Caesars Bankruptcy: The Value of Total Rewards.

In various news reports about the bankruptcy of the unit of Caesars that includes Caesars Palace, and discussion that the rest of the Caesars company might be forced to also declare bankruptcy, there is sometimes mention about the Total Rewards players club program and how valuable it is.

In another thread I wrote that I think Total Rewards has no real value to anyone but Caesars.

I think it's worth discussing since Caesars is a publicly traded stock and there are others who invest in other gaming companies.

So there are two quesitons: If you had to put a value on the Total Rewards program for the purpose of selling it in a bankruptcy, how much is it worth? And, if you bought it, what would you do with it?

I maintain that the Total Rewards program is of no value to anyone except as a mailing and telephone list of casino gamblers with information about their credit and gambling habits. And that's something that really has limited value -- if any value at all.

Other casino companies can create their own database of their own customers and as new customers join their programs they can add. Seeing what Caesars has or had is of no value.

What about non-casino companies?

If American Airlines bought the Total Rewards system they couldn't offer free hotel stays in any of the casino resorts. So again, American Airlines would only be buying a mailing list.

If American Express bought the Total Rewards system they couldn't offer free play or show tickets to those on the list because Amex has no casinos and no showrooms. Why offer loss leaders when you don't have businesses to lead customers to?

Now what about another casino company -- say Wynn, for example. If Wynn bought the Total Rewards system they wouldn't want to take on the liability of all of the comps and Reward Credits and "tier level privileges" that Caesars handed out for previous play. In other words -- Wynn would only value it as a mailing list, albeit a list of players and their spending habits. But does Wynn need it?

So all you have left is a mailing list.

This is why I think Total Rewards is worthless to anyone but Caesars. And I think investors and the media were sold a bill of goods that Total Rewards is any kind of valuable, marketable asset.

If there is an asset (and I am taking a guess here) it's the software that analyzes player habits. But I have to ask, do you really have to buy Total Rewards to research your own data?

TR is of little value to any type of buyer. Casinos would get far more meaningful info by working player background deals with CET hosts and other employees--which happens all the time--or by hiring them.

What Rob mentioned would also be more economical.

Do any of you realize how big of a base TR has? Alan you think it's just about a mailing & telephone list it's way more than that.
It's the most valuable asset they own.....

I don't disagree with Rob's ideas. But look at the real costs:

Cost of hiring a host: $50,000.
Cost of buying Total Rewards: $1.

And... you get what you pay for.

Alan

I'm not sure what business you're in, but I ran a privately owned firm for 26 years.. We had 683 employees.. Every week we met our payroll, never late, never borrowed a penny from any banks...
My Dad started the firm in 1961 with 4 people we grew when we could afford to. We sold the entire firm in 2012...

The problem with Caesars is they are not spending their own money, thus their financial mess... They assume because they are well know people will just play at their properties..
When I moved to Ohio they had ZERO casinos, drove to Wheeling and Southern Indiana...Now they have I think 10 casinos/racinos...
People have many options... The "hard core" gambler can get any meal,show,sporting event, suite they want... The mom/pop are just happy with a hot dog and Coke... Thus the problem arises Caesars took their "hard core" players for granted.. They bought properties just to buy them, knowing damn well they'd run them into the ground.
They can care less about their employees, morale is awful.

The TR base IS a goldmine, just watch who buys it and the price they pay for it

Quote:

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Originally Posted by Alan Mendelson

I don't disagree with Rob's ideas. But look at the real costs:

Cost of hiring a host: $50,000.
Cost of buying Total Rewards: $1.

And... you get what you pay for.

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Originally Posted by LoneStarHorse

Alan

I'm not sure what business you're in

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What? If you posted this on WoV you would get suspended for a personal insult.

Coach Belly

What insult was written, I truly have no idea what business Alan is in.... Very touch sone of you are WOW

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Originally Posted by coach belly

If you posted this on WoV you would get suspended for a personal insult.

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Quote:

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Originally Posted by LoneStarHorse

Coach Belly

What insult was written, I truly have no idea what business Alan is in.... Very touch sone of you are WOW

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Relax...it was a joke.

