Wednesday, March 10, 2004 | 11:07 a.m.
Harrah's Entertainment Inc. Chief Executive Gary Loveman explained on Tuesday why the casino-operating giant had no long-term interest in running downtown Las Vegas' Binion's Horseshoe, and why buyer MTR Gaming Group will be a positive for downtown.
Appearing on Face to Face With Jon Ralston on Las Vegas ONE, a cable channel owned and operated by Cox Cable, KLAS Channel 8 and the Greenspun family, owner of the Las Vegas Sun, Loveman said that the Horseshoe likely would have ended in bankruptcy without Harrah's and MTR stepping into the void.
"It's an old, run-down building, that hasn't been invested in in a long time," Loveman said of the 52-year-old Horseshoe, repeating his company's real target in the three-way-transaction that would have Harrah's operate the property for at least one year, with options for two additional years.
MTR has a desire to operate downtown, and Loveman suggested that there aren't a lot of licensed operators with the same willingness.
The World Series of Poker and rights to the Horseshoe brand name in Nevada are the prizes Harrah's is seeking, but operating downtown in the long term is not on the company's wish list, he said.
And Reno, where the company operates a downtown casino, may not remain a good market for the company if conditions there don't improve, he said.
But the company is bullish on the Las Vegas Strip, where reasonable tax rates and capital expenditure have fueled a strong surge.
"We intend to bring the name Horseshoe to life in a new way in Las Vegas," Loveman said, teasing the company's rumored plans to build a Horseshoe-branded property on the Strip.
Meanwhile, MTR Gaming Group executives said this morning they expect to finalize the company's purchase of Binion's today as they announced the company's fourth quarter results, including a 14.8 percent decline in net income to $2.3 million, or 8 cents per share, from $2.7 million in the 2002 fourth quarter.
The year-ago earnings per share were 10 cents. More shares were outstanding last year.
In addition to its prospective purchase of the Horseshoe for an estimated $20 million, MTR Gaming also operates the Speedway motel-casino in North Las Vegas. Its big money-maker is Mountaineer Race Track in its home base of Chester, W. Va.
MTR Gaming Chief Executive Ted Arneault said this morning in a conference call with investors and analysts that the company can't release financial details about the purchase of Binion's Horseshoe, which he said "we expect momentarily."
A couple of last-minute snags with property owners of land, who are negotiating to sell their parcels, have delayed the sale. But Arneault said the deal is expected to close today.
"Anyone who reads the papers in Nevada probably has much more information than we do," he said.
Harrah's Entertainment spokesman Gary Thompson said this morning that Harrah's hopes the deal closes today. Harrah's would run the property for at least a year under terms of MTR's licensing arrangement with state regulators.
Neither MTR nor Harrah's executives expect the fate of the so-called Parry parcel -- under the southwest side of the Horseshoe, the old Mint side, with frontage on both Fremont and First streets -- to affect today's closing.
A deal to buy a separate plot under the Casino Center Drive side of the property was temporarily stalled, but was expected to close today.
MTR's fourth quarter, which ended Dec. 31, included a 13 percent revenue increase, to $70.4 million from $62.6 million.
Operating cash flow jumped by 31 percent in the quarter, to $53.8 million from $46.1 million.
Arneault emphasized the importance of a number of bigger prospects than the Horseshoe opportunity, including plans to locate an Erie, Pa.-racetrack next to a civic-funded convention center, build Minnesota's first harness racetrack -- and a card room -- north of Minneapolis and to lobby for table games at its West Virginia base and slot machines at a Columbus, Ohio, race track.
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