UFC in Trouble? And Why?

Over the years, UFC has become the biggest (and more lucrative!) sport in Las Vegas... And the fastest growing sport in the world. More and more fans are tuning into games, attending games, buying merchandise, and even aspiring to become MMA fighters themselves.

However, UFC's rise hasn't been without controversy.



And now, there's a new challenger in the ring ready to take on (the owners of) UFC.

Culinary Union Local 226 set up a website recently at unfitforchildren.org that details the foul-mouthed tirades of Dana White, president of Ultimate Fighting Championship.

Here’s unfitforchildren.org quoting White berating some poor schoolyard schlub: “Whoever gave you that quote is a (anatomical expletive) and a (homophobic slur with a modifying expletive).”

Culinary asks, “Can you imagine NBA Commissioner David Stern or NFL Commissioner Roger Goodell talking like this?”

I like UFC and realize it’s a nice amphetaminic boost for our deathbed economy. But the question put to White is a reasonable one, especially given UFC’s desire for mainstream legitimacy. The Vince McMahon shtick is juvenile.

Another reasonable question, though, from UFC fans: What union? In case you don’t know the history here: It’s no surprise that the big hotel union that represents more than 50,000 workers on the Strip would be sticking the shiv in the side of UFC, which is owned by Frank and Lorenzo Fertitta, who in turn own a controlling stake in Station Casinos.

Culinary has unsuccessfully been trying to unionize Station’s many valley casinos for years, with the fight intensifying in recent years, to include high-stakes federal litigation.

Especially in the last three years, players, coaches, and team owners in other sports have faced a whole lot of heat for allowing homophobia, misogyny, racism, and other forms of discrimination in their respective sports. Has UFC really faced that kind of scrutiny yet, especially considering what Dana White seems to get away with saying?

Of course, this isn't the real reason why Culinary 226 is now going after UFC. This is.



Culinary has been working on this aggressive campaign to unionize Station Casinos for decades, yet until recently it seemed like it was failing to gain any traction. But when Station went bankrupt, Culinary saw opportunity. And as Station continues to pile up the federal charges of workers' rights violations, Culinary has made some hard kicks. And now that the Fertittas have a new billion dollar empire with UFC, which is part of a sport that's already been swirling around plenty of controversy, Culinary is aiming for the ultimate knockout punch.

Of course, Dana White is now complaining that Culinary is "just trying to make this thing look bad and trying to hurt the Fertittas by lobbying against the UFC and mixed martial arts". Well, duh! Both Culinary and the Fertittas have long used this tactic against each other, and against other adversaries. When Station went bankrupt, the Fertittas pressured creditors into allowing them (and a posse of banks, such as Deutsche Bank and JP Morgan Chase) a leveraged buyout of Station, even though a more credible (pun intended?) suitor had emerged in Boyd Gaming. Station pummeled those creditors that opposed the leveraged buyout and/or supported the Boyd deal and used all the legal tricks in the book to get the Nevada bankruptcy courts to agree to something that probably no other court in America would green light.

And most recently, Station joined forces with the Nevada Resort Association to convince the Clark County Commission that Dotty's somehow became the greatest threat ever seen to Nevada's way of life. Why? Well, Dotty's had grown exponentially all over the valley as locals were coming to enjoy the smoky, intimate, slot experience that seemed to lure customers away from Station Casinos. And of course, it helped that Dotty's had earned very little sympathy by local lawmakers by operating in such a dark gray legal cloud that allowed Dotty's to straddle the fence between "casino" and "bar", and prey after gambling addicts. It was becoming increasingly obvious that the Clark County Commission had to do something about "The Dotty's Loophole", but what ultimately emerged smelled rotten in that it looked less like a fair solution to legal discrepancies over "incidental gaming licenses", and more like yet another political wet kiss to the Nevada Resort Association and Station.

So do Dana White and the Fertittas really want to criticize Culinary for engaging in activities that the Fertittas themselves have mastered to get their way whenever Station is in trouble?

I'll be honest. I like MMA, and UFC really fascinates me. I see the intense skill involved, and I realize there's more to it than the brutality that first meets the eye. However, I also believe it's more than fair for Culinary to hit the Fertittas on UFC's more controversial aspects to shame them into improving Station Casinos' workplace. As we've seen above, the Fertittas have never shied away from hitting below the belt to preserve their precious assets. So what gives them the right to change the rules of the fight when they face a more experienced opponent in Culinary 226?

Don't Get Caught in a Bad Hotel... Or How Culinary Can Use New Tools to Fight Station

Take a look at what SF Pride at Work is doing...



This thing is quickly going viral, and just in time to catch tourists like moi considering our San Francisco PRIDE plans... Including hotel reservations. Paul Hogarth explains more on the value of this new kind of "viral video protest" at Beyond Chron (an excellent SF blog):

The video was fun, but how do we know it will be effective at getting people to boycott the Westin St. Francis?

A friend responded with this point: “It will be seen by a lot more people than your average - ‘what do we want and when do we want it’ protest - because as much as I am pro union and will support boycotts, I don’t forward info on every single boycott because seriously, nobody would read my reports if I did. I saw the YouTube video and then saw that the Palace Hotel was part of the boycott list and canceled my reservations for tea at the Garden Room. I probably would not have found out about the boycott if it wasn’t entertaining enough to go viral, and I definitely wouldn’t have posted it in my [Facebook] status and then five of my friends probably wouldn’t have posted in theirs …”

In the 21st Century, people spend a lot of time online – and a huge amount on Facebook, talking to their friends and procrastinating. A fun YouTube video can go viral, because you’re reaching people where they’re at – and it’s easy for them to post it on their page.

As far as getting “bang for your buck,” Pride at Work hit a home run. They didn’t have to mobilize a huge number of people, the whole action took 5 minutes and nobody got arrested. How many times can you say that – and get that amount of media coverage?


Could Pride at Work have done a similar direct action without YouTube or Facebook? Of course, but no one would have seen it – unless they happened to be in the Westin St. Francis at the time, or activists were lucky to get reporters present – never a sure thing.

