Sweaty Palms
March 2, 2010
Here we go again.
It’s like Deja vu.
This was how Planet Hollywood’s demise began.
For those who may be unaware, keep in mind that Texas Pacific Group is also known as “Harrah’s”.
Texas Pacific Group, one of the private equity owners of Harrah’s Entertainment in Las Vegas, is accumulating debt in the Palms resort, according to a story published Wednesday by Debtwire, a publication of the Financial Times.
Citing unnamed sources, the publication said TPG had acquired a piece of the Palms’ $380 million bank debt. It also said Palms’ EBITDA – a commonly-used profit indicator – fell to $12 million this year amid the recession from about $70 million two years ago.
The Palms is restructuring its debt and the Maloof family, which owns the Palms, is in the process of selling its beer distribution business in New Mexico for $100 million, the publication said.
The Palms loans are privately-held but can be traded among investors.
Palms owner George Maloof declined comment on the story and declined to discuss his resort’s financing other than to say the business was on solid ground.
I certainly hope George is right.
Palms Hotel and Casino and Gold Coast
While not as polarizing as say, Imperial Palace, The Palms is another one of those properties which people tend to have a strange relationship with. In a way, it’s Hard Rock West … with a twist.
While the Palms does cater very heavily toward the d-bag and celebrity crowd, they still work hard to make ugly people feel welcome. It’s arguably the only property in Las Vegas that is equal parts local and tourist casino. I can’t think of another venue that pulls off this delicate balance quite as well, and for some reason, this unique feat often goes unrecognized by the pundits.
When I lived on the West Side, rarely a week went by when I did not receive generous offers in the mail from The Palms, and my modest play was often enough to allow me to eat free. Even non-gaming locals have been well-served by The Palms since it is still one of the more popular places on the Southwest side of the city for residents to catch movies. It’s just an all around decent property.
Soon after learning to play Texas Hold’Em with a free lesson at the Luxor (yes, that is how my poker “career” got started), I cut my teeth with many a low-limit games at the Palms. The staff always treated me very well. As a matter of fact, they were one of the few places that would let me roam around the casino and call me on my cellphone when a seat opened up.
Not to mention, the Palms has the best video games in Las Vegas. I remember mastering “perfect” strategy at home on my Video Poker simulator (if you are going to do anything, try and do it well), and then going to play for real money at one of the Palms many full-pay machines. In my opinion, the Palms is still the best place in the city to play Video Poker. In addition to having the best video games in town, the Palms also routinely offers $10 3:2 Blackjack, and reasonable table games in general.
Given the quality of the Palms casino, they could get away with more “standard” gaming odds, but they seem to have resisted this better than their Strip counterparts. The Palms is a casino in which I have never felt overtly ripped off from a gaming perspective. They’ve always been very fair. I would be lying if I said that I didn’t have some affection for the place.
Last, but certainly not least, for my money … the Pearl Theater is still the best music venue in town. It is the gold standard for concerts in Las Vegas. I would hate to see this gem fall under the control of Harrah’s.
Palms Hotel and Casino - Pearl
The Maloofs get their fair share of critique, but as casino owners go, they don’t seem quite as evil as everyone else. Sure, they’re kind of goofy with the hamburger-eating pig commercials, and they wear the fact that they desperately want to be celebrities on their sleeves, but I feel as though they genuinely try to make a quality product. The only reason I do not patronize the property more often is because it can be a bit of a traffic headache from Rexville.
If Harrah’s ends up taking over the Palms, and it looks like they at least are moving in that direction, I think the future of Las Vegas will look even more bleak than it does now. While a duopoly may keep buildings open and people employed in the short term, I don’t think the town can thrive long-term under such a paradigm.
Service will decline, wages will drop, gaming will get worse, employer abuse will rise, and the entire Las Vegas Strip will have all the charm and character of a K-Mart and a Walmart sitting across the street from each other engaged in a price war.
