CET Credit Rating Takes a Dive

[redietz]

Standard and Poor's knocked CET down two notches in one fell swoop, as they say. All you CET lovers, I think that shudder you just felt was the iceberg. I suggest you reinterpret the Diamond/Seven Stars fiascos in light of the fact that all of your precious RC's and ratings can be reconfigured, reduced, or eliminated at any time, and you'll be left holding a very expensive bag.

Most of you are interpreting the latest cutbacks as confusion. I think it's the first wave of what will be a cascade of fractional reductions regarding stashed comps and statuses.

[Alan Mendelson]

I didn't know the CET credit rating could go any lower??

[redietz]

There are junk bonds, and there are junk-junk bonds. Anyway, it may be demerited even further. The enterprise is considered unsustainable even in the short (18-month) run.

[Alan Mendelson]

There have been predictions about a bankruptcy going back several years. I think that the recent "division" of CET into various partnerships was not only a way to raise more money, but also a way to isolate units in the event of a bankruptcy.

The concept of "too big to fail" no longer works in America... not after GM, at least.

Anything could happen, but I don't think players would be affected anymore than if the existing management decided to cut comps and offers and raise prices. It is still a competitive business.

I think "Total Rewards" is one of the crown jewels, and even if the company went Chapter 11 I doubt there would be major changes to TR because it is the backbone of the company's customer base.

[Rob.Singer]

This is amazing Alan. You've watched and complained countless times over the constant reduction in benefits in the TR program, & Dan and others pick it apart while you agree. Yet even in the face of knowing how bad it could get, you continue to say sterling things about its future should the inevitable Ch. 11 happen. Have you not followed what places like Revel and Stations did to their "crown jewel" club members once they filed? It's time to cash out, and it's time to stay away from Rincon after you do cash out. The Indians will have no mercy on customers with points once the hammer comes down.

[slingshot]

I have found that the real point of the whole mess is to get one roped into just coming. After that, they don't need any semblance of fairness. I see it every day at work. "I just lost big today and I ain't going back" Two weeks later, a repeat-and reminding them of their resolution, they just say "I know, I know."

[Rob.Singer]

I have found that the real point of the whole mess is to get one roped into just coming. After that, they don't need any semblance of fairness. I see it every day at work. "I just lost big today and I ain't going back" Two weeks later, a repeat-and reminding them of their resolution, they just say "I know, I know."

That is spot on. The reason for all the moaning & groaning being voiced here about the TR program, is OF COURSE because people lose and vow to themselves not to go back. But....in comes the juicy reel-'em-in offer in the mailbox that makes the heart pound and the palms sweat. They can't WAIT to pick up the phone and book that special oh-so-special offer! And just as the casino marketing dept. expected, last visit's loss is instantly forgotten now that the hope and anxiety of more gambling action complete with some fabulous "freebies" awaits. "Clockwork" & "manipulation" do not do this process justice, no matter what the level of abuse might be.

BTW, speaking of being "in the throngs", I wonder where Alan is tonight.....

[Dan Druff]

That is spot on. The reason for all the moaning & groaning being voiced here about the TR program, is OF COURSE because people lose and vow to themselves not to go back. But....in comes the juicy reel-'em-in offer in the mailbox that makes the heart pound and the palms sweat. They can't WAIT to pick up the phone and book that special oh-so-special offer! And just as the casino marketing dept. expected, last visit's loss is instantly forgotten now that the hope and anxiety of more gambling action complete with some fabulous "freebies" awaits. "Clockwork" & "manipulation" do not do this process justice, no matter what the level of abuse might be.

BTW, speaking of being "in the throngs", I wonder where Alan is tonight.....

But that's not what happens with me at all.

When I get new offers -- or when I book my Seven Stars Annual Trip or similar guaranteed offers -- I do not typically play. I use the hotel room, free food, free play, and whatever else I get, and then leave.

Often I will make mini-trips out of these offers, taking in local sites or attractions.

How exactly is Caesar's reeling me in?

[Rob.Singer]

But that's not what happens with me at all.

When I get new offers -- or when I book my Seven Stars Annual Trip or similar guaranteed offers -- I do not typically play. I use the hotel room, free food, free play, and whatever else I get, and then leave.

Often I will make mini-trips out of these offers, taking in local sites or attractions.

How exactly is Caesar's reeling me in?