And while onlookers in the hotel appeared supportive (activists handed out flyers during the flashmob about the hotel boycott), it can be difficult convincing an apolitical tourist who already paid for their room to check out of the hotel in solidarity. By broadcasting it on YouTube and generating a viral campaign, more will hear about it and not stay there.

How very, very true. And you know what? It applies very much to LAS VEGAS, too!

Think about it. The Fertittas are trying hard to prevent "an inconvenient bankruptcy" from toppling their gaming empire, while Boyd Gaming is licking its chops to grab as many Station properties as possible when "PropCo" (amd maybe even a bit of "OpCo"?) goes to the auction house. Both companies are notorious for being anti-union, and Culinary 226 so far has had no luck at organizing any casinos run by either company.

Culinary now has an active organizing campaign running, but all I've seen from it so far are two RTC bus stop ads: one at Green Valley Parkway & the 215, and one at St. Rose Parkway & Paseo Verde. Oh, and apparently there's a YouTube page that I didn't even know about until five minutes ago.

Now I'm sure there's plenty of negotiating going on inside, and there's probably more to come. Culinary has earned its reputation as a true Nevada political power player for good reason.

However I just think there's even more they can do, especially when it comes to winning in the court of public opinion... And getting the public to choose union hotels over anti-union hotels when staying here in Vegas. [I'm sure MGM Mirage, Harrah's, and Wynn would really appreciate this as well. ;-) ]

I'm wondering how involved Sleep With the Right People and Pride at Work are with the Station fight. If they aren't yet, I hope Culinary reaches out to them. There are millions of LGBTQ tourists who come to Vegas each year, and they should know to "sleep with the right people". Oh yes, and Culinary should know about these new tricks they should put up their sleeve so they can reach out to millions more Vegas visitors and let them know where to go (and where not to go).

All those tourists "voting with their dollars and their feet" would really get Station and Boyd to pay attention.

Casinos: Station Gets a(nother) Lifeline

Well, so much for us knowing the final fate of Station Casinos sooner rather than later...

Station Casinos is getting a little extra time as the exclusive company or group to draw up a reorganization plan in its $6.6 billion bankruptcy case.

U.S. Bankruptcy Court Judge Gregg Zive gave the Las Vegas casino company until mid July to exclusively put forth a plan on how to emerge from its debt.

His approval came after creditors and independent lenders withdrew opposition to an extension. Attorneys for the groups initially wanted the exclusive right to draft a plan to end May 24 so they and others could prepare their own bankruptcy plan.

Zive had been leaning toward giving Stations the extension, saying, “I’m not sure why we should open the door to that type of distraction,” referring to others who might submit rival plans.

But issues remain over Station's proposed auction and PropCo/OpCo divide.

Deutsche Bank and JP Morgan hold a $2.475 billion mortgage on four of Station’s most valuable properties: Red Rock Resort, Sunset Station, Boulder Station and Palace Station. They and Station Executives Frank and Lorenzo Fertitta would take over those four casinos.

Another 13 casinos would be put up at an auction.

The Fertittas and the banks have put together a proposal to bid $772 million for those 13 casinos. But other companies could outbid them.

The judge also allowed the lenders and creditors additional time to take depositions from two more officials. Zive will hear additional arguments Wednesday on the bidding procedures but said he won’t rule until later hearings set for May 26-27 in Reno.

Lawyers for Station Casinos objected to allowing more depositions. Thomas Kreller, attorney for Station Casinos, said it gave the bondholders, creditors and lenders 50 reports and allowed them to take depositions from five officials.

But lawyers for the creditors and others told Zive they have not been able to get all the necessary information to assess the proposed reorganization plan. They argued that they need to know how the “stalking horse” plan was selected and want to know the value of such things as customer lists and land.

“There is no evidence on the value of the excluded assets,” said Eric Winston, attorney for the creditors’ community.

And apparently there is also an emerging problem with Texas Station, as the Fertittas want to auction off the casino but NOT the land underneath it. So this ain't over yet, not by a longshot.

So far, it seems Station has been lucking out in getting the judge to mostly agree to what the Fertittas, Colony Capital, Deutsche Bank, and JP Morgan Chase want. We'll have to see if their luck will ever run dry in this case.

I just wonder how much of a chance Boyd really has now in getting any of these casinos...

Casinos: Boyd Gaming Swings Back to $8.4 Million Q1 Profit, Still Wants Station's Casinos

So Boyd reported earnings this morning. They went from a $0.16 per share, or $13.8 million total, loss in Q1 2009 to a $0.10 per share, or $8.4 million total, profit. So how did they do it? Apparently they've been cutting costs rather aggressively, as net revenue actually fell 8.4 percent to $398.4 million from $434.8 million in Q1 2009.

Still, Boyd stated in its report that there's good reason to be more bullish on Las Vegas these days.

Keith Smith, President and Chief Executive Officer of Boyd Gaming, commented on the quarter: "We continue to be encouraged by improving trends in our business, which clearly reflect the signs of an emerging recovery. Our Las Vegas Locals market reported the best year-over-year comparison in nearly two years, and business levels are returning to normal seasonal patterns in this region. Given the positive developments in our business, combined with continued improvement in the national economy, we expect to generate year-over-year growth during the second half of 2010."

Looking at the internals, it seems like the locals' casinos are starting to recover their footing. Boyd's locals' casinos' Q1 2010 EBITDA was off only 10.8% from Q1 2009, compared to Boyd's Downtown casinos' EBITDA dropping 37.3%. No wonder why Boyd isn't pursuing any more Downtown casinos, but is still aggressively going after Station Casinos.

During Tuesday’s conference call, Smith said Boyd is still aggressively pursuing the acquisition of Station Casinos’ assets.

In December, Boyd made an offer to purchase Station Casinos’ assets in an effort to expand its locals market. The offer was $2.45 billion for the company’s 18 casinos and casino-hotels in Southern Nevada.