There will be no innovation. Instead, your choice will be defined by who can save you $5 on the same frustrating shopping experience.
Even though it may already be too late to save Las Vegas from such a fate, I sincerely hope that the Palms is not the next meal on the monopoly menu.
Given the current developments, I may shift a little more of my play to the Palms in the near future.
Sometimes you don’t know what you have until it’s gone, and if the Maloof-owned Palms ceases to exist, I think we’ll all miss it.
Written by Boomer262 on March 2, 2010 at 5:39 am
I’m from Sacramento originally, and I am a Sacramento Kings fan (the Maloofs own the Kings). I’ve been a fan of the way they do business since before they opened The Palms. Though I know there are contrary opinions, I admire the way these guys do business and what they have done with their family’s investments. They took risks, worked hard, and have been successful. I wish them the best.
Plus, I don’t want to see Harrah’s ruin another great property.
Written by Greg on March 2, 2010 at 5:52 am
I’d think a beer distribution company would be more reliable than a casino, but then again, I’ve never owned either. That’s right: someone on the Internet is taking the time to share his uninformed opinion. It’s the beginning of the end!
Written by Ron from MI on March 2, 2010 at 3:09 pm
The Palms does a very good job on how to go both ways in order to cater both to the Planet Hollywood/Hard Rock crowd with its amenities while trying to cater to locals just like the Station and Boyd casinos do, but better. And given its location West of the Strip, it its very completive to the older Rio and the smaller Gold Coast. And having a theater inside a casino (like the Suncoast having a bowling alley) is very flexible.
I think what put the casino in a huge debtload were three things:
1. Building of the Fantasy Tower (the Playboy Suite)
2. Building of the Palms Place condo
3. Drop in visitation due to the severe recession
I think (even if the Maloof’s own a majority stake in the resort) TPG is probably a managing partner, but that’s just my guess. The selling of the beer distribution business is a shocker: that’s their baby. That’s their true signature business. Some folks end up their prize possessions just to stay afloat with their existing possessions. That’s sad. It’s sorta like Circuit City (when it was in business) when it stopped selling appliances. That was the beginning of the end for them.
Though the property is over a decade old, it is still technically young by Vegas standards. If TPG (or even Apollo) take over the Palms and the Maloof’s are out of the picture, it definitely means Harrah’s will get slipped in there. They start tinkering with the Palms, it will definitely have no “personality” left in it.
Harrah’s, like MGM-Mirage, are very financially-strapped companies. The old trend was “build, build, build.” Now the trend is now “buy, buy, buy.” Harrah’s, TPG, nor Apollo cannot afford to continue playing the game of Monopoly at this rate. It will put a burden on everyone who comes to visit and those who live in Vegas. And if Harrah’s goes down, so does Vegas. If they think that debt equals profit, they have another thing coming.
That’s unless they disband some of their properties to responsible companies or people with cash who really know how to run a gaming company. Then things will become smoother and competition will allow some sort of comfortable innovation.
Written by LizzieGirl on March 2, 2010 at 7:33 pm
I love the Palms exactly the way it is. I stay there, I play there, I hang out there every time I am in town. Best resort/casino in Las Vegas, in my opinion. It strikes the perfect balance.
Written by Russ on March 2, 2010 at 10:50 pm
I hope that Harrahs does not take over the Palms for 2 reasons. One is what will happen to the property (lower paybacks) and the other is lost competition. You would think at some point the gaming commission would stop these mergers, but I think I’m asking for too much there.
Written by coolpacific on March 2, 2010 at 11:20 pm
My next trip I am going to take my comp room at CP and stiff them on my play. I have made a decision to patronize non MGM/Harrahs properties and will be playing at the Trop (the old girl might be on a comeback if the facelift works out) and Palms.
Written by yoyoseven on March 4, 2010 at 10:20 pm
If and when the town turns completely into “Las Harrahs”, my visiting days will be over.