Post of the Day
January 21, 1998
From our Gaming Board
Subject: CIR, AZR, MIR thoughts
Just a few thoughts of over the weekend developments on CIR, AZR, and MIR.
CIR -- Call me ignorant, but somehow buying out a CEO's contract sounds like an ousting to me. At those management levels, folks who lose favor and are effectively fired are usually asked to resign. Many here on this board probably know that.
As to the signals and the whys? Well, there was the mixed signals on final ownership of Project Paradise. Some analysts are reporting lousy December traffic at Luxor, and if I recall, even Excalibur wasnt a big winner. While pretty, I dont think the new Luxor lighting really does much. I can't speak for the other properties, but IMHO CIR has just not been strategically focused in the past few years. A new captain might be what they need.
As to takeover possibilities,, there are plenty of views and even mine are mixed. I could say that with a new CEO, they need to formulate what they intend to do and that if a deal were to be done, it would start going forward. Conversely, the fairly fast replacement of CEO to the company's top individual stockholder -- instead of recruiting -- might suggest a deal is happening and they simply need someone to fill the seat. If that were the case, then I would suggest they are being bought by another hotel/casino who would bring in their own management, not a REIT which would generally keep current management.
AZR -- You know, I have been on the brink many times the past few weeks to pick up a bunch of AZR stock on the takeover/value notion. I am not worried about downside now. The real killer still seems to be the land issue. IMHO, that really needs to be resolved before a third-party could buy and explain to their shareholders why they bought. Otherwise the Jaffe's have the new operator over a barrel. In a related situation, it took Disney years to buy out the orchard west of West in Anaheim to expand Disneyland. When they finally did, it unleashed a 3 billion $ + Anaheim resort and second park expansion plan. Sounds familiar..
MIR -- Still formulating the following idea... We Mirage followers have considered MIR buying up the Caesars operation from Starwood on the premise that Starwood isnt a gaming company and that Caesars happened to be spoils of the larger ITT/Sheraton deal. Well, if Starwood wanted to keep Caesars, it would seem possibly strategic for them to buy up Mirage to obtain the management, synergy, and bragging rights Mirage could bring them. I havent run the numbers, but somehow the moves of Mirage (buying BWLK, rapidly taking title to H-Tract, etc) might be construed as closing down open business. What are the numbers and is it doable?
And just one board-wide note... The acquisition of casino companies by REITs may make focused discussion of our favorite topic harder to follow in the future.