So you say you only play the $5 machines, you attain the top tier in doing so, you spend hours complaining about the cutbacks and slights....But when you go to the casinos you never play ? Huh? In such a case, would it not be better to just skip all the casino nonsense and simply PAY for your entertainment at other, much better properties, while leaving all the CET abuse you're suffering, behind?

[redietz]

Most of the material I've read suggests the WSOP has reached a kind of schizophrenic critical mass. Some of the tournaments are as soft as any that exist, but the expenses for attending, the tax responsibilities, the tipping, have created an environment where, as Daniel Negreanu says, there are as many people making a living playing tournaments as there are birds with thumbs. Now I'm not sure archaeologically what that means, but Archaeopteryx aside, I get what he's saying. Some folks claim the only profits to be made at WSOPs are in the side games, but that's reason enough to attend, certainly.

My point is that, for 90% of poker players, the existence of the WSOP "reels people in." But Dan may be one of the handful who grinds his way to a profit by watching his expenses and manipulating the comps expertly. If he's staying at a different company's property, or the TR rules change, his financial edge may disappear.

[Alan Mendelson]

I don't bank my comps. I use them as I get them. I have nothing to lose.

[Dan Druff]

Most of the material I've read suggests the WSOP has reached a kind of schizophrenic critical mass. Some of the tournaments are as soft as any that exist, but the expenses for attending, the tax responsibilities, the tipping, have created an environment where, as Daniel Negreanu says, there are as many people making a living playing tournaments as there are birds with thumbs. Now I'm not sure archaeologically what that means, but Archaeopteryx aside, I get what he's saying. Some folks claim the only profits to be made at WSOPs are in the side games, but that's reason enough to attend, certainly.

My point is that, for 90% of poker players, the existence of the WSOP "reels people in." But Dan may be one of the handful who grinds his way to a profit by watching his expenses and manipulating the comps expertly. If he's staying at a different company's property, or the TR rules change, his financial edge may disappear.

Much of what you wrote is correct, but I want to make a few corrections:

1) The WSOP tournaments are no longer soft. There are some recreational players in the field who are dead money, but there are more good players now than any time in poker history, which especially makes it tougher when you get to later stages.

2) Side games aren't good, for the most part. That has been a longstanding myth. In reality, the WSOP attracts a lot of good players to Vegas who wouldn't normally be there. My best cash game results in Vegas have always been at non-tournament time, when it's me versus a mixture of tourists and a few good regulars.

You are correct that there are a lot of expenses in playing tournaments, though, and that eventually kills everyone's edge, aside from the elite few who win enough to overcome that. I have rarely traveled beyond Nevada/California to play tournaments, except in the case where I got the buyin or travel expenses for free.

[Count Room]

BTW, speaking of being "in the throngs", I wonder where Alan is tonight.....

[regnis]

BTW, speaking of being "in the throngs", I wonder where Alan is tonight.....

I don't see Alan "in the thongs" thankfully.

http://www.pinterest.com/stunnish/sexy-girls-in-thongs/

[Alan Mendelson]

Hi. I was in Vegas this past weekend and to be honest, I wish I hadn't gone. I lost and while I didn't go over my budget, I was very disappointed that I lost my full budget for a three day weekend in only one day. But that's okay because I was in Vegas for several different things besides going to a casino: I had a special dinner planned (no, not with Rob), and I celebrated my son's birthday there, and we also had some business to attend too. The only thing that went wrong was the gambling. Otherwise, it would have been a "home run" of a weekend.

I did get to see four new movies thanks to the free movies that 7 Stars get and they were Monuments Men (good but not great), Nurse (a whacky horror film). Pompeii (not bad) and the Liam Neeson film Non-Stop which was so good I watched it twice.

Now, for Rob:

Yes, I criticize Caesars and complain about cuts in comps and cuts in free play, but Total Rewards is still a good deal.
I do not fear a Chap 11 for Caesars because as I wrote above, I do not "bank" my reward credits and I use them as I get them either for hotel stays, purchases or free play conversion.
Also as I noted above, I think that if there is a Chap 11, Caesars will follow the same course that General Motors followed -- and it would not wipe out the comps or Total Rewards benefits of its primary, loyal customers. GM did not wipe out my "points" towards a new car -- and they could have. (By the way, I have about $3,500 towards a new car because I use the GM Master Card.)

