Fishman Adds Some Perspective on Station Casinos Trouble

October 25, 2008

There has been much talk recently on the troubles being encountered by the Fertitta family with their stake in Station Casinos. Many websites, ours amongst them, have detailed the troubles that have been brought on by the credit crunch and economic downturn: Fight Opinion, Bloody Elbow, FightLinker, MMAPayout 1, 2.

Bob Carson of Carson’s Corner spoke with with former casino executive and Pride associate Ed Fishman who gave perspective on the casino industry troubles and what they mean to Station Casinos in particular. Fishman is an oldhand in the casino business and does a good job of breaking down a lot of issues in layman’s terms.

Fishman doesn’t give much creedance to the idea that Lorenz may have been shown the door at Station. Colony Capital, which owns 75% of Station, doesn’t know the casino business and that gave them the impetus to keep them around once the company was taken private. Fishman characterized them as excellent operators and the performance of Station Casinos owes more to an industry wide downturn as opposed to any concrete mismanagement of the company.

I’m curious to if this downturn is hitting Station to a higher degree than others in Vegas. The rise of Station Casinos under Lorenzo and Frank III is usually tied to their performance in the locals market, but from all I’ve read on the brothers, an equal part of the success was a big play in scooping up real estate in the Vegas area, essentially being ahead of the game in land speculation. Speculation like that is usually dependent on high levels of financing that would be a significant albatross around their neck now. Some of that may have been lessened by taking the company private and having Colony Capital assume a large part of the equity in the company. Regardless, there is still in excess of $5 billion in debt that is pressuring operations, as they look to cut costs.

On a related note, there was also an article in the Las Vegas Review Journal that forecast a less than enthusiastic opening for the new property owned by the Fertittas, the Alliante, and also gave a look at the size of the downturn for the industry as a whole:

Station Casino executives told state gaming regulators Thursday they don’t know how well the $662 million Aliante Station will perform when it opens next month given current economic conditions.

“There’s not a lot of visibility in our business today,” said Thomas Friel, Station Casinos’ chief accounting officer. “It’s a bit of a crap shoot to figure out where things might be.”

The Nevada Gaming Commission unanimously approved licensing of the North Las Vegas property, which is scheduled to open Nov. 11, but asked the gaming company’s executives questions about how the company plans to operate the property in the current market.

Gaming revenue in North Las Vegas declined 17.81 percent in August to $18.1 million, and is down 6.3 percent to $284.7 million for the last 12 months ending Aug. 31

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