Caesars Entertainment -- thumbs up or thumbs down?

[Alan Mendelson]

First, a little history: in the gladiator days of Rome, when a gladiator was to be killed the emperor would give thumbs up -- not thumbs down. But in the movies, the signal to kill the loser was thumbs down.



Now, with that piece of history stated, let's move to a contemporary issue: the future of Caesars Entertainment. In other threads several forum members including redietz and Dan Druff have pointed out some of the signs that the Caesars Entertainment empire is crumbling or is barely hanging on and is waiting for Wall Street to signal thumbs down (if you use the modern, accepted signal of death).

Redietz and Dan Druff have given some spot-on examples of some of the big problems and blunders. I thought it might be appropriate to have one thread to keep track of the news and opinion on the future of Caesars Entertainment -- thumbs up or thumbs down.

I'd like to start by offering four factors which I think are showing that Caesars is in trouble:

1. Setting up certain partnerships for certain properties and removing them from the basic Caesars Entertainment corporation -- moving them into "side corporations." The Caesars Bondholders are furious about this -- as it takes assets that could support the bonds and took them off the balance sheets. It can be viewed as a way to prepare for bankruptcy. This is the biggest sign of thumbs down if you ask me.

2. Failure to sell the Rio. Caesars wants to sell the Rio in Vegas but can't. Management has told me that there have been many companies wanting to buy the Rio but they want the Rio for the business attached to the World Series of Poker. But Caesars would move the WSOP to Caesars convention center if the Rio were sold, and that is preventing any buyer from closing a deal.

3. The High Roller observation wheel. It looks pretty, but I understand that customer traffic is only a fraction of what was expected and I was also told that the restaurants and shops at the Linq shopping area are not doing well.

4. The Octavius Tower was supposed to be the premier new hotel tower at Caesars Palace but someone forgot to look out the windows -- it has no "views" on one side of the tower and the other side has limited views. As a result, few guests want to stay there. Octavius was built when hotel occupancy slumped in Vegas. They probably never really needed it.

Those are the problems. I still think Caesars Entertainment still is the best of the casino companies with the best casinos and certainly the best hotels. I think staying in Caesars Palace is always a marvelous experience except when there is a mistake and everyone makes mistakes (like overlooking maid service for two days one New Year's weekend years ago.)

I hope Caesars survives. I hope they can turn themselves around.

[redietz]

Let me state the obvious -- Mr. Packer, I suspect, plunked down his LV commitment partially because he smelled blood in the water, and it's CET blood on the colosseum floor. The money being committed to mid-strip probably signifies that people who have much more knowledge of the financial situation of CET in Las Vegas than you or I think that CET is teetering.

[Alan Mendelson]

Let me state the obvious -- Mr. Packer, I suspect, plunked down his LV commitment partially because he smelled blood in the water, and it's CET blood on the colosseum floor. The money being committed to mid-strip probably signifies that people who have much more knowledge of the financial situation of CET in Las Vegas than you or I think that CET is teetering.

You're going to have to provide more detail. I don't know what you're referring to.

[regnis]

You missed the biggest factor Alan--they went public. They needed to suck in all of that public $$ to maintain the big executive salaries. And who will take the biggest hit when it all blows up--the stockholders, especially after they spin off the better assets.

I have to be careful in what I say here because my firm was involved, but the exact same plan has been used before in Vegas. You run up ridiculous debt, you spin off the better assets, you file Bankruptcy, no third party wants to buy the remaining garbage, and you take it back cheap and discharge the debt. It seems to be their plan and it will work because the system and the judges allow it.

[Alan Mendelson]

the exact same plan has been used before in Vegas. You run up ridiculous debt, you spin off the better assets, you file Bankruptcy, no third party wants to buy the remaining garbage, and you take it back cheap and discharge the debt. It seems to be their plan and it will work because the system and the judges allow it.

Is there an alternative or a way to stop it?

[redietz]

Regnis, you're not referring to the Station scam, are you? That was hilarious. They had a judge(s) in their pocket and, voila, they emerge unscathed and much better the worse for wear. Oh, sshhhh, they don't like people to actually say that stuff.

Packer is the Aussie billionaire who just plunked down the cash for the Frontier property. His team waited until CET spun off their properties. Supposedly he'll be up and running in 2017.

[regnis]

can it be stopped--no--for some of the reasons Red points out above, as well as bad judges, and if I may say so, good lawyering. It is not just in vegas, but Vegas is the worst because the whole state lives off the fat of the gaming industry.