Personally, I doubt there will be a Chap 11. Caesars over the past two years has structured a lot of partnerships that allowed it to raise capital and at the same time would make a Chap 11 rather benign on its total operations.

But I do expect the company to get tougher with comps and free play and other offers. They can't keep giving the store away forever.

[Count Room]

Also as I noted above, I think that if there is a Chap 11, Caesars will follow the same course that General Motors followed -- and it would not wipe out the comps or Total Rewards benefits of its primary, loyal customers. GM did not wipe out my "points" towards a new car -- and they could have. (By the way, I have about $3,500 towards a new car because I use the GM Master Card.)

Personally, I doubt there will be a Chap 11. Caesars over the past two years has structured a lot of partnerships that allowed it to raise capital and at the same time would make a Chap 11 rather benign on its total operations.

Based on Alan's experiences with his GM card I'm starting to agree that, even if CET were to file bankruptcy, it would cost the brand more value in goodwill (enterprise value) with customers to wipe out all customers' RC's than the direct monetary savings such a move would actually realize. (ie. the customers providing critical long-term cash flow would be inconsolably ticked off at such a move & never return)

In the direst of circumstances it would seem more likely TR would discontinue (or just severely scale back) their RC program yet CET will continue to honor the RC's that have already been banked by CET's patrons.

Overall there's too much value to lose here just in customer goodwill alone, especially when the company is huge & well-known.

[redietz]

That's why non-brand-name affiliates would take over compartmentalized properties and simply extract them from their TR presumed obligations. CET has dozens of properties. Obviously, if you compartmentalize 25 to 50% of them under an aegis other than CET, and remove them from the TR universe, one cannot "blame" CET if a different company logo starts a rewards program from scratch. CET would argue that TR can be exercised at any of the remaining properties, after all. The secondary effect of removing properties from the TR universe would be to make it that much more difficult to get the rooms/dates most prized in those CET properties remaining under the CET aegis.

[Count Room]

That's why non-brand-name affiliates would take over compartmentalized properties and simply extract them from their TR presumed obligations. CET has dozens of properties. Obviously, if you compartmentalize 25 to 50% of them under an aegis other than CET, and remove them from the TR universe, one cannot "blame" CET if a different company logo starts a rewards program from scratch. CET would argue that TR can be exercised at any of the remaining properties, after all. The secondary effect of removing properties from the TR universe would be to make it that much more difficult to get the rooms/dates most prized in those CET properties remaining under the CET aegis.

Red: Why would they want to go through all that trouble & expense of re-branding absolutely everything in a large number of their properties just to save some table scraps their customers have accumulated (ie. the reward credits which only add up to a small fraction of a typical customer's losses)? It would only serve to weaken CET's core brand name recognition by sloughing off more properties from the TR universe to save pennies by comparison.

Admittedly I haven't researched why CET is spinning off some of the properties onto other brand names, but I hope for management's sake that trying to save on player comps isn't the primary reason. Just not worth the expense involved in such a radical overhaul (on top of losing the intangible brand name recognition value!).

[Alan Mendelson]

redietz you are forgetting the main reason why TR and comp programs exist: they give you a carrot so that they can get you to give them the farm. In other words: they'll give you $1,000 expecting you to give back $10,000.

If anyone has anything to fear it's those players who milk the system -- taking the $1,000 and not giving back more.

TR is not going away. But TR will cut off everyone who tries to milk it.

Even in a bankruptcy, the creditors will quickly be shown how TR brings in money and is not responsible for losses.

[Count Room]

To me, the closure of CET's Tunica property shows exactly what went wrong with the company aside from the massive debt load Apollo Management took on when it bought out Harrah's.

Too many huge casinos with large fixed maintenance costs that only leave a small amount of wiggle room to cut those costs. You can lay off some minimum-wage employees/pare down rewards programs/tighten game rules, but you still have massive temples to the Goddess of Greed (ie. palatial casinos) to pay maintenance on every day. It's hard to physically cut parking garages in half just as it is hard to cut casino palaces in half even though it would be the best way to maximize EBITDA per square foot.

It doesn't matter whether you use a butter knife or a steak knife to try to cut costs, the huge fixed costs of running big casinos are largely set in stone leaving little wiggle room except for either full operational capacity or a complete shutdown (as seen in Tunica).

The people who built those giant palaces didn't foresee the crash of 2008 and they left themselves little room to maneuver by spending like "drunken sailors" (as Gary Loveman once put it).