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Tim Poster and Tom Breitling Could Split up to $150 million
 in Profits With Sale of Golden Nugget for $295 million
 in Cash and Debt Assumption to Landry's Restaurants
By Howard Stutz, Las Vegas Review-Journal
Knight Ridder/Tribune Business News

Feb. 5, 2005 - A little more than a year after their purchase of the Golden Nugget landed Tim Poster and Tom Breitling on the front pages of national publications and in their own reality TV series, the dot-com millionaires agreed to part ways with the historic downtown casino Friday, accepting $295 million in cash and debt assumption from Houston-based Landry's Restaurants.

The transaction gives Landry's, the operator of more than 300 restaurants nationwide under such brands as Landry's Seafood House, Rainforest Cafe and Joe's Crab Shack, its first gaming property and a brand name the company hopes to introduce into different casino jurisdictions.

"The Golden Nugget name is a great brand, and it's one that allows us to expand into other markets," said Tilman Fertitta, Landry's chairman and chief executive officer. "It's a great property, and we believe it is a name we can roll out and build upon as we have with our restaurant brands."

In addition to exploring additional gaming purchases outside of Nevada, Fertitta said Landry's is considering making a bid to purchase the Riviera on the Strip, which some analysts believe is a prime takeover target.

"We're still looking at the Riviera, but we're not ready to make an offer," Fertitta said.

Landry's will pay Poster Financial Group $140 million in cash while assuming the casino's $155 million in debt. The Golden Nugget has 1,907 rooms, a 40,000-square foot casino and 2,900 employees.

The transaction is subject to approval by Nevada gaming regulators and is expected to close by the end of the year.

Poster and Breitling earned their initial fortune by founding the travel Web site Travelscape.com, which was later sold to Expedia. The pair made their way into gaming in January 2004 after closing on a $215 million purchase of the Golden Nugget properties in Las Vegas and Laughlin from MGM Mirage.

In November, they agreed to sell the Laughlin property to Barrick Gaming Corp. for $31 million.

Gaming sources said Poster and Breitling could split up to $150 million in profits once the transaction closes.

"I spoke with Tim Poster this the morning, and he told me they had an offer you couldn't refuse," Mayor Oscar Goodman said of the transaction in which one of downtown's key gaming destinations could be changing owners for the second time in two years. "I love Tim and Tom, and they brought a tremendous amount of attention to downtown. They told me they are committed to downtown."

The casino's most recent earnings were mixed, and gaming analysts said the property suffered from poor cash flow.

"I think operating a casino was a little different than they expected," said gaming analyst Steve Ruggiero of CRT Capital Group. "But they got a great price, and Landry's is getting a great property."

Ruggiero said Landry's might be a good fit for the Riviera, but it would take a tremendous amount of capital to revive the older Strip property.

Poster and Breitling were not available for comment on the Golden Nugget sale, saying only in a statement the transaction will allow Poster Financial Group to "participate in various business opportunities."

Throughout their brief ownership, Poster and Breitling said they wanted to return the Golden Nugget to the heyday of the Rat Pack. They embarked on a nationwide marketing campaign that included ads in Esquire, GQ, Conde Nast Traveler, Cigar Aficionado and Sports Illustrated to introduce the gaming public to the resort's new owners and their efforts to revive "Vintage Vegas" in downtown.

If anything, the flashy, mid-30s, first-time casino owners were headline grabbers.

The apex of their public relations savvy saw them take part in the Fox reality television show, "The Casino." Created by Mark Burnett, the program was panned by critics and finished the year ranked 177 out of the 279 programs in the Nielsen ratings.

In addition to its restaurants, Landry's owns the Inn at the Ballpark, a hotel adjacent to Houston's Minute Maid Park and the city's downtown Aquarium.

Fertitta said the company plans to participate in downtown redevelopment.

"Landry's will take part in the downtown revitalization because we're excited about being part of the community," said Fertitta, who expressed the same sentiment in a morning phone call to Goodman.

Fertitta, 46, is a cousin of Frank and Lorenzo Fertitta of Station Casinos. The local gaming giant will not have a role in the Golden Nugget.

"We're operators and we believe there is a good management team already in place at the Golden Nugget," Fertitta said. "We do a good job operating our restaurants, and we will bring that same type of service to gaming. Station is a good company, and they were the first to call this morning congratulating us on the deal, saying we could call any time for advice."

Once operated by Steve Wynn, the Golden Nugget has undergone several changes under the current owners, including new restaurants and updates to the casino.

Fertitta said the company was attracted to the property because it needs little in the way of capital improvements.

Golden Nugget employees learned of the proposed sale throughout the day. Zachary Conine, a property spokesman, said the matter "was just another interesting event in the casino's history."

Employees questioned Friday didn't want to be named, and several just shrugged off the matter as hotel guests began arriving for the busy Super Bowl weekend.

"I'm not too concerned," said one cocktail server.

The transaction drove up the price of shares in Landry's during trading Friday, with the stock gaining 12.46 percent on the New York Stock Exchange, closing at $31.95, up $3.54.

Landry's was founded by Fertitta in 1986. The company went public in 1993, the same year his cousins took Station Casinos public. In the company's most recent earnings, Landry's reported total revenues of $314.4 million for the quarter that ended Sept. 30.

Michael Smith, a restaurant industry analyst for Oppenheimer, said Landry's executives discussed getting into the gambling business during the company's two most recent conference calls. He said bank loans, a revolving line of credit and funds raised through the bond market give Landry's more than $500 million it could spend on casino purchases.

"To Tilman, maybe it's a way of growing cash flow," Smith said. "They can acquire talent to run the casinos, and I think he looked at the math and sees gaming as another way to expand the company."

Fertitta called gaming "a growth industry," saying operating one casino could have the same value as 40 restaurants. Landry's operates four restaurants in Las Vegas; a Landry's Seafood on West Sahara Avenue across from Palace Station, two Joe's Crab Shacks and the Rainforest Cafe inside the MGM Grand.

-----To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to http://www.lvrj.com.

(c) 2005, Las Vegas Review-Journal. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. MGG, LNY,

 
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