Tuesday, May 11, 2004
Copyright © Las Vegas Review-Journal
Harrah's aims for Binion's bonus
MTR would pay extra $5 million if goals reached
THE ASSOCIATED PRESS
MTR Gaming Group will pay Harrah's Entertainment an additional $5 million if the company reaches certain financial goals while running Binion's Horseshoe.
West Virginia-based MTR disclosed the financial terms of its deal to buy the downtown Las Vegas property from Harrah's in Securities & Exchange Commission documents filed Monday.
MTR owns Binion's Horseshoe through a subsidiary called Speakeasy Gaming of Fremont. MTR reported in the SEC filing that it bought the property and equipment for $20 million.
Harrah's, which paid $39.7 million for rights to the Horseshoe brand, its World Series of Poker and to pay off certain liabilities, agreed to manage Binion's for one year at $200,000 a month, said Gary Thompson, spokesman for the Las Vegas gaming company.
Harrah's has an option to extend the agreement another year at $400,000 a month, he said.
"In the meantime, if we reach certain financial milestones, when we turn the property over, they will pay us a $5 million bonus," Thompson said.
If Harrah's operates the property for a second year, MTR stands to receive $4.8 million or 50 percent of the earnings before interest, taxes, depreciation and amortization, whichever is greater.
If Harrah's extends for another six months, MTR could receive at least $2.7 million or 50 percent of the earnings before interest, taxes, depreciation and amortization.
The same arrangement would apply for the next six months if Harrah's extended the contract.
MTR did not release Binion's historical financial data because "it did not believe such information would be indicative of future operations," the filing said.
Binion's closed its doors Jan. 9 after U.S. marshals seized cash from the casino to pay outstanding employee benefits. The property reopened April 1.
The 35th annual World Series of Poker tournament is under way at Binion's, with the championship event set to take place May 22-28.
"They've got a great property in downtown Las Vegas that's undergoing a lot of revitalization," Thompson said. "There's a lot of interest in the downtown area."
Binion's is one of several downtown hotels under new management groups that appear willing to invest in the area. Others include the Four Queens, Golden Nugget, Plaza, Las Vegas Club and Gold Strike.
Review-Journal writer Hubble Smith contributed to this report.