“We welcome the opportunity to compete for Station [Casinos] assets so long as the process is competitive, open and fair and as long as the assets have not been devalued to a point where it no longer makes financial sense,” Smith said.

So the picture is becoming clearer now. Boyd seems to have found the "magic formula" of expense cuts and travel/gaming promotion to return its locals' casinos to profitability (thereby taking the entire company back to black), so it thinks it can make money off Station's casinos. But wait, can they negotiate a deal with the Greenspuns on GVR and Aliante? And can they run these and the other "OpCo" properties without Station's Boarding Pass (players' club program) feeding locals and non-Strip travelers into the casinos? Apparently so, or so Boyd execs think.

Casinos: Another Day, Another Hot Mess in Station Bankruptcy Case

Why are we even surprised any more? Station Casinos is under fire for its now controversial plan to emerge from bankruptcy. It's been in a heated war of words with Boyd Gaming lately over the proposal.

In court papers filed Monday, attorneys for Station charged that Boyd has been meddling in the case -- claiming to be a creditor but actually acting as a potential buyer for Station. Station specifically objected to Boyd's insistence that its representative attend depositions in advance of the key reorganization hearing set to begin May 4.

"Boyd had sought to act as the stalking horse bidder in the auction ... but was not successful in negotiating for that position," Station's filing said. "As a result, Boyd’s true status is that of a disappointed bidder for the stalking horse position and a potential competing bidder in the ultimate auction.

"Equally important, Boyd is the debtors’ primary competitor, which means that regardless of the outcome of the auction process, Boyd has every incentive to try to disrupt the debtors’ efforts to preserve and maintain their business operations in a manner consistent with the debtors’ place at the top of the locals gaming market. Thus, Boyd’s posturing has nothing to do with its holdings of insignificant amounts of out-of-the-money bonds and everything to do with Boyd’s effort to try to gain access to debtor’s confidential documents and to attend the depositions in order to disrupt the bankruptcy process and the debtors’ business and obtain sensitive competitive information that it would then use to the detriment of the debtors’ estates.

"Boyd clearly views this as a 'free shot' to harm Station Casinos and gain a competitive advantage; such an agenda is not an appropriate use of creditor standing in these cases and should not be permitted," the Station attorneys charged, adding Boyd has failed to turn over documents related to the case sought by Station and Boyd violated a non-disclosure agreement by working directly with OpCo lenders on competing restructuring proposals.

"From the outset of these proceedings, Boyd has sought to delay, hinder, and obstruct the debtors’ reorganization, obtain access to Station Casinos’ valuable trade secrets, and harass Station Casinos' management. Simply put, Boyd has acted strategically to hurt Station Casino’s reorganization in order to further its own competitive interests. And, if at all possible, Boyd would like to poison the well for other potential bidders for OpCo, so that Boyd can obtain the OpCo assets at fire-sale prices," Station charged in its filing.

And not to be outmatched by Boyd...

But attorneys for Boyd, in denying allegations the company breached the non-disclosure agreement, said: "Boyd Gaming is a party whose involvement in these Chapter 11 cases as both a creditor and bidder already has brought substantial benefit to the debtors' estates, including by increasing the stalking horse bid."

Boyd attorneys also complained that Station attorneys have been making "vastly overbroad" discovery requests for Boyd documents.

"The majority of the debtors' document requests are directed to Boyd Gaming's development of its previous proposals to purchase the debtors' assets," Boyd argued. "Indeed, the debtors even have requested Boyd Gaming's competitive plans on competing with PropCo in the future.

"These topics -- what Boyd Gaming was willing to pay for the debtors' assets in the past, how it arrived at that decision and how Boyd Gaming will compete with PropCo in the future -- bear no relevance whatsoever" to current issues in the case -- amendments to the PropCo master lease between Station and lenders, Station's request that its exclusive period to file reorganizaztion plans be extended and the OpCo bidding procedures, Boyd's filing said.

"Rather, such demands only are designed in an attempt to gain insight into the amount that Boyd Gaming may be willing to bid in the future for the debtors' assets in an auction process in which Boyd Gaming will be bidding against the debtors' insiders," Boyd attorneys said.

And now, the bondholders are raising hell over the proposal:

Bondholders and other unsecured creditors, independent bank lenders and competitor Boyd Gaming Corp. have been attacking the Station plan as favoring the insiders and are likely to continue doing so during bankruptcy court hearings in Reno May 4 and 5. Billions of dollars are at stake in the case as the Fertitta/Colony proposals value the company at about $2.572 billion, while its debts and liabilities were last reported at $6.6 billion.

In a filing Monday, the bondholders asked Judge Gregg Zive to allow competing plans of reorganization to be filed so that creditors can recover more money than what is proposed by the Fertittas, Colony Capital and key lenders Deutsche Bank and JPMorgan Chase Bank.

"The debtors have been given several chances to put forth a good faith plan that benefits all creditors to whom they owe a fiduciary duty. The debtors have not used those opportunities to make progress through substantive negotiations with the vast majority of Station Casinos' creditors. Rather, they have offered sham auctions, one sided 'compromises' and conclusory, opaque rationales for their proposed actions," the bondholders' attorneys argued.

For instance, they charged: "Station Casinos has agreed to give the Fertitta brothers the opportunity to buy all remaining Station Casinos assets for a set price that all third-party bidders are required to top despite the fact that third-party bidders cannot buy the assets that are being stripped away from Station Casinos and handed to reorganized PropCo."

The controversy is swirling around Station's proposal to split up the 5 "PropCo" properties (Palace, Boulder, Sunset, Red Rock, Wild Wild West/Viva, and the Las Vegas Blvd./Cactus Ave. land) from the "OpCo" properties (everything else). PropCo won't be auctioned off while OpCo will... And a consortium of the Fertittas, Colony Capital, and JP Morgan Chase would be allowed to be the "stalking horse bid" in OpCo. And many of the technological tools needed to run OpCo would actually be included in the PropCo holdings. So when considering this, it becomes easier to see why the bondholders and Boyd are upset over Stattion's proposed plan to emerge out of bankruptcy.