Coach Belly

OK, I mean the other day I questioned ace of spades and he/she got their balls in a uproar...
This is a fun place to talk about things, never been a part of something like this... I don't do any social media i.e. Facebook or Twitter ...

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Originally Posted by coach belly

Relax...it was a joke.

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LoneStar, you had no idea that AoS was highly sensitive about someone asking him what casino he frequents. He really freaked out about being stalked. I don't blame him. But no one can blame you for not knowing anything about it.

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Originally Posted by LoneStarHorse

This is a fun place to talk about things

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This is one of the many forums @ AlanBestBuys

Go to www.alanbestbuys.com and you can read all about Alan.

slobdinger I appreciate your words on that subject

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Originally Posted by slobdinger

LoneStar, you had no idea that AoS was highly sensitive about someone asking him what casino he frequents. He really freaked out about being stalked. I don't blame him. But no one can blame you for not knowing anything about it.

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Interesting

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Originally Posted by coach belly

This is one of the many forums @ AlanBestBuys

Go to www.alanbestbuys.com and you can read all about Alan.

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No one would pay a dime for Total Rewards because Total Rewards has no value without the Caesars Entertainment casinos. That's my point.

It's like placing a value on "goodwill." Goodwill has no value to anyone but the company that says it has goodwill.

I can't buy your Goodwill. And another company can't buy Total Rewards and make use of it.

That means Total Rewards is worthless to anyone but Caesars.

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Originally Posted by LoneStarHorse

Interesting

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Here...you'll get a kick out of this link

http://alanbestbuys.com/id194.html

Please coach... since LoneStar is a businessman let this be his introduction to my main website:
http://alanbestbuys.com/id201.html

http://alanbestbuys.com/id194.html

It's still find it absolutely astonishing that the Rob Singer in those videos is the same Rob Singer that posts on this forum.

Alan

Tell you what I'll make a wager with you my $500 to your $100 that "someone" pays a hefty price for TR within the next 150 days...

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Originally Posted by Alan Mendelson

No one would pay a dime for Total Rewards because Total Rewards has no value without the Caesars Entertainment casinos. That's my point.

It's like placing a value on "goodwill." Goodwill has no value to anyone but the company that says it has goodwill.

I can't buy your Goodwill. And another company can't buy Total Rewards and make use of it.

That means Total Rewards is worthless to anyone but Caesars.

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Alan

"Retired" businessman, now just volunteer for Habitat,Gamble,Daytrade, smoke good cigars...

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Originally Posted by Alan Mendelson

Please coach... since LoneStar is a businessman let this be his introduction to my main website:
http://alanbestbuys.com/id201.html

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Originally Posted by coach belly

http://alanbestbuys.com/id194.html

It's still find it absolutely astonishing that the Rob Singer in those videos is the same Rob Singer that posts on this forum.

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"That Rob Singer" is not the same Rob Singer who posts in these forums. "That Rob Singer" is my friend. The Rob Singer who posts in these forums is a caricature of what I don't know.

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Originally Posted by LoneStarHorse

Alan

Tell you what I'll make a wager with you my $500 to your $100 that "someone" pays a hefty price for TR within the next 150 days...

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Suppose someone does buy TR, then what? Does Caesars not have a players club program? Does Caesars wipe out Seven Stars, Diamonds, Platinum accounts? Do your tier points and Reward Credits vanish? Or do you overnight discover that you now have frequent flyer points with Southwest Airlines in lieu of everything, or you have timeshares with Trump?

Alan

There is no "supposed" with this. Everyone in the industry knows it's Caesars last bargaining chip... Caesars will do what Rock Gaming is doing in Ohio. They are starting their new program soon, no more TR. In fact my host said offers will be better than ever, because Caesars doesn't tell them how to dool out the comps. Rock Gaming is grandfathering in every seven stars player into their top level membership. And will do the same for Diamond,Plstinum,Gold..
Your tier points convert to whatever new program they start with.

