Caesars to shut Showboat Atlantic City casino-hotel


Caesars Entertainment (CZR +0.2%) says it will close the Showboat Atlantic City casino-hotel this summer, citing the high property-tax burden and increased competition in Atlantic City.

CZR hasn't decided what to do with the property or land, which has a prominent position on the Atlantic City boardwalk.

Despite the closure, CZR says it would remain the largest operator in Atlantic City, and it is developing a new meetings facility in the area as well as other revitalization efforts.

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Comments (3)
  • Howard Jay Klein
    , contributor
    Comments (587) | Send Message
     
    Very sad for the employees of course but to be utterly frank Caesars had little choice given the current state of its finances and the AC market. Showboat's DNA rooting back to its Nevada origins was a simple but very effective business model: strong grind slot play, good f&b support at high value prices, nice rooms, simple and clean. When this model performed best was when AC was flush with quarter slot players coming off busses and groups. Its entertainment product was solid-middle of the road. In many way's it was the poor man's Harrah's. At best it was a questionable buy for Caesars to begin with and as body traffic declined in the town, its end of boardwalk location once a plus, became a strong minus. The opening of the Revel in 2012 had little spillover impact on the north boardwalk. The closing will of course
    reduce Caesars cash drain and from the perspective of the stock might be seen as a plus. It is fair to posit that this move is clearly part of a broader based downsizing mission that seeks to improve the firm's net cash flow numbers as it seeks to refinance its debt and repurpose its strategy to focus on fewer, profitable markets.
    Look for more of the same from them.
    27 Jun 2014, 11:55 AM Reply Like
  • King Rat
    , contributor
    Comments (1463) | Send Message
     
    That's a pretty in depth explanation but just curious why they wouldn't sell it? Decommissioning, property tax, restructuring charges (layoffs) all cost money. In selling it (even for $1) they could get some cash, take some losses for tax purposes, and have no more expenses.
    27 Jun 2014, 12:52 PM Reply Like
  • Howard Jay Klein
    , contributor
    Comments (587) | Send Message
     
    Good question with a simple answer. Nobody would buy it at any price. The big, glossy Revel next door which cost $2.3 billion can't even fetch a dime on a dollar offer thus far an its had the for sale sign up for over a year. It's not the acquisition price its that the revenue base has all but disappeared for the number of AC casinos still in operation. Any realistic assessment indicates that at least two to four more closings in the town might be on tap at which point the balance between revenue base and capacity will come into play. At that point the surviving properties will be reasonably profitable. But I think we will never again see an AC with 12 or 13 full scale casino hotels. New York state competition is maybe two years away. Noise continues from Philly for another major property there. The Showboat makes no operational sense to a potential buyer until the marketplace shows some growth.
    At this point its not in sight.
    28 Jun 2014, 08:12 AM Reply Like
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