It will be interesting to see what the courts finally think about this. Will Station be allowed to get away with it? Or will Boyd end up being in for a really sweet deal?

We know the Fertittas now want to keep everything together in Station world. We also know that the folks at Boyd are licking their chops over Station's assets. And in the end, it looks like we will ultimately still be dealing with a near duopoly on the Vegas locals' casino market. So the more things change with Station, the more they stay the same with locals' casinos?

Casinos: CityCenter Makes Conde Nast Traveler's "Hot List", Harrah's to Sell Rio?, Boyd Throws Station Reorganization Plans into Limbo

Visit msnbc.com for breaking news, world news, and news about the economy

Yep, you heard me right... MGM Mirage finally got some good news for CityCenter. Conde Nast Traveler has put both Aria AND Mandarin Oriental in its "2010 Hot List"! Apparently the rooms, the art, the restaurants, and the green touches all make Aria a winner in its book (even if Vegas Tripping and Rate Vegas' TWHT weren't as impressed initially). And since Conde Nast Traveler is quite revered as an authority on luxury travel, perhaps it can help encourage more of those high-end travelers needed to come and help CityCenter turn a profit?

Meanwhile in Harrah's territory, they may be considering (AGAIN!) selling The Rio. But unlike past rumors, which were just glorified gossip, this time it's getting press in Bloomberg Businessweek.

Harrah’s Entertainment Inc., the casino company owned by Apollo Management LP and TPG Inc., is seeking bids for the Rio All-Suite Hotel & Casino in Las Vegas, people with knowledge of the situation said.

Starwood Capital Group LLC and Colony Capital LLC are among the companies that are weighing bids for the resort, said the people, who declined to be identified because the talks are private. Some bids value the Rio at about $500 million, two of the people said.

Harrah’s, the world’s biggest casino company, is exploring a sale of the off-Strip property two months after buying Planet Hollywood Resort & Casino. Las Vegas is coming out of a two-year slump that took casino operators to the brink of bankruptcy. Chief Executive Officer Gary Loveman cut Harrah’s debt by $4.2 billion in 2009 by offering creditors new bonds at a discount. He extended maturities on another $5.5 billion this year.

Dave McKee has more on this, including his thoughts on who might be the early favorite to snatch The Rio. He thinks Colony Capital (which currently owns The Las Vegas Hilton, as well as a chunk of the possibly-soon-to-emerge-from-bankruptcy Station Casinos) is the frontrunner, followed closely behind by Starwood Capital Group (which currently owns Sheraton, Westin, St. Regis, and a number of other hotel brands). However someone in the comments there mentioned the constant rumor that Penn National Gaming (which came close to buying the bankrupt Fontainebleau, which ended up in Carl Icahn's hands) may get it, which is always a possibility considering how badly it wants to enter the Las Vegas market.

So will The Rio be banished from Planet Harrah's? We don't really know yet, since the company isn't saying anything... Yet. But since Harrah's has already tried multiple times to sell The Rio, I wouldn't be surprised if they finally let it go this year.

And finally, speaking of Station Casinos, its long, hot mess of a bankruptcy isn't over quite yet... Boyd Gaming and the unsecured creditors are challenging the reorganization plan! They specifically object to the proposed PropCo/OpCo plan to let Station keep Red Rock, Sunset, Palace, and Boulder along with the proposed "Viva" site and the Las Vegas Blvd/Cactus Ave. plot of land while putting all the other assets (or OpCo) into "auction". Boyd and the creditors are claiming that the "auction" process and PropCo/OpCo divide put Station and Colony at an unfair advantage over everyone else (including Boyd, which badly wants to buy as much of Station as the Nevada Gaming Commission will allow).

Oh, and a group of independent lenders is also objecting to Station's plan.

"By excluding OpCo assets of significant value, as well as the PropCo assets, from the proposed Station Casinos sale, the debtors are not allowing their assets to be shopped as their fiduciary duty requires," Boyd charged in court papers.

Boyd also noted that its offers to purchase Station assets in February and December 2009 were not accepted. The last offer for the entire company was for $2.45 billion.

"We now know that the debtors were only interested in pursuing an insider transaction at the expense of their creditors' interests in breach of the board's fiduciary obligations," Boyd's filing said. "The court should not sanction the debtors' ongoing blatant disregard for the creditors' interests by approving these one-sided bidding procedures."

Similar objections were filed Wednesday by the case's Official Committee of Unsecured Creditors, representing bondholders and others owed some $2.5 billion. The unsecured creditors charged that the Fertittas and Colony Capital have arranged to acquire a 50 percent interest in the PropCo properties at a 15 percent discount while arranging a lucrative 25-year management deal for those properties.

"These series of transactions are structured, using New PropCo and Fertitta Gaming, to camouflage the conflicts of interest and self dealing that are at the heart of the ... plan," attorneys for the unsecured creditors charged.

"The proposed restructuring is simply a deliberate campaign by those controlling Station Casinos to benefit themselves, its equity owners, at the expense of Station Casinos' creditor constituents," the creditors charged.

Another objection was filed by a group of independent lenders, which also complained that assets crucial to the operation of the OpCo casinos would not be included in the OpCo auction.

"From the perspective of the OpCo creditors, the process makes no sense: It's like selling KFC without the Colonel's secret recipe, or selling Coke without the formula, because the seller fails to capture the full value of the enterprise and the buyer acquires a business crippled without its competitive advantage," the lenders charged.

So will all their objections be enough to derail the Fertittas' plan to take Station out of bankruptcy? We'll have to wait and see.

Casinos: What Next for Station?

So last week, we found out about how Station Casinos will look once it emerges from bankruptcy reorganization. Basically, it will be a "leaner, meaner" company as it only holds onto Palace Station, Boulder Station, Sunset Station, Red Rock Resort, Wild Wild West (where its "Viva" casino/entertainment complex redevelopment plan has been on hold lately), and a plot of land at Las Vegas Blvd. and Catcus Ave. slated for a future casino. And the rest?

