Fitz off the market for now

Don Barden won’t need to sell Fitzgeralds to maintain a stake in a slots-only casino in Pittsburgh, but the downtown Las Vegas casino remains an asset he could use to generate cash for his struggling gambling portfolio.

On Thursday, Barden announced he will relinquish a quest for a majority stake in the $800 million Majestic Star casino project in downtown Pittsburgh.

Although Barden will maintain a 25 percent share in the Pennsylvania project, bankers will no longer need the Fremont Street casino as collateral for the $35 million he had promised to contribute to the venture.

Instead, real estate developer Neal Bluhm will take control of the Pittsburgh casino, which is already under construction, and Barden will be left to contemplate the future of his remaining properties in Las Vegas, Colorado, Indiana and Mississippi.

“He has some other issues,” said Ben Bubeck, analyst for Standard & Poor’s, which in April downgraded the debt rating on Barden’s Majestic Star Casino company.

The company owns two properties in Gary, Ind.; one in Black Hawk, Colo.; and another in Tunica, Miss.

Fitzgeralds in Las Vegas is owned separately under Barden Development and has no significant debt, Bubeck said.

The Fitz, as it is known locally, is privately owned and doesn’t disclose revenue. But Bubeck said it likely earns less revenue than Barden’s properties outside Nevada. Bubeck said the Indiana properties alone earned $250 million in revenue in 2007.

Kirk Saylor, Fitzgeralds vice president and chief operating officer, did not return a call for comment.

Debt for the properties outside Nevada under the Majestic Star company were downgraded to CCC+ with a “negative” outlook in April by Standard & Poor’s.

“It signifies we are concerned a default is possible potentially within the next 12 months,” Bubeck said of the rating.

According to a research update at the time of the downgrade, “Majestic Star’s liquidity position is weak.”

The update said the company recently amended bank covenants to retain access to $23.6 million from an $80 million line of credit.

The revised deal lowered the amount of earnings before interest, taxes, depreciation and amortization, or EBITDA, the company needed to produce to secure the credit to $58.5 million. The research note said Majestic Star’s EBITDA in 2007 was $67.8 million. It also said the company had about $29 million in unrestricted cash. But it added that much of that cash was needed for operations and also included money in casino cages.

If Barden did want to sell his Las Vegas property, now is a tough time to put it on the market. In recent months a number of downtown properties have changed hands, including the sale of Binion’s to Terry Caudill of Las Vegas for $32 million.

But the economic slowdown has investors running away from gambling deals, with even big-name casino stocks such as Las Vegas Sands and MGM Mirage trading at a fraction of what they did late last year.

As for Pittsburgh, Barden is no longer in the driver’s seat on the project.

After winning the license for the project, Barden was unable to put together a financing plan that would stick. The news came in May that he would use the Fitz as collateral for the $35 million bankers wanted him to contribute to the deal, prompting speculation he would need to sell the Las Vegas property to make good on the pledge.

Delays and shaky financing deals are an indication the rough economy is taking a toll not only on Las Vegas but on smaller, regional gambling projects, according to Joe Greff of JPMorgan.

“We believe the transfer of the license and lack of available financing for the casino project further points to current credit market conditions,” Greff wrote in a research note on Friday.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.

ad-high_impact_4
Business
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
Star Wars VR Comes to Las Vegas
Sneak peak at the new "Star Wars: Secrets of the Empire" VR experience at the Grand Canal Shoppes.
Elaine Wynn continues her fight to change Wynn Resorts board
Elaine Wynn, the largest shareholder of Wynn Resorts Ltd., is seeking to kick a friend of her ex-husband Steve Wynn off the company’s board of directors. (Todd Prince/Las Vegas Review-Journal)
Zillow is getting into house flipping in Las Vegas
Las Vegas Review-Journal real estate reporter Eli Segall says flipping houses has waned in popularity after the housing bubble burst.
Ellis Island Buys Mt. Charleston Lodge
Ellis Island, which operates a casino, brewery and hotel just off the Strip, purchased the Mt. Charleston Lodge in early April.
Casinos to be penalized for allowing drug-impaired customers to gamble
Nevada Gaming Commission Chairman Tony Alamo talks about an amendment making casinos subject to the same disciplinary standards of preventing people to gamble if impaired by drugs as they are for letting them play while intoxicated by alcohol.
Terrible Herbst to open large travel center in Southern Nevada
The 50,000-square-foot commercial travel center will include 96 fuel pumps and the third White Castle restaurant in Southern Nevada. Wade Tyler Millward reports.
Art Bell’s Top 10 Shows
A selection of radio host Art Bell’s most popular shows.
TOP NEWS
News Headlines
Home Front Page Footer Listing
Circular
You May Like

You May Like