Ran across this article and I found it pretty interesting. We all seem to love to hate CET because they make it so easy to dislike them and they seem to make it easier for us all the time. After reading this article I can see why they are doing everything they can to try and squeeze every nickel out of everyone who walks in the door. It looks like they are a day late and $25 billion short.

Also, it's not just the Strip that could be changed forever if they go bankrupt, it's a lot of smaller markets across the country that have under performing CET properties now that gaming is spreading all over the country.

http://www.fool.com/investing/genera...soon-be-b.aspx

Why were they allowed legally transfer assets into subsidiaries which the banks had no claim on?

Most of these leveraged buyouts seem terrible and it's had to be sympathetic when they've disastrously wrong. I'd like to see new regulations where companies need to have a certain % of the money to buy a company out and so it can't just pile the debt onto the new business.

I ask the same question, the article implied that the more profitable subsidiaries were out of reach of the original bondholders and in fact the original company??? This is more than egregious and whether or not common practice then they all ought to go to jail. Where is our regulatory system when we need them ? Someone tell me it isn't so.

In finance there is something called a "pro-forma" model. It basically removes everything like debt, taxes, interest from a balance sheet and looks at the core business. In other words, if you remove everything else, does the company operations itself make a profit? It's a basic way of evaluating companies on the simple question of profitability.

Pro-formas are commonly used for things like tech and bio companies who acquire a lot of debt to start up but do actually make money if you remove debt. In other words, in the long run, once debt is paid off, they will be good profitable companies.

For about the past two years, the pro-forma answer for Caesars has been "no". It has been shocking to me that they have been allowed to keep doing that. Their core business, from day-to-day does not turn a profit. But Wall Street has been giving them a pass, treating them like some start-up that can eventually be profitable, once all that "pesky debt" is out of the way.

It simply makes no sense to me.

Would be great for the consumer if it did break up. Horribly mismanaged. More competition usually leads to better business practices and better customer service.

Also, as to their one size fits all resort fee policy, in what world does it make sense to charge the same resort fee to stay at the Quad as it does to stay at Caesar's Palace? Craziness.

Are you saying that their casino business does not make a profit (if you remove debt service) ?

Caesars is a lot more than just a casino business. They are more casino/hotel/entertainment. So casino revenues are offset by, what, $33 million to Celine Dion, I think? BritBrit gets another $15 million? Oh and then you have to run some hotels too . . . the unions would like to chat with you about that.

And then on top of all that, it's not just Vegas. They're running 40 different properties across the US. It's a massive operation.

Bad wording on my part.

Are you saying that this "core business", however you define it, is losing money prior to debt service?

I'm pretty sure that is exactly what Jim is saying.

CET's 40 or so properties across the nation, combined, do not turn a profit vs. their operating cost. The quarter over quarter revenues are lower than their expenses aka their operations are in red; therefore CET is consistently losing money, to add to their existing debt.

Yet Wall Street treats them as if they are a second year start-up who need an angel investor to clear their debt so they can finally show their quarter over quarter profits.

That is, if what Jim is saying is what I think he is saying, and he is correct in what he is saying

This is exactly why I let Natamus represent me in all my financial matters

So if they crumble and have to sell off all of their assets, wouldn't MGM Mirage buy up the best ones and create more of a monopoly in Vegas hurting the market for consumers?

I think that's the most likely scenario. While it would be nice to see them all independently owned, my guess is that a large company will come in and (at the very least) buy them in groups or the whole thing. I'm referring to Vegas, of course. The other properties will most likely go out to different companies like Penn, etc.

I'm guessing they will also sell the WSOP brand to someone else or maybe retain that - who knows? How they handle that one will be very interesting.

ugh. it's a pro forma, based on a sum-of-the-parts valuation, which is ridiculous. everytime they've dumped a property (harrahs st louis) it's for 10 cents on the dollar.

@jim they can't sell wsop that ****s been on a billboard "for sale" for years. except of course for 10 cents on the dollar. run run run from this stock. this is not yahoo lmao, they have no ****ing worthwhile assets.

lookout for penn gaming to come in here and bail them out and crush them all in one movement.

MGM has 13b in debt too but at the right price who knows

Depends what's for sale. Look for Penn to be aggressive as well as Boyd.

No I think these are the least likely suitors, especially for the Vegas properties. The Strip casinos just aren't their style really. Besides, there will be foreign competition and maybe new entrants (hedge funds?) that will also want to stake a claim.

MGM does have its own debt problems but their revenue structure also looks different (better) than one would think. I think MGM will still be a player in any sales that may happen.

MGM recently refinanced a bunch of their debt, which is certainly better than CET, but their debt ratios are still higher than Wynn and LVS. I would think that the top-tier CET properties would be bought by entities with better abilities to incur additional debt for the transaction, but I'm a Monday morning armchair financier.

so when is the WSOP going up for sale... and who's gonna run it post 2015? Planet Hollywood, really?

Not every entity will require debt I'm sure there's hedge funds or foreign companies that would like to make an entry. The location(s) are much too prime to not attract suitors.

Who knows? That one will be interesting. WSOP is a brand and event circuit more than a "location" or single casino. Maybe:

ESPN? That's my gut feeling but goes beyond the wholesome image of the The Mouse.

AEG? That would be nice. Take it to another level

CardPlayer magazine? How amazing would that be?

The romantic in me also thinks about some of the companies Downtown that would bring it back there but I can't think of one that would be viable.

Maybe. The ones with the primest locations are the ****ty ones, though - Harrah's through Bally's. If I were bidding for Flamingo or whatever Imperial Palace is called now, it would be for demolition value. And they just plunked down a bunch of money to remodel those.

I assume Caesars Entertainment is not going to sell Caesars Palace, but armchair financier and all that.

I guess I might buy Planet Ho. That there's nothing directly south of it bothers me, though.

This is amazing to me. Other than Jersey going to hell, how do you screw up running a casino so badly that you lose money?

I'm in WI and the tribes here have money pouring in.

indian casinos here in Ca are all making money too, hurts Tahoe and Reno for sure

Penn national has taken market share from them in a TON of markets. Harrahs used to be the only show in town at a lot of these spots. Harrahs product is often inferior.

It's actually a little worse than that. I started to get really concerned when they closed the casino in Mississippi. They didn't sell it, they didn't re-work they just flat out closed it. So, it's not just how do you lose money on a casino. It's how do you lose money on a casino to the point where no one else wants to buy it? That's the real insanity in all of this. It points to larger, fundamental issues in the casino industry.