The plan, if approved, would lead to the sale of the remaining company assets.

The assets include Indian casino management contracts as well as Texas Station, Santa Fe Station, Fiesta Rancho, Fiesta Henderson, Wildfire Rancho, Wildfire Boulder, the Gold Rush, Lake Mead Casino and the company's 50 percent interest in Green Valley Ranch Resort, Aliante Station and the smaller Barley's, the Greens and Wildfire Lanes.

The assets to be sold include extensive land holdings in California (1,321 acres), the Reno area (200 acres) and at key gaming-entitled sites in the Las Vegas Valley at Durango Road and the southern Las Vegas Beltway, Town Center Dive and the Beltway and in Henderson's Inspirada development. The land holdings also include 52 acres south of Palace Station planned as a retail, entertainment and residential development.

So what does this mean for the future of Las Vegas gaming? Quite a lot, really. Station Casinos and Boyd Gaming were quite close to holding a "duopoly" over the locals' casino market. Almost all the casinos up here in Henderson are Station, and the same can be said of many other areas outside The Strip and Downtown. But with this shedding of assets, we will likely see a major game change... And this can go one of two ways.

If Boyd manages to buy most or all of these soon-to-be former Station assets, it will emerge as the new leader in locals' casinos. And what would that look like? Downtown is probably the best indicator (where Boyd dominates), along with the Coast Casinos scattered around the valley. I'd also be interested in seeing if their experience with Borgata in Atlantic City has prepared them for a more upscale Las Vegas locals' casino like Green Valley Ranch.

However, this doesn't have to be the case. If Nevada gaming regulators manage to show some concern over one company controlling so many casinos in town (and it's admittedly a crap shoot over whether they will care enough to do something), they may not allow Boyd to suck up all these casinos. If that happens, this will leave quite the opening for a "renaissance" of independent and small chain operators (like the Maloofs of Palms fame and Cannery Casinos) to emerge as more powerful players in town. Perhaps we'll see more M Resort like casinos in our future? Or maybe Tony Marnell himself will want to expand his empire? Or maybe Michael Gaughan (formerly of Coast Casinos, now running South Point) will reemerge as a big locals' market player? The possibilities are endless, and it would be quite the sight to see.

And what will become of the Fertittas? Well, they will still hold 46% of the new, smaller Station while Colony Capital retains 4%. And while they will let go of most of Station's current assets, the remaining assets will still be quite the company with "crown jewel" Red Rock, "the original" Palace, and Boulder & Sunset in key parts of town. And by holding onto the Cactus plot of land, they'll at least keep their foot in the door for a possible future Station Casino in the still unfinished southern stretch of the valley near Silverado Ranch and Southern Highlands.

So whatever happens next, this will change Station Casinos and change the state of locals' casinos here in Vegas. It's like watching the fall of a great empire. We'll just have to wait and see whether it means the start of a new great empire (Boyd) or a return to a more decentralized and level playing field, as well as how the new Station fits into everything.

Casinos: More Station-Boyd Drama! Oh, and Culinary 226 Still Isn't Keeping Its Mouth Shut, Either.

Yay! Happy b-day to me, I get to laugh at more Station-Boyd gaming. The Fertittas may have thought they were safe when they struck an agreement with their creditors last month to emerge out of bankruptcy wholly intact, but I guess Boyd Gaming thinks differently. This is what they said when they announced narrower losses than expected in their Q4 2009 earnings report.

During a conference call with investors and analysts today, Boyd executives reaffirmed the company’s commitment to acquiring Station Casinos’ assets and discussed the company’s view of the current condition of the Las Vegas locals market. [...]

“This offer stands and we are actively pursuing these assets,” [Boyd President & CEO Keith] Smith said. “We believe we can offer the greatest possible value to the majority of Station’s creditors. There is no one who is in a better position to manage those assets properly.”

And I guess there's still an opening with Boyd, especially with creditors still objecting about the Fertittas' spending habits of late... And even U.S. Bankruptcy Judge Greg Zive asking his own questions about possible overbilling.

U.S. Bankruptcy Judge Greg Zive told lawyers Tuesday he would look for overbilling and questioned expense accounts. He approved $12 million in interim fees and expenses for law and accounting firms.

The judge noted that progress has been made in an agreement with key lenders and the company in clearing the way for Station to emerge from bankruptcy. Attorney Paul Aronzon told the judge there has been "good progress" and a creditors meeting is set for March 5. [...]

Most of the hearing was taken up with the judge approving the request for interim payment of fees and expenses, but Zive had several questions.

For example, one accounting firm charged $19,500 in hotel bills. Zive pointed out that Station Casinos has hotels where the representatives of FTI Consulting Inc. can stay.

"I don't know if the hotels still comp, but we need to be careful," Zive said. "This is not a large amount of money but it doesn't have to be."

The judge approved $3.9 million in fees and expenses for one law firm where some 50 attorneys and legal assistants are working on the case representing Station.

The judge noted two lawyers in the firm of Milbank, Tweed, Hadley & McCloy are charging $995 an hour and a small group of others are billing at $900 to $950 an hour.

"When you bill at that rate, I expect a great deal of efficiency," he said.

The judge then threatened to hire a court-appointed fee examiner to investigate of Station's expenses keep spiraling out of control.

So I guess this is what I'm thinking about the whole ordeal now.



Don't like my Gaga? Too bad, bitchez! It's my birthday, dammit! Oh yeah, what was I talking about again? Oh, that's right, back to Station and Boyd. ;-)

I guess Station isn't really out of the woods just yet. As always, the Fertittas' wacky spending habits and self-enrichment schemes are coming back to bite them. And as long as they keep screwing with their own company like this, there will always be some kind of opening for Boyd.

And by the way, Station also still has to deal with its stubborn refusal to let its workers organize.

Hundreds of workers from Station Casinos founded a union organizing committee last week and are meeting at the Culinary Workers Union, Local 226 today. The workers have called on the company to agree to a fair process for workers to form a union free from management interference, intimidation and harassment. The Culinary and Bartenders unions have informed the company’s owners, partners, creditors and the National Labor Relations Board of the committee’s formation.

