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Harrah's Entertainment

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This article is about the company known as "Harrah's Entertainment" before 2010. For the company Harrah's acquired in 2005, see Caesars Entertainment, Inc.
Caesars Entertainment Corporation
FormerlyHarrah's Inc. (1937–1995)
Harrah's Entertainment
(1995–2010)
Company typePublic
Nasdaq: CZR
IndustryGambling
Hospitality
FoundedOctober 29, 1937; 87 years ago (1937-10-29)
FounderBill Harrah
Headquarters
Paradise, Nevada
,
United States
Key people
Mark Frissora
(President & CEO)
Gary Loveman (Chairman)
ProductsHotels
Casinos
BrandsHorseshoe Gaming Holding Corporation
World Series of Poker
Total Rewards
London Clubs International
RevenueDecrease US$ 4.654 billion (2015)[1]
Increase US$ 573 million (2015)[1]
Increase US$ 5.92 billion (2015)[1]
Total assetsDecrease US$ 12.195 billion (2015)[1]
OwnerApollo Global Management (18%)
TPG Capital (18%)
Paulson & Co. (10%)[2]
Number of employees
33,000 (2016)
Websitecaesars.com
Former headquarters and current corporate offices

Caesars Entertainment Corporation, is an American gaming corporation based in Paradise, Nevada that owns and operates over 50 casinos and hotels, and seven golf courses under several brands. It is the fourth-largest gaming company in the world,[3] with annual revenues of $8.6 billion (2013). Caesars is a public company, majority-owned by a group of private equity firms led by Apollo Global Management and TPG Capital.

Caesars's largest operating unit filed for Chapter 11 bankruptcy protection in January 2015.[4][5]

History

William F. Harrah era (1937–1978)

The company's background can be traced to October 29, 1937, when Bill Harrah opened a small bingo parlor in Reno, Nevada, a predecessor to Harrah's Reno.[6][7] In 1955, he expanded to Stateline, Nevada, on the south shore of Lake Tahoe, where he would eventually open Harrah's Lake Tahoe.[8] Harrah's Inc. made its initial public offering in 1971.[9] Following that in 1972, it was listed on the American Stock Exchange and in 1973, Harrah's became the first casino company listed on the New York Stock Exchange.

Bill Harrah died on June 30, 1978 of complications from aortic aneurysm and cardiac surgery at the Mayo Clinic in Rochester, Minnesota.

Under Holiday Inn

In February 1980, Holiday Inns acquired Harrah's, Inc. for $300 million. Liquidation of Harrah's collection of almost 7,000 antique automobiles reportedly returned the full purchase price of the company to Holiday Inn. Holiday Inn at the time had interests in two casinos: the under-construction Holiday Inn Marina Casino in Atlantic City, and a 40 percent stake in the Holiday Casino, adjacent to the Holiday Inn hotel on the Las Vegas Strip.[7]

In July 1987, Bill's Casino Lake Tahoe opened.[7] Harrah's Laughlin opened in August 1988.[7]

The Promus Companies

The company now known as Caesars Entertainment was formed in 1990 as The Promus Companies. To effect the sale of the Holiday Inn hotel business to Bass PLC, Promus was created as a corporate spin-off, holding Harrah's, Embassy Suites, Homewood Suites, and Hampton Inn; Bass then acquired Holiday Corp., which retained only the Holiday Inn assets.[10] The next year, the company's headquarters moved from Reno to Memphis, Tennessee[11]

In April 1992, the Holiday Casino was rebranded as Harrah's Las Vegas.[7]

The late 1980s and early 1990s saw a rapid increase in gambling markets with the growth of Indian gaming and legalization of riverboat casinos. In 1993 and 1994, the company opened Harrah's Joliet,[12] Harrah's Vicksburg,[13] Harrah's Tunica,[14] Harrah's Black Hawk,[15] Harrah's Central City,[15] Harrah's Shreveport,[16] Harrah's North Kansas City,[17] and Harrah's Ak-Chin.[18]

Renamed as Harrah's Entertainment, Inc.

