News for the Hospitality Executive
|By Jeff Simpson, Las Vegas Review-Journal
Knight Ridder/Tribune Business News
Jan. 13, 2004 - It's Harrah's Entertainment to the rescue.
Three days after federal marshals closed the 52-year-old Binion's Horseshoe and seized more than a million dollars to help settle its debts, Harrah's on Monday evening announced a deal to buy the hotel-casino from owner Becky Binion Behnen.
The purchase is expected to result in a rapid reopening of the downtown landmark property after state regulators approve the transaction, although industry insiders believe Harrah's may not be the ultimate operator.
Industry insiders valued the Harrah's purchase at about $50 million, most of it in the form of assumed Horseshoe liabilities.
Binion's is believed to owe as much as $20 million to Jack Binion's Horseshoe Gaming Holdings, $7.5 million to the Internal Revenue Service, $3 million to the Fremont Street Experience, $1 million to the Culinary union's pension and health plans, and unknown amounts to the casino's landlords and smaller creditors.
"We've reached an agreement in principle to acquire Binion's Horseshoe," Harrah's spokesman Gary Thompson said Monday evening. "The agreement is subject to execution of a definitive written agreement and receipt of regulatory and other approvals."
The terms were not disclosed but involve Harrah's assuming Binion's Horseshoe's liabilities to bona fide creditors, Thompson said.
"We're reviewing options for reopening the property as soon as is practicable," he said.
Thompson declined to say whether Harrah's itself would operate the property once it reopens, or whether Harrah's would sell or transfer the property to another owner as some industry insiders expect.
Behnen did not return a Monday phone call seeking comment but issued a statement.
"I am confident that this transaction will provide new opportunities for both the property that has meant so much to me and my family, as well as for the loyal employees who have worked with us over the years," Behnen noted.
Nevada Gaming Control Board Chairman Dennis Neilander said Monday that the board will try to handle the transaction as quickly as possible.
"The board will take all appropriate measures to expedite the transaction," Neilander said.
Harrah's is regarded as an aggressive buyer in the casino business, having recently announced its $1.45 billion purchase of Horseshoe Gaming Holdings, which is owned by Behnen's brother Jack Binion, after earlier buying Harveys Casino Resorts for $675 million in 2001, Players International for $425 million in 2000, the Rio for $888 million in 1999 and the Showboat for $550 million in 1998.
Buying Binion's Horseshoe gives Harrah's two strong assets, Thompson said, referring to the Horseshoe brand name in Nevada and to the World Series of Poker.
"Our expectation is that the World Series of Poker will go on this year," said Thompson, although he couldn't say whether the event would be held at the Horseshoe. "It's one of the premier events in the world of gaming and has by far the largest prize pool of any sporting event."
Jack Binion, who ran the property for two decades before he sold the Horseshoe to Becky Behnen in 1998, said he was very happy about the deal.
"I take my hat off to Harrah's," Binion said. "I feel like everyone in the community really owes Harrah's a vote of thanks. They came to the rescue."
Binion said Harrah's is a quality operator, and the sale is tremendous news for the property's many longtime employees.
"You'd be amazed," Binion said of his former workforce. "People who've been there for 20 or 30 years. A lot of 'em have been there since they became adults. (The closure) was traumatic for 'em, so this Harrah's deal is real good news."
Culinary Local 226's top official, Secretary-Treasurer D. Taylor, said the Harrah's purchase agreement is tremendous news for the Horseshoe's 450 Culinary workers.
The health and pension plans of the Culinary's parent union precipitated Friday's closure when U.S. marshals entered the casino and seized about $1 million to cover some $2 million in overdue payments.
"Harrah's is an established, well-known operator," Taylor said. "That's gigantic. Anything that gets people back to work is great, and not having IRS liens hanging over the property will be a big relief."
Las Vegas Mayor Oscar Goodman met with Behnen and Horseshoe lawyer Bob Faiss early Monday, a meeting that may have been responsible for his optimism about the Horseshoe's fate Monday evening before the deal was announced.
"The workers are my major concern, of course, but my opinion, and I'm a betting man, is that concern about the Horseshoe is premature," Goodman said. "I believe it will be open again before too long."
Before Monday evening's announcement, Horseshoe workers said Monday they felt like they were in limbo while the hotel-casino was closed.
Many said they hoped Behnen could find the cash to reopen the property. If she can't, workers said they hoped for a buyer with the cash to keep it open and save their jobs.
Many of the estimated 900 Horseshoe workers spent Monday afternoon lined up to receive their paychecks, and at least some of the property's gaming workers said they received checks. Nongaming employees are scheduled to get paid next Monday, the workers said.
Armed Binion's security officers patrolled the property's valet parking area and the sidewalk on Ogden Avenue east of First Street as a line of about 120 workers and a few family members inched toward the closed hotel to receive their checks.
"We're not quite out of a job but we're not sure we've got one," said one Horseshoe casino worker who declined to give her name, explaining that she'd be fired if she was quoted and named. "Someone's got to buy it because I don't think I could find another job as good (as this one)."
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(c) 2004, Las Vegas Review-Journal. Distributed by Knight Ridder/Tribune Business News. HET,