The first-quarter earnings call with Red Rock Resorts raised more questions than answers on the casino company’s deal to sell 49 acres to the Oakland A’s for a $1.5 billion stadium.
Though they’d previously hinted that more details would be forthcoming on the call, Red Rock executives provided few answers to the questions asked by Wall Street analysts, including whether the A’s site has entitlements for gaming. Executives cited a confidentiality agreement with the A’s who in mid-April announced a deal to buy the land from the casino company. The transaction is contingent on government approvals for the financing of the 35,000-seat domed stadium with a partially retractable roof. It’s situated on 96 acres at West Tropicana Avenue a short distance from I-15 on the former Wild West Casino site.
Red Rock CFO Stephen Cootey said the deal with the A’s is expected to close during the fourth quarter, but couldn’t cite the dollar amount due to the confidentiality agreement.
The binding agreement is for 49 acres and an option to buy another eight acres. That would leave Red Rock with just under 40 acres for future monetization, as the “continues to execute on our strategy of repositioning our land portfolio for future growth,” Cootey said.
When asked about the possibility of building a casino on the parcel next to the stadium, Red Rock Resorts CEO Frank Fertitta III deflected his answer by talking about Red Rock’s future growth elsewhere in the valley.
“We’re looking to monetize the (Wild West) parcel and the A’s actually increase the value of the remaining property,” Fetitta said. “We’re pretty bullish about the site and we wound up with all of these new sites out in the suburbs that we acquired over the last 12 months.”
Cootey was asked about the gaming entitlements on the 39 or 47 acres, but responded, “Unfortunately, we’re under confidentiality, so we can’t really answer any of those questions at this time.”
If funding is secured, the A’s relocation could come as early as 2025. The team would probably play in Las Vegas’ minor league baseball stadium before the new stadium is completed in 2027.
Fertitta sounded an optimistic note for Red Rock and Las Vegas as a whole in terms of the future in general and sports in particular.
“We like our position based on what we see happening in Las Vegas over the next one to five years,” Fertitta said. “With the professional sports teams relocating here and the Sphere opening up, Formula One and the Super Bowl coming, Las Vegas has a lot of things that can buffer (whatever) happens in the macro economy. In addition, there’s population growth and limited supply in our market.”
The other main topic in the earning’s call centered around Durango Station, under construction in the southwest valley and scheduled to open by the end of the year.
Cootey said its cost has increased from $750 million to $780 million based mostly on a decision to expand the casino area and add 360 gaming positions. Smaller cost increases are related to construction.
“We believe a larger footprint will better align the product offering with the anticipated growth and favorable demographics in the area,” Cootey said.
Red Rock reported net revenue of $433.6 million for the first quarter, an increase of 8% or $32 million from $401.6 million in the first quarter of 2022. Net income was $85.5 million for the first quarter, a decrease of 7.3%, or $6.7 million, from $92.2 million in the same period of 2022.
Adjusted EBITDA was $194.2 million for the first quarter, an increase of 8.6%, or $15.4 million, from $178.7 million in the same period of 2022.
Net revenue from Las Vegas operations were $430 million for the first quarter, an increase of 7.6%, or $30.3 million, from $399.7 million in the same period of 2022.
Adjusted EBITDA from Las Vegas operations was $214.1 million for the first quarter, an increase of 8%, or $15.9 million, from $198.2 million in the same period of 2022.
The company’s cash and cash equivalents on March 31 were $107.7 million and the total principal amount of debt outstanding at the end of the first quarter was $3.1 billion.