Harrah's Entertainment logo (1995–2010)

In 1995, Promus decided to spin off its non-gaming hotel businesses, in part because they had been undervalued by investors due to perception of the company as a risky gaming stock.[19] Promus Hotel Corp. was established, holding Embassy Suites, Hampton Inn, and Homewood Suites, while the parent company, holding 16 casinos, was renamed as Harrah's Entertainment.[20]

Harrah's continued its expansion over the next ten years, opening Harrah's Skagit Valley,[21] Harrah's Sky City,[22] Harrah's St. Louis-Riverport,[23] Harrah's Cherokee,[24] Harrah's Prairie Band,[25] Harrah's New Orleans,[26] and Harrah's Rincon,[27] and acquiring the Southern Belle Casino,[28] Showboat, Inc.,[29] the Rio All Suite Hotel and Casino,[30] Players International,[31] Harveys Casino Resorts,[32] Louisiana Downs,[33] Horseshoe Gaming,[34] and the World Series of Poker.[35]

In 1997, Harrah's launched its Total Gold loyalty program (renamed as Total Rewards in 2000[36]), developed at a cost of $20 million.[37] It was the first gaming company to offer a systemwide comps program, allowing points earned at one casino to be redeemed for goods and services at any of the company's other casinos.[38] The system would be credited as a major driver of Harrah's growth over the coming years.[39]

Harvard Business School professor Gary Loveman joined Harrah's as chief operating officer in 1998,[40] and would go on to serve as chief executive officer from 2003 to 2015.[39][41]

In 1999, the company moved its headquarters from Memphis to Las Vegas.[42]

Purchase of Caesars Entertainment

Harrah's made its largest single expansion in 2005, when it acquired Caesars Entertainment, Inc. for $10.4 billion.[43] Negotiations were spurred on by news of a merger agreement between MGM Mirage and Mandalay Resort Group.[44] The two companies sold several properties ahead of the merger to assuage antitrust concerns, including Harrah's East Chicago and Harrah's Tunica.[45] The acquisition increased Harrah's portfolio to 40 casinos, plus four cruise ship casinos.[46] The deal furthered Harrah's goal of gaining a larger presence on the Las Vegas Strip, where Caesars owned four casinos,[47] and improved its ability to market to high rollers.[48]

Harrah's began to push for a larger international presence in 2005, announcing joint venture agreements to build casinos in Spain, Slovenia, and the Bahamas, and applying for a license to build a major resort in Singapore,[49] though none of these projects would come to fruition. Harrah's also acquired London Clubs International in 2006,[50] and the Macau Orient Golf club in 2007.[51]

From 2005 to 2010, the company consolidated control of a long stretch of the east side of the Las Vegas Strip, acquiring the Bourbon Street,[52] Imperial Palace,[53] Barbary Coast,[54][55] and Planet Hollywood[56] casinos, along with large tracts of land behind the Strip properties.[57][58]

In 2005 and 2006, Harrah's closed its Lake Charles casino due to damage from Hurricane Rita, sold the Flamingo Laughlin, and sold Grand Casino Gulfport.

Company goes private

Loveman at some point sought advice from private equity tycoon David Bonderman about the possibility of spinning off ownership of Harrah's real estate as a separate real estate investment trust (REIT), hoping to attain the higher price-to-earnings ratios at which hotel companies traded, compared to gaming companies.[59] In 2006, the discussions evolved toward the idea of a leveraged buyout of Harrah's by Bonderman's company, TPG Capital.[59] Another private equity firm, Apollo Global Management, approached Loveman about a buyout, and he encouraged them to collaborate with TPG.[59] By the end of the year, an agreement was announced for the two companies to buy Harrah's for $17.1 billion in cash plus $10.7 billion in assumed debt.[60] The transaction closed in January 2008, leaving Harrah's with $25.1 billion in debt.[61]

The Linq

It was widely announced in previous years that the company planned to implode properties and build new ones from scratch, but after the market downturn the company conceded that it had little experience in building major resorts. Instead it developed Project LINQ in 2009, which calls for retaining and improving all existing buildings while adding a collection of about 20 restaurants and bars to be built along a winding corridor between the company's Imperial Palace, O'Sheas and Flamingo casinos, on the east side of the Strip. It is an attempt to create the kind of entertainment district that has developed organically in cities such as Los Angeles, Memphis and New Orleans yet is lacking on the Strip, with its enclosed, casino-centric zones.[62] If this new zone is successful it will provide competition for the Fremont Street Experience.

