Yesterday, I highlighted the three best moves in gaming over the last couple of years. It's easy to see how executives made smart decisions when their stock prices were rising, but we should also look back to see why their stocks were in the dumps to start with. Here are the three worst moves in gaming during the last half-decade.
Sheldon Adelson sticks it to shareholders
Las Vegas Sands
He could have made the sort of dilutive stock offering the company needed at any time after shares hit $140 late in 2007. Instead, he waited until it was almost too late. As a result, shareholders took a massive hit, and the company nearly went bankrupt. But Adelson himself took a big part in the offering, including shares of preferred stock and warrants, so his portfolio took a much smaller hit. It's funny how things work in your favor when you call the shots.
Adelson is a great CEO to have when the economy is booming and aggressive risk-taking is the order of business. But when times are tough, Wynn Resorts
MGM from 2007 – 2009
Missteps at MGM Resorts
That inaction helped lead to the fire sale of Strip property Treasure Island to Phil Ruffin a year later, when MGM needed cash. And while further stock offerings and asset sales have put the company in a better financial position, this is the only major casino company that still raises questions regarding its survival.
Private equity falls in love with gaming
Now for my favorite private equity purchase of all time: The Apollo Management/TPG Capital buyout of Harrah's Entertainment, now known as Caesars Entertainment. The $27.8 billion deal was completed in early 2008, near the peak of the stock market, when gaming veterans had their eyes elsewhere. By the time the purchase went through, Las Vegas Sands, Wynn Resorts, and MGM had joined Melco Crown
After the company barely survived the recession with the help of some financial magic and the largesse of its debtholders, the market laughed when Caesars wanted to go public. The private equity firms took a risky bet, and so far, they've come up empty.
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Fool contributor Travis Hoium owns shares of Melco Crown and is short MGM Resorts. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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