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.
