Caesars sold to Park Place
In the ongoing drama of casino ownership, Starwood Hotels & Resorts is about to exit the stage and Park Place Entertainment enters as the owner of Caesars World, Inc.
Following months of high stakes negotiations, a $3 billion cash purchase agreement was announced Tuesday.
That places Caesars resorts in Las Vegas, Atlantic City and Lake Tahoe under the Park Place banner. The sale does not include the Desert Inn hotel-casino in Las Vegas.
”This is the cream asset in gaming,” Arthur Goldberg, president and chief executive officer of Park Place, said in a telephone news conference.
Park Place will be the third owner of Caesars in two years. Starwood purchased the property 14 months ago as part of a package of luxury hotels previously owned by ITT Corp. From the beginning, Starwood’s chairman and chief executive Barry Sternlicht expressed discomfort with the volatility of the gaming industry.
The deal, expected to be finalized near the end of the year, ends a 10-figure financial tug-of-war between two gambling titans – Park Place and Mirage Resorts Inc.
William Eadington, director of the University of Nevada Institute for the study of Gambling and Commercial Gaming, said the sale is good news for both Caesars as a whole and Caesars Tahoe.
“Mirage was not interested in a lot of the properties that came under the Caesars banner,” he said.
“It pushes Park Place into a dominant place in the industry with all kinds of opportunities for rebranding,” Eadington said. “It puts Hilton (now Park Place) in a position not unlike Harrah’s which has a significant presence in many markets.”
It also gives Park Place “a striking presence on the Las Vegas Strip.”
At Caesars Tahoe, the announcement brought a sense of relief.
“The rumor mill was unsettling,” Caesars Tahoe Marketing Services Director Trish Gilbert said, noting the employees seemed pleased to reach the end of negotiations.
Otherwise, “It’s business as usual (while we wait for directions).”
More changes could still be in store for Caesars if the previous Park Place acquisition of Bally’s is any indication, according to Eadington.
“Arthur Goldberg has a very strong sense of what he wants in a management team,” he said. “The Bally’s experience is very interesting regarding the integration of management. (Within a few years) all the original management people were more or less gone. Whether there will be a parallel experience here, it’s too soon to tell.”
The purchase agreement has been approved by the boards of both companies will give Park Place interests in 29 gambling properties with 28,000 rooms worldwide, 12,000 of them in Las Vegas.
In addition to owning one out of every 10 hotel rooms in Las Vegas, the purchase would give Park Place ownership of three of the four major hotels on the busiest intersection of the Las Vegas Strip – the Flamingo Hilton, Bally’s Las Vegas and Caesars. Park Place also plans to open French-themed Paris-Las Vegas, a 2,900-room hotel next to Bally’s in September.
The purchase also gives Park Place prime land for future development on the Las Vegas Strip and the Atlantic City Boardwalk.
Park Place owns two Atlantic City hotel casinos. Its New Jersey flagship is the 1,263-room Bally’s Park Place Casino Hotel, located at the famous intersection of Boardwalk and Park Place. The Atlantic City Hilton has 805 rooms.
Caesars Atlantic City Hotel Casino has 1,114 rooms.
Goldberg said the sale provides ”significant benefits for both companies.” Park Place obtains ”an internationally recognized brand name and a portfolio of premier gaming assets.”
Goldberg said there is a possibility that Las Vegas-based Park Place might change its name, or the name of some of its other properties, to take advantage of the Caesars marque.
”By acquiring the Caesars’ brand name and related customer database, we plan to heavily cross-market between our destination resorts,” said Goldberg. ”This will boost revenues and expand the markets where we operate.”
Dexter Wood, hospitality and leisure consultant for PricewaterhouseCoopers in New York, said the sale will allow Sternlicht to pay down debt taken on in the ITT purchase.
It will also allow Starwood to focus on its hotel business, which includes the Sheraton, Westin and St. Regis/Luxury Collection brands.
Wood said the recent entry of Mirage into the Caesars selloff played a role in pushing the Park Place deal to completion.
”Mirage helped bring it to a close a little quicker,” Wood said. ”Mirage came in and there was more of a threat of a bidding war.”
Mirage may have quickened the pace and pushed the price a little higher, Wood said.
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