Red-I cannot confirm or deny. You will have to wait for my memoires. Hopefully, a long wait still.

However, for anyone that's bored, and not to imply that it is Stations, but an interesting read is the history of how the Fertittas (Stations) started out in Texas.

[Alan Mendelson]

I had to look up the Packer investment in Vegas. For others: http://www.reviewjournal.com/busines...-frontier-site

Now is this development supposed to do well because the Caesars empire is crumbling? Is that the thought?

Remember there is another big development coming to the North Strip and the Strip still has excess room capacity.

[regnis]

I know the money means nothing to Packer, but he already has 2 Vegas strikes against him. Three strikes and you're out.

[redietz]

Now I know he took a hit as a partner on Fountainebleau, but it actually impresses me that he dove back in as soon as CET's debt was called in. What was the first strike, regnis?

[regnis]

He had a pre BK stake in Stations. Pretty much went worthless.

[redietz]

Wow, talk about swinging and missing. It's amazing he's still gung ho about LV. Wow, those were two brutal strikes.

[Dan Druff]

Good things about CET:

1) Best value rewards program, if you know how to work the system and use it to maximum benefit.

2) Wide group of properties to choose from across the country (and even one in Canada), so you can often build vacations to other areas of the country around comp stays at CET hotels.

3) Owners of World Series of Poker, so if your'e a poker player, having a good status at CET is convenient and often saves you a lot of money.



Bad things about CET:

1) Terrible operationally. Customers have to deal with a myriad of operational gaffes and boneheaded mistakes, even at the higher-end properties.

2) Poor communication between departments. They never know what each other are doing, resulting in a frustrating "pass the buck" situation for the customer, where he is sent dancing around in circles trying to solve his issues. (My favorite was when Nobu opened, and Nobu was not informed how to redeem Caesar's food vouchers, despite them being listed as accepted there.)

3) Very few employees fully understand their own Total Rewards program.

4) Weird, poorly designed, or sometimes self-defeating promotions offered to players, such as the disasterous "Gas for a Year" award that Alan redeemed.

5) Peculiar tier status system in their rewards program, which awards high status to certain players despite their relatively low value as customers, which then is reflected in how the customer is treated when asking for comps or favors.

6) Weird "reward credits" system, where hosts aren't supposed to comp players anything until they blow their existing rewards credits, which seems to contradict the whole "bank your own comps for when you need them" theory behind RCs in the first place.

7) Lack of common-sense understanding of what customers want/need when generating offers. Seven Stars members get comp rooms in any CET properties, but I am constantly getting ridiculous offers such as "3 free nights at Harrah's New Orelans" (with no other benefit). Why is this being mailed to me, especially given how far I live from New Orleans? Also, I got a laughable offer for the "Caesar's Laurel Collection", which first appeared to be a $400 food credit at Guy Savoy, but instead was 3 nights at Caesar's plus the $400 food credit if I pay $1150 for the whole thing! I asked the rep on the phone, "Why would I pay $1150 for $400 in food and 3 nights I would get for free anyway?", and she didn't have an answer. The computer should be smart enough to only send out offers that don't duplicate other benefits.

[Rob.Singer]

Generally, when the bad seriously outweighs the good as we're seeing here, an intelligent player would either just walk away or utilize whatever happens to be appropriate at any given moment without a hassle. Of course, if the player just can't seem to win over and over again and finds himself entwined in a no-way-out scenario of somehow enjoying the constant abuse on top of the financial losses, the rest of us will have to keep seeing long-winded, contemporaneous posts.

[Alan Mendelson]

Generally, when the bad seriously outweighs the good as we're seeing here, an intelligent player would either just walk away or utilize whatever happens to be appropriate at any given moment without a hassle.

For players I don't think the bad outweighs the good. For Caesars Entertainment it's troubles are on Wall Street and with bankers and bond holders. Actually I think most players love Caesars for what it offers.

[Rob.Singer]

I have always liked CET TR for what it offers overall. Yes the vp machines are almost all bad pay tables, but their TR system has been one of the best over the years--and even today, from the pile of offers that keep showing up in my account.

I just read your comment about thumbs up vs. down in the gladiator days. Where did you read that from?

[Alan Mendelson]

That's from college. One of the few things I remember from college-- the truth about the signal to kill. It was thumbs up to kill the fallen gladiator.

The second thing I remember was why the British soldiers in the American Revolutionary War wore "red coats" -- so they could see each other amid all the smoke from the muskets.

The third thing I remember was how diabetes was first diagnosed -- tasting the urine for sweetness from sugar.