Station Casinos answered the workers’ request for a fair process with threats and intimidation. Yesterday, the unions filed an Unfair Labor Practice charge against the company with the National Labor Relations Board alleging the company violated federal labor law in over 100 incidences by threatening, surveilling, physically assaulting and intimidating workers for their union activities.

“I’ve worked at Palace Station for 18 years,” said Casino Porter and Organizing Committee Member Casiano Corpus. “I joined the organizing committee because I want a better future for myself, my family and my co-workers. Station Casinos may not want a union, but it is not their decision to make. It is our decision and they shouldn’t try to scare or intimidate us because of our union activity.”

Since a management-led buyout in November 2007 that paid Station Casinos insiders $660 million, the company has subcontracted out its coffee shops and its uniform department to outside operators. Hundreds of workers have lost their jobs with the company as a result. The company has also cut hours, made permanent lay offs, suspended the workers’ 401(k) match, and raised employees’ health insurance premiums. [...]

“These workers are standing up for themselves and their families,” said Geoconda Arguello-Kline, Culinary Workers Union President. “The company and the workers are in a very difficult position right now because the 2007 buyout increased the company’s debt and left it unable to weather the economic downturn. The company is making decisions that affect these workers lives and their ability to take care of themselves and their families. The workers didn’t create this mess, but they are suffering as a result. We are going to do everything we can so they can achieve the respect they deserve and take care of their families with dignity.”

It's already looking ugly with accusations of violent assault (FOX-5 video) now flying. So for now, the sordid soap opera that's become "The Station Casinos Bankruptcy Case" continues.

Casinos: Harrah's Turns a Profit in Q4 2009 While Station Reaches Deal to Escape Bankruptcy

Whoa, there! In a week filled with bizarre, ugly, and downright wacky news out of Carson City, it looks like things are looking brighter here in Vegas (which may help things in Carson City next year, interestingly enough). Believe it or not, Harrah's turned a profit late last year!

Harrah's Entertainment Inc. today reported a profit of $295.6 million in the fourth quarter, even as the recession contributed to a 10 percent decline in net revenue for its big hotel-casinos on the Las Vegas Strip.

The profit compares to a loss of $4.782 billion in 2008's fourth quarter, when the Las Vegas company booked special costs of $5.49 billion to write down the value of goodwill and other intangible assets.

Harrah's attributed some of its profit in 2009's fourth quarter to financial engineering. Its interest expense fell by $118 million in the quarter and it posted a pre-tax gain of $686 million due to debt exchanges and other purchases of its debt at discounted prices.

OK, so much of this profit was "engineered" out of tricky accounting and and playing with its debt. But hey, it's still a profit... Which MGM Mirage and Las Vegas Sands can't say. (Both companies actually reported narrower losses than expected, but still bled a little more red in Q4.)

Oh, and now for the other big casino story of the day... Station has a deal??!!

Station Casinos Inc. today announced it has reached an agreement with key lenders that the company hopes will clear the way for it to receive approval to emerge from bankruptcy this summer.

While the company didn’t disclose details, the arrangement with lenders holding $2.475 billion of debt secured by four of Station’s most valuable hotel-casinos is expected to result in the lenders swapping some debt for equity in the company. [...]

[T]he deal- if approved — would keep the company and its 18 casino properties and extensive land holdings together.

It’s expected members of the founding Fertitta family, along with Station majority owner Colony Capital of Los Angeles, would maintain equity stakes.

The Fertittas would make a substantial, but undisclosed, equity investment and the current management team led by Chairman and Chief Executive Frank Fertitta III would continue to lead the company.

“We are extremely pleased to have reached an agreement in principle with certain of our key mortgage lenders for the comprehensive reorganization of our Company,” Fertitta III said in a statement. “This is a very important step in our restructuring process. Our commitment to the successful restructuring of our company is demonstrated by (my brother) Lorenzo and me making a significant investment in the reorganized company. This restructuring will create a much stronger company going forward that will benefit our team members, guests and the Las Vegas community as a whole.”

WOW! Honestly, I really wasn't expecting this. After all the recent controversy over what Station has been doing, it was starting to look inevitable that Boyd would "do some bargain hunting" in bankrputcy court. If this holds, Station might just survive.

So perhaps the worst is over? Maybe, just maybe, we can really start to believe it now. Station was starting to look like "The Meltdown of The Millennium", while Harrah's was really looking doomed with all its debt load and casino losses all over the country.

But apparently, tomorrow is another day... And that brighter tomorrow looks to be starting today.

Station Casinos: Bankruptcy Judge Urges Station & Creditors to Negotiate

So is US Bankruptcy Judge Greg Zive punting? Is he ruling in favor of Station Casinos? Is he ruling in favor of the creditors? Why don't you take a look here.

After six hours of arguments, a federal bankruptcy judge advised Station Casinos and unsecured creditors to hold negotiations over a $2.3 billion debt, rather than face legal action.

U.S. Bankruptcy Judge Greg Zive withheld a ruling on the petition by the unsecured creditors to be allowed to sue over the arrangement of the 2007 leveraged-buyout deal that took the casino company private.

Susheel Kirpalani, attorney for the creditors, told the judge the creditors “were left holding the bag” while “insiders and fat cats” got big payouts in the $8.9 billion buyout by Colony Capital and the Fertitta family.

“The unsecured creditors were harmed by the transaction,” Kirpalani argued. He called it a fraudulent transfer.

But Thomas Kreller, attorney for Station, said a suit would result in “acrimonious litigation” and would disrupt the chances of coming up with a plan for the company's reorganization.

He said denial of the unsecured creditors' right to sue wouldn't extinguish the money owed. But permitting a suit, Kreller said, would result in “significant and irreparable harm” to Station. [...]

Zive said he didn't see any evidence of fraud in the buyout by Colony and the Fertitta family in taking the company private.

Zive advised Station Casinos to allow the unsecured creditors to be a “meaningful participant” in the talks toward reorganization. He said he believed there would be “unintended consequences” if he permitted a suit go forward at this time.

