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Caesars Entertainment announced that their third-quarter revenue (2013) was essentially flat at $2.18 Billion. Yeah, that's a large "B" and you'd think that might be enough to make everybody happy, but Caesars is heavily saddled with debts of over $23 Billion. You know the way much debt that may be? I've watched because it went to $12 Billion, then $17 Billion, and now nearly twice that number from only a few years ago. Sure, the corporate got sold, but didn't the buyer's pay anything in cash? I missed the transaction, and it's within the past, so let's just have a look at today's numbers. What to do? How do you service a debt that costs $550 million a year in interest?
Vegas properties were up in revenues, however the remainder of the U.S. properties from Philadelphia to Atlantic City and everywhere else were down. May even a considerable increase within the economy pull this debt load? No. When Bill Harrah first bought a property in Lake Tahoe with profits from his casino in Reno, he was so happy to have expanded his gambling domain, despite the fact that it was in a snowy, seasonal place like Tahoe. He pushed for better winter road clean-up and in many years the South Shore club was open year-round.
Other properties on the lake, just like the North Shore Club, never went year-round. Was that a bad thing? Maybe, because Harrah's continues to be around, the North Shore is gone, but if is a gaming conglomerate too big to function efficiently? In my humble opinion, for Harrah's - now Caesars, it was about 10 years ago, but what do I DO KNOW. The growth to new gaming locations is important to enhance revenues, but not in case you are cannibalizing old property revenues and taking over more debt that can not be paid (sound like our government?).
Best of luck to Caesars, I'm sure they are going to figure things out because they have got numerous experienced MBA types in charge, however it doesn't take an MBA to understand you must occasionally prune back the dead branches to make a tree blossom in springtime and often there will not be enough water to grow another dozen fruit trees, especially if you need them to be the scale of a city block.
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