And in high school the most important thing I learned was "personal typing." Thank heaven I can type 120 words per minute.

The rest of my college years was spent as a disc jockey, working midnight to 6 to pay for Syracuse University... and then there was the semester when I was one of the leaders of the anti war movement and was involved in the takeover of the administration building and I made speeches on the Quad (the Syracuse Quad, not the Vegas Quad). When we climbed in and out of the Admin Bldg window we could hear the police surveillance cameras click away.

[Dan Druff]

That's from college. One of the few things I remember from college-- the truth about the signal to kill. It was thumbs up to kill the fallen gladiator.

The second thing I remember was why the British soldiers in the American Revolutionary War wore "red coats" -- so they could see each other amid all the smoke from the muskets.

The third thing I remember was how diabetes was first diagnosed -- tasting the urine for sweetness from sugar.

And in high school the most important thing I learned was "personal typing." Thank heaven I can type 120 words per minute.

The rest of my college years was spent as a disc jockey, working midnight to 6 to pay for Syracuse University... and then there was the semester when I was one of the leaders of the anti war movement and was involved in the takeover of the administration building and I made speeches on the Quad (the Syracuse Quad, not the Vegas Quad). When we climbed in and out of the Admin Bldg window we could hear the police surveillance cameras click away.

That's funny. I don't picture Alan as a Vietnam protester type, but I guess people change over the years.

What type of station did you work at as a disc jockey? Was it a big station?

I heard that DJs (on medium or bigger stations) got a lot of women in those days (even through the 1990s), regardless of what they looked like.

[Alan Mendelson]

I started on radio at the age of 14. My first full time DJ gig was on WFBL in Syracuse. It was an "easy listening station" which meant upbeat contemporary music. It was also a test station for various record labels (Syracuse was a test market for virtually everything) so we had a lot of the new releases before they were new releases. We played Vikki Carr, the Beach Boys, many of the top 20s, but also had news every half hour, a morning talk show with co-hosts. It was one of the top stations. In high school because I had an FCC First Class License I baby-sat transmitters and read news at various stations ranging from some of the big suburban NYC stations to WGNY in Newburgh which was a big regional radio station north of NYC.

There is probably an FBI file on me from the Vietnam War days.

[FABismonte]

There is probably an FBI file on me from the Vietnam War days.

Hi Alan:

You should consider a Freedom of Information Act request on yourself. Your family including future grandchildren may find it interesting.

As to CET:

Thumbs Up (Good):

I like the basket of benefits for making Diamond and even better benefits for Seven Stars. By way of example, in writing I am entitled to a $1,200 value roundtrip travel Seven Stars Retreat with $500 spending money and hotel. I used this to go to New Orleans and enjoyed it.

I like the fact that there is a certain clear level (Tier Points) to hit to get the bunch of stuff at CET like monthly free shows. By contrast, I was a "VIP" at Golden Nugget in downtown LV as well as a casino in Reno/Sparks and other than the written mailed offers, the only thing I "qualified" for was that my host would look at my bill at checkout and see what she could do.

I like the many locations of CET casinos and hotels. I even stayed at Canada comped and repatriated some video poker profits from abroad when I did so.

Thumbs Down (Bad):

Short deadlines to use earned Seven Stars Benefits -- I made Seven Stars only in December 2013 and while I technically remain Seven Stars until March 2015, my $500 celebration dinner needed to be used before end of March 2014, with the same deadline for my regular Seven Stars Retreat. Why allow people to earn status benefits throughout the calendar year but only allow such a short window to avail benefits?

Reduction of Benefits -- Seven Stars members this year cannot get Diamond tier benefits like $750 in travel retreat and $100 celebration dinner. But, hey -- every program seems to be reducing benefits -- including my former preferred location at the Golden Nugget which used to regularly pay for my airfare. Bean counters look everywhere to save money and why shouldn't they as long as players are still willing to give them action?

Bad Video Poker -- Just this year CET erased all their full play video poker I like to play in Vegas. The exception is that I could play $5 Video Poker at Bonus or 9/6 Jacks but then I need to put in $25 in action for each tier point instead of $10.

Crazy Disincentive to Play More -- As was mentioned elsewhere on this forum, there is a nice package of benefits when you hit the Seven Stars Level but only marginally useful benefits the more you play after that. ie. the crazy and illusory "Free Gas for a Year" benefit for 100,000 in tier points after making Seven Stars. When I make Seven Stars this year, I will stay and play at other casinos for the rest of 2014 to keep my offers there going.

Regards, FAB