“I find people negotiate when people have a little bit of risk,” in advising the two sides to talk, Zive said. “The creditors deserve to be heard.”

If there are no negotiations, Zive said “I’m willing to rule. It may not be in the best business interest but it will be on the law.”

So reading the tea leaves, it seems the judge thinks the creditors are making some sort of legitimate claim, but they're overplaying their hand and Station isn't helping by not even wanting to listen to them. And who knows, maybe a judge ordered "mediation" can do the trick? Nah, they're all still bickering and more law suits are being threatened every day.

So the creditors won't be getting their new law suit, but it looks like they'll be getting something out of Station soon... And Station remains in a precarious situation as they teeter on the edge of fading out of existence. I'm sure Boyd Gaming is loving every minute of this...

Station Casinos: Rethinking Nightclub Concept, Fighting off Creditors' Law Suit... Still a Hot Mess

OK, so overall Vegas news is looking better these days. Casino winnings are rebounding off their lows. More visitors are returning. Both airline and auto travel are on the rise again.

So why is Station Casinos still in the sh*tter? Well for one, they're still in bankruptcy court... And the creditors are trying to start a law suit over the 2007 stock buyback sweetheart deal leveraged buyout that took the company private and consolidated power with the new generation of Fertittas running it.

Attorneys for two members of Las Vegas’ Fertitta family moved Tuesday to block a threatened creditors’ lawsuit in the Station Casinos Inc. bankruptcy case.

Attorneys for Station Chairman and Chief Executive Frank Fertitta III and his brother, Station shareholder Lorenzo Fertitta, filed court papers opposing a request by Station’s Official Committee of Unsecured Creditors that the committee be allowed to prosecute fraudulent transfer and other claims.

The committee is asking Bankruptcy Judge Gregg Zive in Reno for permission to pursue those claims against the Fertittas and their partner in the 2007 leveraged buyout of Station, Los Angeles investment company Colony Capital LLC. A Jan. 25 hearing is set on the request.

The unsecured creditors committee, which represents creditors including bondholders owed $2.3 billion, last month said 2007’s $8.8 billion buyout saddled the company with excessive debt, dooming the company to failure while enriching the Fertittas, insiders and merger bankers with hundreds of millions of dollars in payments for stock and buyout fees.

The creditors, with their claims of fraudulent transfers and breach of fiduciary duty, hope to recover the funds at issue from the Fertittas, Colony Capital and banks involved in the buyout.

Donde los yikes! And if that isn't bad enough, Deutsche Bank is joining with the creditors to try to block Station from paying almost $1 million in "advisory fees" (WSJ, subscription required)... Or is it "hush money" that was used to try to prevent those lenders from pursuing a full investigation?

No wonder why Station is in so much trouble. And if that isn't bad enough, their whole strategy to conquer the off-Strip nightlife scene looks to be blowing up in their faces.

Two nightclubs at Station Casinos properties have closed their doors for different reasons that officials are emphasizing have nothing to do with the company’s bankruptcy filing.

Cherry, the Red Rock Resort club that opened its doors when the property debuted in April 2006, and Stoney’s North Forty, a country music club at Santa Fe Station, are making way for new attractions.

Station spokeswoman Lori Nelson said a special nightlife entertainment division of the company is evaluating what would be developed in the Cherry space. The company already has announced that it is opening Revolver, a new bar and nightclub in the Stoney’s location at Santa Fe Station. [...]

“The two decisions (to close the nightclubs) were made for different reasons,” [Station spokesperson Lori] Nelson said. “Cherry simply reached the end of its life cycle and for Stoney’s, it was a mutual decision to part ways.”

Rande Gerber, owner and operator of the Midnight Oil chain of bars and lounges, developed Cherry. In early 2007, Station assumed control of the nightclub and brought in promoters and consultants to create nightlife events at the club.

Nightlife industry experts say Cherry operators attempted to cater to both locals and visitors off the Strip, but as Red Rock became predominantly a locals property, it lost market share.

“We are exploring new concepts for that space that will complement our other entertainment offerings that locals enjoy,” Nelson said.

No timeline has been set for developing a new attraction, but Nelson said the company is considering nightclub, ultralounge and bar concepts.

So this has nothing to do with Station's bankruptcy? Uh-huh, and I'm the most conservative Republican you'll ever meet. (That's supposed to be snark, bitchez!)

Really, this is just a part of the Fertitta's larger failure in letting hubris and greed get in the way of making good business decisions. Red Rock tried too hard to snatch the kinds of tourists that usually favor Hard Rock. Aliante cost way too much and was placed way too far away from the rest of civilization. Resort fees were piled too high, and other bilking schemes just turned off those locals and value-oriented tourists that were buttering the Fertittas' proverbial bread.

And of course, we can't forget that infamous 2007 leveraged buyout that may have temporarily enriched the Fertittas and their few lucky friends... But ultimately caused the downfall that's led to this disastrous bankruptcy brouhaha.

Basically, Station Casinos needs to do more than just rethink its nightlife ventures. It needs to rethink the entire way it does business... And fast, before Deutsche Bank, the unsecured creditors, Boyd Gaming, Isle of Capri, and/or someone else emerges like a vulture to gobble up the remains of a dead company.

Hehe, Boyd is ON THE PROWL for Station!

Please excuse me while I LMAO some more at the Fertitta empire as it comes closer to being gobbled up by someone else.

Boyd Gaming Corp. of Las Vegas today made another offer to buy Station Casinos Inc. -- this one for $2.45 billion for the company with 18 casinos and hotel-casinos in Southern Nevada.

With Station carrying $6.8 billion in debt and other liabilities and operating in Chapter 11 bankruptcy, acceptance of the $2.45 billion offer likely would cause creditors and investors to take billions of dollars in losses. [...]

Boyd, one of just a few gaming companies considered to be in sound financial shape and capable of buying Station without over-leveraging itself, has been persistent in pursuit of Station.

Boyd is on the prowl and ready for the kill!

