahoe and Laughlin – has long desired to operate a Strip address.

Reeg is just not sure if the company needs nine hotel-casinos within a two-and-a-half-mile stretch, encompassing more than 23,000 hotel rooms.

“As I sit here today … I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” Reeg said. “So I would expect that we would be a seller of a Strip asset, but that decision has not been made.”

High Roller at the Linq

Reeg said Caesars is completing $1.2 billion in room remodeling at the company’s Strip casinos, which could be 95 percent done by the time the deal closes in 2020. “That positions the portfolio for improved operating performance in the near-term,” he said.

However, the ink wasn’t even dry on “For Sale” signs when a potential buyer surfaced.

Treasure Island owner Phil Ruffin told the Las Vegas Sun he would be interested in one of the Caesars-operated Strip casinos – for the right price.

But which property?

Caesars Palace is untouchable. It is the company’s iconic property, and Eldorado plans to adopt the Caesars name and stock market trading symbol.

Bally’s and Paris Las Vegas are connected physically and operate under the same Nevada gaming license. You can’t sell one without the other. Plus, they are catty corner from Caesars Palace at the southeast intersection of the Strip and Flamingo Road.

Planet Hollywood

Harrah’s Las Vegas is a legacy property from the Harrah’s Corporation, which engineered the 2005 deal to acquire Caesars Entertainment. The Harrah’s brand is on casinos in 13 states.

The Linq Hotel and the Flamingo Las Vegas are connected by Linq Promenade, a shopping dining and entertainment district that includes the 550-foot High Roller, currently the world’s largest observation wheel. Plus, Caesars is constructing the $375 million Caesars Forum, a 550,000-square-foot conference center expected to open in 2020. A buyer would have to want all four entities.

That leaves three resorts – the boutique-size 188-room Cromwell, Planet Hollywood, and the off-Strip Rio – as potential sales targets. The Cromwell’s location on the northeast intersection of the Strip and Flamingo is a prime location, but its size doesn’t move the needle.

The Rio has been on the block since it opened. No, it’s not going to be demolished and the site used as a Major League Baseball stadium, as the Twittersphere has speculated. However, the Rio – which experiences its most profitable weeks when it hosts the Caesars-owned World Series of Poker – does need a hefty investment.

And Planet Hollywood holds a prime Strip location, has 2,500 rooms, and a large retail component, and has always seemed somewhat out of place in the Caesars-Harrah’s universe.

Expect to hear any number of rumors and widespread conjectures over the Caesars Strip portfolio in the next 12 months.

Boyd Gaming Corp. has also expressed an interest in acquiring a Strip resort;  the company sold the Echelon project in 2013, after closing and imploding the Stardust in 2007.

“We have said (for some years) that we’d like to get back on the Strip for the right asset at the right price,” Boyd Gaming CEO Keith Smith said in 2018. “(But) we’re not laser-focused on it. If there was the opportunity we would, but right now there isn’t.”

This other wildcard in this equation is Tilman Fertitta.

The Houston billionaire was rejected by the Caesars board last fall when he offered a reverse merger at $13 a share that would have given him control of the company. Still, he purchased 4.5 million shares in Caesars and was conducting due diligence when corporate raider Carl Icahn acquired 28 percent of the company through stock purchases and swaps, installed his own CEO and three board members, and pushed for the deal with Eldorado.

As I told the Houston Chronicle on Monday, Fertitta – star of CNBC’s Billion Dollar Buyer and owner of the NBA’s Houston Rockets – is not one to be deterred. Fertitta owns the five-casino Golden Nugget chain, which includes properties in downtown Las Vegas and Laughlin. He might want a Strip location to plant the brand’s flag.

He’s one person I wouldn’t count out.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.