Caesars Tahoe sales could benefit Stateline
November 21, 2004
South Shore tourism officials are weighing in with optimism over the announcement that Caesars Entertainment has agreed to sell its Tahoe property at Stateline to Horizon Casino Resort’s parent company for about $45 million.
The sale to Columbia Sussex Corp., a Fort Mitchell, Ky., hotel operator that runs 64 properties with affiliates as far flung as the Cayman Islands, was announced late Friday.
Park Cattle Co., which leases the land on which both the Horizon and Caesars sit, has 60 days to approve the deal, which is expected to close by mid-2005.
Phone calls to the Stateline company were unreturned Sunday.
The announcement verified a four-month-long rumor that has ramped up the corporate stakes in the casino corridor.
Douglas County business leaders were not surprised by the Caesars/Columbia announcement.
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“I’m not surprised. From a practical standpoint, Park Cattle leases to both properties,” said Carson Valley Chamber of Commerce Executive Director Skip Sayre, a longtime gaming marketer with ties to Stateline. “It could be good for the market because it’s a company that knows Tahoe. There shouldn’t be a learning curve.”
Kathy Farrell, executive director for the Tahoe Douglas Chamber of Commerce, said the deal comes with an opportunity for the Stateline properties to pool resources.
“In these economic times where we have mutual competition from Indian gaming, we certainly have the potential of being stronger,” Farrell said.
Columbia Sussex management did not return phone calls about the matter a week ago and on Sunday was unavailable for comment.
But William J. Yung, founder and president, issued a statement saying: “The acquisition represents a great opportunity to purchase a superior asset in a region in which we have been familiar for 14 years.”
No comment was offered by Horizon’s management.
“It’s obvious by what they’re saying who they want to appeal to,” Caesars Entertainment Las Vegas spokesman Robert Stewart said Sunday.
The company appears to want to re-brand the property for “a younger, hipper audience,” Yung’s statement continued.
The Caesars-Columbia deal – which is not contingent on Harrah’s Entertainment’s intent to buy the Caesars corporation – would place five of six Stateline properties in the hands of three companies. Lakeside Inn and Casino is not included.
“We’re an independent company up to closing. Harrah’s has no say over this transaction,” Stewart said.
Harrah’s may benefit in terms of releasing future holdings at Stateline, where monopoly issues may exist for regulators. Harrah’s Entertainment already owns Harrah’s Lake Tahoe, Harveys and Bill’s Casino.
When Harrah’s announced its intent to buy its rival Caesars Entertainment for $9.44 billion in July, Chief Executive Officer Gary Loveman gave the impression it would unload Caesars Tahoe. Harrah’s now awaits word from regulators on that transaction.
Meanwhile, Caesars will focus its efforts on 11 of 28 properties that generate 80 percent of its revenue and cash flow. Tahoe was not on the list.
“It won’t be a Caesars property (after the close), I can tell you that,” Stewart said. “Otherwise, I don’t know what their plans are.”
And Caesars Tahoe Chief Executive Officer Mark Rittorno said Sunday it’s unclear “what Columbia Sussex intends to do” with the property in terms of a name, remodeling and consolidation efforts. Between them, the two Stateline properties – which are very different in products and style – employ about 2,600 people.
Rittorno said he hasn’t noticed a mass exodus of staff since the Harrah’s deal was announced.
“We have a high turnover on the hill anyway. It’s no different than it’s been in the past,” he said.
Much activity has come out of the privately owned company, with a few national acquisitions in recent months. Columbia’s latest was a deal to buy Caesars’ Bally’s Casino New Orleans for $24 million in October.
Columbia Sussex Corporation has a history of entering into leasing agreements with Marriott Corp., its Florida affiliate exploring a convention center proposal with South Lake Tahoe.
Susan Wood can be reached at (530) 542-8009 or via e-mail at firstname.lastname@example.org