"Combining Station with our current portfolio is consistent with our strategy of growing our presence in the Las Vegas locals market. The transaction contemplated by this proposal will allow us to leverage our 35 years of operating experience in the Las Vegas market to maximize the full potential of Station’s assets. Given this compelling strategic fit, and Boyd Gaming’s position as a licensed operator with strong financial capabilities, we continue to believe that the acquisition of the Station assets by Boyd Gaming is the optimal way forward for Station and will create the most value for Station’s creditors," Boyd said in a letter to Station.

"Importantly, Boyd Gaming is in the best position to execute a smooth transition of ownership and operate the Station properties efficiently from day one. We believe our proposal is in the best interests of Station’s employees, vendors, customers, and the Las Vegas community as it will help to strengthen the local economy and preserve thousands of jobs," the Boyd letter said. "We believe our offer price represents fair value to Station’s stakeholders and takes into account current market conditions, our deep knowledge of the gaming industry and Station’s publicly disclosed financial performance."

"Our proposal to acquire both the 'OpCo Assets’ and the 'PropCo Assets’ reflects the belief that there is more value in keeping these assets together rather than separating them. We believe that combining Station’s assets with Boyd Gaming will result in the greatest number of benefits for stakeholders," the letter [from Boyd Gaming] said.

Well, what else can I say? As I've said before, Station Casinos had it coming. So not only are the creditors furious, and not only is Culinary 226 ready for all out warfare against Station execs, but Boyd is now back in the game and ready to snatch them at a fire sale price in bankruptcy court.

Still, I must admit I'm conflicted about this possible Boyd acquisition of Station. On one hand, Station has been piling up reckless amounts of debt for years while continuing to treat their workers like crap. But on the other hand, I don't know if Boyd's really a better employer... And this deal will create a near-monopoly of Off-Strip casinos for Boyd. And as we've all seen with just two companies controlling so much of The Strip, it's dangerous to have so many casinos concentrated in so few hands.

So I guess we'll have to wait and see what happens next for Station. And if Boyd and/or some other "vultures" capture Station in bankruptcy court, the Fertittas only have themselves to blame for it.

Culinary 226 Goes After Station Casinos in Bankruptcy Court

Oh, my! And the plot thickens...

The Culinary Union heightened the drama in its fight with Station Casinos last week, blaming a management-led buyout for the company’s bankruptcy filing and aligning itself with the company’s creditors.

The union issued a detailed report on the company’s financial woes, arguing that Station could have avoided bankruptcy had it not pursued a $5.7 billion deal to take the company private in 2007. It concluded with a call for creditors to demand that Station’s owners reinvest a significant part of the profits from the deal to help the company recover.

The move is the latest chapter in the Culinary’s ongoing battle to organize the 13,000 workers of the nonunion casino giant, and piggybacks on a lawsuit filed by a group of aggrieved creditors that claim the company relied on unrealistic, rosy financial assumptions. [...]

Among the union’s findings: Company insiders, led by the Fertitta family, nearly tripled Station’s long-term debt from 2005 to 2007, borrowing money to buy back 14 million shares and complete the buyout. Forty percent of the proceeds — more than $660 million — went to company insiders. The Fertittas alone received $495 million.

“Clearly, the owner-managers and other insiders were more interested in extracting wealth from the company for themselves than ensuring its and its employees’ future,” said D. Taylor, Culinary secretary-treasurer. “Now it’s time for them to give back.”

Well, the Fertittas had it coming. They negotiated that generous (to them) buyout loaded with stock options and other goodies. They kept taking on more and more debt, even though they must have known at some point that they couldn't afford any more debt.

But now they say they have to fire employees? And for the workers staying at Station, they'll have less pay and fewer benefits? Oh, and the workers still aren't allowed to organize?

Bullsh*t.

The Fertittas brought this upon themselves. It's their fault they're in bankruptcy court now, not Culinary's. Maybe if they had run better this company they inherited from their father, they wouldn't be at risk of losing it all in court today.

What Next for Nevada's Gaming Industry?

I'm about to step out the door to see a movie. But before I do, I want to share with you something I just read in today's Sun about the casinos. They asked three retired casino executives about what went wrong in recent years, and what may be done now to get back on track. I don't know if I completely agree with what they say, but it's certainly interesting to see how we got where we are now.

Uh Oh, Station Casinos Goes Chapter 11

That is, Station is going bankrupt. However, they insist it will only be "reorganization" and it won't affect employees or gamblers.

Station officials today said the company's casino operating subsidiaries did not file for bankruptcy and that the company will continue normal operations at all of its properties under the direction of its existing management. In addition to cash generated from its operating subsidiaries and affiliates, the company has in place an agreement with its senior secured lenders that, subject to court approval, permits it to borrow, as needed, up to $150 million of cash from one of its non-operating subsidiaries. [...]

"All of our casinos will continue to operate as usual and we will continue to provide our guests with the same great value and entertainment choices they have always enjoyed at our properties," said Kevin Kelley, chief operating officer of Station Casinos. "From our loose slots, to honoring points earned in our Boarding Pass program, to our great promotions and contests ... it’s business as usual at Station Casinos."

Because of reductions in cash flow tied to the recession, the company is having difficulty serving its debt load of $5.74 billion and in February started negotiating with key bondholders regarding a proposed prepackaged bankruptcy filing in which bondholders would have made concessions and Station's owners, the Fertitta family and Colony Capital, would invest another $244 million in the company and remain in control of Station.

So for now, I guess I won't have to worry about the points I earn at Green Valley Ranch or my friend who works at Sunset Station. However, we'll probably need to keep a close eye on this one. Bondholders and others have been pressuring the Fertitta family for quite a while to sell some or all Station properties to Boyd Gaming. One bondholder even tried suing Station executives over possible debt restructuring. I don't know how likely it is that the Fertittas will keep their hold on this company, but I guess this is their last chance to keep the company in their family.

Hopefully whatever comes out of bankruptcy, it won't cause any more pain to Greater Las Vegas.