Caesars won't be able to make their first quarter payments without a major cash infusion. Their options are very limited

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Originally Posted by Alan Mendelson

Suppose someone does buy TR, then what? Does Caesars not have a players club program? Does Caesars wipe out Seven Stars, Diamonds, Platinum accounts? Do your tier points and Reward Credits vanish? Or do you overnight discover that you now have frequent flyer points with Southwest Airlines in lieu of everything, or you have timeshares with Trump?

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But my point is this: "Total Rewards" has no value to anyone but Caesars. But if you disagree tell me who you think would buy and what they could do with the information and the obligations of the program?

Yes, I concede the information has a value -- but it's not enough value to make a sale worthwhile.

The value of Total Rewards has been over-hyped.

Alan

I know who will be buying this program, the sale will be completed on or before June 30th 2016. This company will bring back TR to it's prominence once again. Just to add something along with the sale of TR 7 current Caesars properties will be sold also.. Thus giving this buyer immediate "brand" recognition

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Originally Posted by Alan Mendelson

But my point is this: "Total Rewards" has no value to anyone but Caesars. But if you disagree tell me who you think would buy and what they could do with the information and the obligations of the program?

Yes, I concede the information has a value -- but it's not enough value to make a sale worthwhile.

The value of Total Rewards has been over-hyped.

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Only if it came with the sale of 7 Caesars properties (that's the number you gave LoneStar) would Total Rewards have any value.

Alan

TR by itself has a huge value, but with 7 properties it's value increases. The people will know the property they are heading to and will immediately recognize the vast improvements...
You're a tough nut there Alan but keep your ear to the ground you'll hear the noise soon enough...

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Originally Posted by Alan Mendelson

Only if it came with the sale of 7 Caesars properties (that's the number you gave LoneStar) would Total Rewards have any value.

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Yes, TR has a value with 7 casinos. TR will never have a value as a stand alone entity.

Since we're talking about the assets of "Total Rewards" a few years ago I wrote an article about how casino and other company websites can become profit engines. This article was based on a proposal that I gave to the Venetian about ten years ago when I was talking to them about running their website:

http://alanbestbuys.com/id297.html

I'm going to zero out whatever points I have on the books early spring. Just in case.

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Originally Posted by james40

I'm going to zero out whatever points I have on the books early spring. Just in case.

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This is not a bad idea and I rarely carry over RCs from one trip to a future trip. The only exception was when I was saving up RCs for the long New Year's weekend. When New Year's Weekend was over and my room charges were all paid, I converted the remaining RCs to free play and cashed out a little "going home money."

I recalled when Caesars was bought out by Harrah's and my host then advised me to take all of my comp dollars (and I had well over a thousand dollars worth) and use them in the gift shops. That's what I did buying clothing, cologne, bathrobes, small electronics. He told me it wasn't clear what would happen to them in the buy-out.

It's a more precarious situation now -- and has been since the bankruptcy was filed. Even though Caesars management said points would be protected there was no guarantee then and there isn't now.

Right now in my TR account I have $9 worth of RCs.

I think it would be prudent for every player in TR not to carry over too many RCs regardless if TR and casinos are sold or not.

Alan

Since you appear to be a fact finder do you know how many TR members there are????

Totally disagree with Alan here.

Total Rewards contains a huge list of gamblers across the countries, and their tendencies. That's worth a fortune.

What about the "liabilities" for comps and RCs owed to these players?

That's not a liability. RCs can be taken away from you at any time, and they expire after 6 months if you don't continue earning them.

RCs and comps are a way to get you back down there to gamble in the FUTURE, resulting in a net win again for the casino.

Dan

Finally someone who understands the facts

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Originally Posted by Dan Druff

Totally disagree with Alan here.

Total Rewards contains a huge list of gamblers across the countries, and their tendencies. That's worth a fortune.

What about the "liabilities" for comps and RCs owed to these players?

That's not a liability. RCs can be taken away from you at any time, and they expire after 6 months if you don't continue earning them.

RCs and comps are a way to get you back down there to gamble in the FUTURE, resulting in a net win again for the casino.

