Caesars Entertainment is Not Selling the Flamingo Casino
Caesars Entertainment CEO Tom Reeg poured cold water on rumours that the real money casino giant is about to offload one of its famous Las Vegas Strip properties. Rumours of Caesars selling the iconic Flamingo began circulating last year and appeared to gather pace recently. Mr Reeg ended months of speculation while speaking at Caesars’ third-quarter earnings call this week.
Industry experts predicted Caesars selling a Las Vegas Strip property as it attempts to reduce its mountain of debt. Caesars US$33.4 billion ($51.9 billion) in liabilities at the end of the 2021 financial year. However, the high roller casino games operator reduced those liabilities to US$29.7 billion ($46.15 billion) by the end of Q3 FY2022.
Chief Financial Officer Bret Yunker explained how the casino giant has restructured some of its debt.
“We continued to reduce debt during te quarter using net asset sale proceeds and free cash flow totalling US$880 million ($1.37 billion). In early October, we successfully upsized our pro rata bank facilities to US$3 billion ($4.66 billion), including a US$750 million Term Loan A and a US$2.25 billion ($3.49 billion) Revolving Credit Facility that matures in 2028.”
Caesars Potential Flamingo Sale Is Off The Table
Mr Reeg indicated Caesars would struggle to receive the US$1 billion for Flamingo. It is believed the company wanted US$2 billion ($3.1 billion) or even US$3 billion ($4.66 billion) for the casino opened in 1946 by gangster Bugsy Siegel.
Reports indicated the vast renovation Flamingo requires put off potential suitors. In addition, ever-increasing interest rates have put many real estate investors in a tricky position. Borrowing costs are sky-high, which massively increases the overall cost an investor pays.
Many thought VICI Properties were first in line to get their hands on Flamingo. VICI has first refusal on a number of Caesars’ properties as part of the deal it struck when purchasing the old Caesars in June 2019. However, VICI has almost finalised a US$17.2 billion ($26.73 billion) deal to acquire MGM Growth Properties. VICI likely does not want another ten-figure cost on its balance sheet.
About the Flamingo Las Vegas
The Flamingo Las Vegas was the third casino to open on the famous Las Vegas Strip, and is the oldest resort on the Strip in operation today. Furthermore, it is the last remaining casino on the Strip that opened before the 1950s.
Mobster Bugsy Siegel got involved with the Flamingo when Billy Wilkerson found himself US$400,000 short to complete the construction. Siegel envisaged an all-in-one resort, not only somewhere to play casino games. It is fair to saw he achieved his goals.
The Flamingo opened its doors on Boxing Day 1946, having cost US$6 million. Moe Sedway and Gus Greenbaum took control of the casino three months after someone shot Siegel dead. It has since had several owners and has undergone several renovations.
The casino’s special garden is a habitat for flamingos, which wonder around patrons throughout the year. Gamblers of all bankrolls are catered for, with almost 2,000 pokies and 89 table games, including a handful of roulette games that have various minimum bet sizes.
Business is booming for Las Vegas casinos. September 2022 marked the 19th successive month Nevada casinos won more than US$1 billion ($1.55 billion). Casinos on the Strip, including several Caesars properties, pulled in US$693 million ($1.08 billion). That represents an 8.25% increase year-on-year. Pokies and electronic gaming machines are creating the biggest pull in Vegas. They accounted for US$409.5 million ($636.59 billion), some 15% more than last year.
“This month’s total was driven by another incredibly strong sports and entertainment calendar, which included concerts, residencies, a music festival, and three high-profile sporting events.”
