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Aztar is set to buy the remaining 50 percent of the Strip site where the 44-year-old Tropicana sits. Photo by Craig L. Moran.

Thursday, January 31, 2002
Copyright © Las Vegas Review-Journal

Aztar plans to own entire Tropicana site

Tropicana-owner Aztar announced Wednesday that it is exercising its option to purchase the remaining 50 percent of the site where the south Strip megaresort sits, potentially paving the way for the redevelopment of the 44-year-old casino property.

The Phoenix-based company will pay $117.5 million for the one-half interest in Tropicana Enterprises held by the Jaffee family, a Chicago-based group of private investors.

Aztar executives plan to create two separate but linked 17-acre developments at the site, both of which would sit along the Strip, according to a statement released by the company.

Aztar bosses do not plan any immediate redevelopment of the acreage and expect an indefinite continuation of the Tropicana's current operations, according to the statement.

The company's shares rose 38 cents, or 2.03 percent, Wednesday to close at $19.08 on the New York Stock Exchange.

Aztar also has casino properties in Laughlin, Atlantic City, Missouri and Indiana.

Casino industry observers have long said the dual ownership arrangement created a roadblock for further development of the Tropicana site.

Meanwhile, the surrounding neighborhood has filled with new attractions since 1993 -- the MGM Grand, Mandalay Bay, Luxor and New York-New York -- which have added more than 12,000 hotel rooms at the intersection of Las Vegas Boulevard and Tropicana Avenue.

"We don't know how a Tropicana rebuild would do in a competitive market," Credit Suisse First Boston gaming analyst Brian Egger said in 2000. "Obviously, the property's been around since the '50s. It seems with that location the opportunity to build something new and compelling is quite interesting."

Aztar Chairman Paul Rubeli said that same year that his company would consider a new development plan for the site if executives believed it would generate a double-digit return on investment.

"We have to find a project of a different nature or magnitude that will create the return we're looking for or we don't do the project," he said.

Aztar executives said Wednesday that it expects the transaction to add 8 cents a share to earnings and 12 cents a share to free cash flow in the first 12 months after the deal's expected March 31 completion date.