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Here is my "ace up my sleeve"

Wall Street Journal 3/19/2015
The most valuable asset in the bitter bankruptcy feud at Caesars Entertainment Corp. isn’t the casino operator’s opulent Roman-themed resort at the heart of the Las Vegas Strip. It’s the company’s big-data customer loyalty program, valued at $1 billion by creditors.
the loyalty program has 45 million members

TR would have some value to another chain of casinos that would be interested in luring Seven Star, Diamond, and maybe Platinum, members to their hotels with better offers than currently offered by TR. If TR ceases to exist, then the buying casino could offer to pick up members at their current levels, which would appeal to TR players. There could be some overlap, but even this information would be useful to a purchasing casino: How much of a player's business are they not getting? I don't know how many Seven Star or Diamond members split their play between different casinos, I know a few do that in Las Vegas -- half their stay at a CES hotel, half at Bellagio or some other casino. I personally only stay at CES hotels when I'm in Las Vegas.

BYLee291

I was like you only stayed and played at Caesars..but i can see the writing on the wall with them. This year I'm gong to explore other venues...
In the grand scheme of life Caesars can care less if I stop staying/playing with them... I've always been a man of principle in business and life. Over the past two years they've been cutting back their benefits for Seven Star players so why should I continue giving them my business... Especially when I have 100's of other choices

Quote:

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Originally Posted by BYLee291

TR would have some value to another chain of casinos that would be interested in luring Seven Star, Diamond, and maybe Platinum, members to their hotels with better offers than currently offered by TR. If TR ceases to exist, then the buying casino could offer to pick up members at their current levels, which would appeal to TR players. There could be some overlap, but even this information would be useful to a purchasing casino: How much of a player's business are they not getting? I don't know how many Seven Star or Diamond members split their play between different casinos, I know a few do that in Las Vegas -- half their stay at a CES hotel, half at Bellagio or some other casino. I personally only stay at CES hotels when I'm in Las Vegas.

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LoneStar,

I know very little about Seven Stars and TR, so I have a couple of questions.

Whenever there have been takeovers in the past, I have always been assured by people allegedly in the know that the comp programs would be better and improved under the new ownership and my previous stashed rewards would be boosted. That has never happened, and I have ceased expecting it to happen. When CET took over Caesars Palace, my stashed comps at Caesars were reduced by 60%. If I have stashed comps, I expect them to be slashed. What leads you to believe new ownership would improve TR?

Second, you mentioned the Cromwell in a previous post. Is the Cromwell part of the TR program right now? I ask because I've read reports that the video poker at the Cromwell was recently improved, making it arguably the best vp under CET if it is indeed part of TR.

redietz

I will start with the Cromwell yes they are a TR property... I've found video poker to be very hot and cold there..l like playing table games at Cromwell nice clientele...

Currently we are going through a TR change in Ohio Rock Gaming has bought out Caesars. They are creating their own loyalty program and according to my host EVERY tier credit & RC will be given to you upon the changeover.. That will be coming in Mid April I've been told.. They are also granting us there top level status until the end of March 2017 once again until the change occurs I can't verify anything other than what I've been told..
Currently any tier points we are earning count towards Caesars and Rock Gaming... I'm sure things will be a cluster F once the change occurs... I suggest everyone screen shot their tier score and RCs just before the change over

Quote:

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Originally Posted by redietz

LoneStar,

I know very little about Seven Stars and TR, so I have a couple of questions.

Whenever there have been takeovers in the past, I have always been assured by people allegedly in the know that the comp programs would be better and improved under the new ownership and my previous stashed rewards would be boosted. That has never happened, and I have ceased expecting it to happen. When CET took over Caesars Palace, my stashed comps at Caesars were reduced by 60%. If I have stashed comps, I expect them to be slashed. What leads you to believe new ownership would improve TR?

Second, you mentioned the Cromwell in a previous post. Is the Cromwell part of the TR program right now? I ask because I've read reports that the video poker at the Cromwell was recently improved, making it arguably the best vp under CET if it is indeed part of TR.

