Zack Arnold puts together the case:
- October 19th - Going private hasn’t saved companies from slump (Las Vegas Review-Journal)
- October 19th - Station Casinos will seek some reprieve from its banks, though the company’s debt costs will likely go up (Las Vegas Sun)
- October 20th - Station Casinos confident business model will best economic worry (online casino advisory)
- October 23rd - Is Station Casinos going out of business? (Fightlinker)
When Dana White announced a while back that Lorenzo Fertitta was making a 100% commitment to UFC and moving away from actively managing Station Casinos, it was heralded as a move that was going to forever change the MMA business. Much to the credit of Fight Opinion Radio lead host (Jeff Thaler), Jeff never bought into the initial explanation given as to why Lorenzo Fertitta would give up such a lucrative position in Las Vegas to go to UFC — a profitable company, but nothing close to the money-making machine that Station Casinos had been over the past decade
Fightlinker has analysis as well and he comes down on the more skeptical side:
The whole thing has to do with loan covenants, and the violation of them. If you’re wondering what the fuck that means, here it is in english:
A loan covenant is a condition in a commercial loan or bond issue that requires the borrower to fulfill certain conditions or which forbids the borrower from undertaking certain actions, or which possibly restricts certain activities to circumstances when other conditions are met.
Typically, violation of a covenant may result in a default on the loan being declared, penalties being applied, or the loan being called.
So long story short, S&P thinks that Station is going to be violating some of it’s loan covenants by as soon as the end of March. How bad that is really depends on the terms of the deal. We just saw Showtime calling in a 6.5 million loan due to ProElite violating it’s terms, and you saw what happened there. But trying to compare ProElite and Station is like comparing lemons and some kind of solid gold money making fruit. I personally doubt Station is in any real danger of closing shop, but something interesting might be going on behind the scenes. I’ll let you know more when I do.
**UPDATE** Here’s another interesting article on Station Casinos and it’s financial health. The gist: Station is bogged down in debt after ‘buying back’ control of their operations. But is it really buying back when it’s really all on loaned money?
Me personally, I'm a bear on the entire world economy right now and it sure doesn't seem like expensive gambling junkets to Las Vegas are high on the priority list of many people I know these days.