With online casino real money games becoming more popular, traditional casinos compete significantly. The experience at online casinos has improved, and more people enjoy their time when they visit an online casino. However, visiting a traditional casino remains a significant to-do for casino gamers.
Because of this tradition and the different exciting features of playing at a land-based casino, the real estate on the Vegas Strip has become huge. As a result, it has become a significant investment, with many businesses looking to invest. Most of the resorts and casino hotels go for millions of dollars. Some even go for billions.
For instance, the Resorts World, a newly built resort on the Northern Strip, costs about $4.3 billion to complete. Building or buying a modern resort on the Strip would require you to have at least a billion dollars. The value of the properties has skyrocketed, and one reason is the continuous growth in popularity.
With this growing value, it became suspect that Caesars Entertainment was looking to sell a Strip asset. Essentially, they were looking to reduce the number of rooms they had on the Strips to increase the rest’s value. And over the past few months, it looked like it was going to happen.
However, in recent days, the deal seems to be off, and we have reasons to think CZR won’t be going ahead to sell the assets. This is what we think about this deal and why it didn’t go through.
About the Deal
From many announcements by the CEO, Tom Reeg, he made it clear that the company was only looking to sell under the right circumstances. We don’t have much information on the deal and what parts of their Strip assets they plan to sell. But it was obvious that they were planning to reduce the number of rooms.
However, according to a statement from the CEO during the company’s second-quarter earnings call, he mentioned that if the deal was going to affect what someone would be paying, there is a limit to which they won’t be chasing. The company has reached a consensus with the statement and the deadline passing.
And the following announcement mentioned that CSZ would keep all their strip assets for the foreseeable future. As a result, the massive deal is off the table.
Regarding Vici Properties’s right to the first refusal towards the sale, and the deadline has passed, it was announced that the deal is off. The CEO mentioned that the company wouldn’t be moving forward with the deal after they made a critical decision following the first refusal and passing of the deadline.
As a result, the company would be keeping its Strip assets. And since the sale might have affected Caesars’ continuity on the Strip because Flamingo has a direct entrance to the famous Linq Promenade. Therefore, even though the news is shocking, we can see why it hasn’t gone through.
What We Think
Undoubtedly, Caesars would want to pay off a considerable chunk of their $15 billion debt. However, that is not the most pressing issue now because they’ve been able to handle their debt payments. As a result, even though they might have wanted to go through with a sale to help with the debts, it is not necessary.
They didn’t have to go ahead with the sale unless it was for the right reasons, and since the CEO already mentioned that it would be under the right circumstances, the chances became slimmer. Therefore, we expected it not to go through. However, the news was pushing that it would work out.
From Reeg’s statement, we could see that the market didn’t have the resources to pull off a massive deal just yet as the ability of buyers to come up with the right financing have been impacted. As a result, it was an easy decision for the team, and they would consider moving on to other businesses.
However, we believe if the need arises, there is a chance that we might see the deal happen in the future, but for now, Caesars Entertainment will be keeping all its assets on the Strip. And if you’re planning to visit the strip, you can take a slight detour to Caesars Palace to try your luck on various casino games to win real money.