Major Player Answers Las Vegas Strip Casino Sale Question
Caesars Entertainment flirted with selling one of its Las Vegas Strip properties for much of 2022. It was a public process that the company gave updates on regularly, but those updates never actually told people much.
That led to all sorts of speculation as to exactly which Strip resort casino the company would sell. Logically, Planet Hollywood made a lot of sense as it's not as geographically entwined with other Caesars Entertainment (CZR) - Get Free Report properties, and it always seemed like a bit of an outlier for the company.
In the end, as the process heated up and then fizzled out, it turned out that Caesars was taking bids on Flamingo. That made sense given that the property is old and badly needs major updating, but it's also in a long line of Caesars properties, and it shares access to The Linq Promenade, a key outdoor dining, shopping, and entertainment area for the company.
Selling Flamingo made sense given the company's debt load, but it's arguably better that Caesars could not find a buyer willing to meet its price. Flamingo might be old, but selling it would break up the Caesars empire and give a rival a key beachhead.
Now, Caesars CEO Tom Reeg has again addressed the issue of selling one of his company's Las Vegas Strip resort casinos during its first-quarter earnings call.
Caesars Isn't Selling (Unless It Is)
Caesars CEO Tom Reeg sort of took a never say never approach when he was asked about a potential Strip asset sale during the earnings call.
"I'd say short answer is no. We've got nothing for sale today. Don't expect to have anything for sale anytime soon," he said, "That said, as I've told you before, effectively as a public company, everything is for sale every day, so you don't know what you'll be approached with."
When Caesars first broached the idea of selling a Strip asset. the idea was cutting its inventory of Las Vegas hotel rooms in order to make the remaining ones more valuable.
"Well, we're 23,000 rooms today. You're taking out the Rio rooms, and then you take out a property, depending on which property it is, let's say 3,000 to 4,000 rooms," Reeg said during his company's 2021 fourth-quarter earnings call, in response to a question about selling a Strip property.
"So you're going to be down to, call it, 16,000, 17,000 rooms in the market. That's about 1/4 of our existing capacity," he added.
Caesars will lose operating rights to Rio, an off-Strip property, later this year.
What Would Caesars Sell?
When Caesars first discussed an asset sale, the speculation hovered around Paris Las Vegas and Planet Hollywood. It was later shared that the company wanted to keep Planet Hollywood due to its performance venues.
Paris Las Vegas seems less likely as a sale target because Caesars has just committed to retheming one of Horseshoe's (the former Bally's) towers and making it part of Paris. And, while that might make Horseshoe a logical sales target, that property's casino actually shares a license with Paris.
That doesn't make a sale impossible, but it makes selling one of those two resort casinos less likely.
In reality, Cromwell and Flamingo seem like the two most logical properties for an outside company to target should they want to make Caesars an offer they could not refuse. That does not seem likely, but it's also not impossible given the ever-increasing value of being in business on the Las Vegas Strip.