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Total Rewards IS the single most valuable asset under dispute in the bankruptcy fight. This is according to the creditors valuations

I've seen those same reports valuing Total Rewards for a billion dollars. As I said before that's like putting value on Goodwill. TR without casinos is worthless. Loveman got his job because he developed the TR database and look what it did? So really how much is TR worth?

Alan

For some unknown reason you are blinded by FACTS these creditors are not stupid. Well they are because they kept loaning money to Caesars. When you have a data base with over 45 million people there IS a definitive worth...

TR is a starting point for a new player in the business or a big power play for someone in the business

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Originally Posted by Alan Mendelson

I've seen those same reports valuing Total Rewards for a billion dollars. As I said before that's like putting value on Goodwill. TR without casinos is worthless. Loveman got his job because he developed the TR database and look what it did? So really how much is TR worth?

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If TR is so valuable why is Caesars in deep do-do today?

Alan

Do I really need to explain to you why they are in bankruptcy?? You're supposed to be a sharp business man...
I think you're just being argumentative to have some laughs...

If you REALLY need an explanation I'll tell you the entire story...

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Originally Posted by Alan Mendelson

If TR is so valuable why is Caesars in deep do-do today?

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My point is and I said this before, the value of TR has been over hyped. Who valued it at a billion dollars? Loveman?

The creditors placed the value on TR, it's all public record in the bankruptcy filing.
45 million customers you think that info is worthless ??

Quote:

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Originally Posted by Alan Mendelson

My point is and I said this before, the value of TR has been over hyped. Who valued it at a billion dollars? Loveman?

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And where did the creditors get the value from? Loveman. It's a house of cards -- appropriate for a casino company that shuffled assets.

I don't know how much truth there is to this, but years ago I was told that Publisher's Clearing House with their huge prize giveaways were not really in the "magazine selling business", but rather the "demographic information selling business". Car manufacturers like Ford or GM would pay for lists of people (with addresses) who subscribed to car magazines (Motor Trend etc.) through Publisher's Clearing House, then send out ads or offers.

Total Rewards certainly does have value, but $1 Billion? Wouldn't a lot of the people in that data base also have players cards at other casinos?

I'd say probably 60-70% have cards at other properties.. They might not use them at all or just signed up to get benefits because of their status at TR....

Caesars will not survive this bankruptcy without having to sell its TR program along with several other properties... 2016 will be a bleak year for them for sure....

I don't think I agree that we will see major changes in CET in 2016.

I also don't know if TR is really worth a billion. That might be inflated.

It is worth a lot, though.

I think some of the valuation also comes from the program itself (the fact that players can use it through a wide network of properties in the US -- bigger than any similar program of any other casino group).

To understand TR's value, you need to look no further than Alan himself.

He chose Rincon over Pala, Pechanga, and other northern-SD/Riverside area casinos because Rincon was a TR property. Alan liked how the status he earned at Rincon gave him comps and favorable treatment in Vegas.

Rincon thrives simply because they are the only TR property in California. Otherwise, the place is very flawed, and inferior to some of the better competition nearby.

A host at Rincon once told me that Rincon has the most Seven Stars visiting it of any TR property aside from Caesars Palace itself.

Cromwell does have some good VP games:

http://www.vpfree2.com/casino/cromwell

However, all of the 99%+ games are 25c denominations (yuck) and $50 per tier credit (double yuck).

So.... never mind.

Thanks for checking that, Dan. I will probably give them a few hours action just to re-invigorate my TR account. I'm not really interested in getting tier credits -- just want to get on the minimal list so they throw the occasional free room offer my way during the three slowest weeks of the year, which they have done in the past.

I'll probably be betting a few Super Bowl props at CET, anyway, so I have to get a TR card for that. I'll report on if they've gotten their sports betting TR accrual organized and consistent or not. My guess: it's probably a not.

If I happen to plunk down 5K or more on anything, and they deny me another sandwich, well, we'll have a swell story for the Best Buys forum.

I think you'll have to be Diamond redietz to get free rooms ever again. Things have changed. Twenty five cent VP play won't do it. Good luck and let us know.