New Las Vegas Arena

The Anschutz Entertainment Group first tried to build an arena in Las Vegas in association with Harrah's Entertainment. In 2007, the joint venture announced they would build a 20,000 seat stadium behind the Bally's and Paris casino-hotels.[63] Caesars Entertainment, Inc. had previously envisioned using the location to build a baseball park, but the company's buyout by Harrah's cancelled the plans. Through the following year, Harrah's got uncertain on continuing with the project, not knowing if AEG would split the costs, and whether building a major league-ready stadium without a guaranteed franchise to play on it would be feasible given the enduring financial crisis.[64] The original plans were to break ground in June 2008 and finish the arena in 2010, but by 2009, it was revealed the stalled project had not even done a traffic study despite being located near a busy intersection.[65] In 2010, the plans were changed to use an area behind the Imperial Palace. However, given the financing would require a special taxation district, opposition from Clark County regarding using public money in the project stalled it even further.[66] AEG eventually backed out completely by 2012, once MGM Resorts International came up with their own project using a terrain behind the New York-New York and Monte Carlo resorts. This attracted AEG primarily for not relying on public funding.[67]

The acquisition of Planet Hollywood provided Harrah's with a contiguous 126-acre (51 ha) property bordering the strip. The vacant lots behind the casinos had been slated for a sports arena large enough to hold a professional basketball or hockey team. The three casinos will have over 8,000 rooms which can be directly connected to the arena.

It was announced in August 2010 that Harrah's would run casinos in Cincinnati, Ohio and Cleveland, Ohio when they open in 2012.

Rename to Caesars Entertainment Corp.

In November 2010 plans for an IPO were canceled, but a planned name change from Harrah's Entertainment Inc to Caesars Entertainment Corp did go forward as planned and was made official November 23, 2010. This change was intended to capitalize on the international name recognition enjoyed on the Caesars name brand. The Harrah's brand would remain one of the company's three primary casino brands.[68]

On February 8, 2012, an initial public offering took place, with the common stock trading on the NASDAQ under the symbol "CZR."[69]

Caesars Acquisition Company merger

On December 22, 2014, Caesars announced its intention to acquire Caesars Acquisition Company.[70] Under the terms of the transaction, shareholders of Caesars Acquisition Company will receive 0.664 share of Caesars Entertainment common stock for each share of Caesars Acquisition Company held.

Casino unit files for Chapter 11 bankruptcy

The casino operating unit of Caesars Entertainment filed for Chapter 11 bankruptcy on January 15, 2015.[71]

On November 2, 2015, the Rock Gaming announced it would begin assuming management of Horseshoe Casino Cleveland, Horseshoe Casino Cincinnati, and ThistleDown Racino from Caesars Entertainment, and complete the transition by June 2016.[72][73]

Playtika Company acquisition and sale

Caesars Entertainment Corporation (via its Harrah’s casino brand) acquired Playtika in May 2011 for an amount range evaluated between $80 and $90 million.[74] Playtika, a social game developer company, was founded in 2010 by Robert Antokol and Uri Shahak and produced a wide range of Facebook social gaming platforms (slotomania.com & caesarsgames.com).[citation needed] As of June 2016, a Chinese consortium (which includes Alibaba chief Jack Ma's Yunfeng Capital, agreed to purchase it in a buyout for $4.4 billion.[75]

Properties

Main article: List of Caesars Entertainment properties

See also

References

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  2. ^ Category 1 Licensee Ownership (PDF) (Report). Pennsylvania Gaming Control Board. June 30, 2015. p. 1. Retrieved 2015-12-05.
  3. ^ "Casino companies ranked worldwide by revenue". statista. 2013. Retrieved 2015-01-17.
  4. ^ "Caesars Entertainment's operating unit files for bankruptcy". Reuters. 2015-01-15. Retrieved 2015-01-15.
  5. ^ "Chapter 11 Petition" (PDF). PacerMonitor. Retrieved 22 October 2015.
  6. ^ "About Us". Retrieved 2008-01-29.
  7. ^ a b c d e "Company History". Retrieved 2008-01-29.
  8. ^ Seymour Korman (September 12, 1965). "Lake Tahoe: Rich in beauty and gambling". Chicago Tribune. Retrieved 2015-10-22.
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  15. ^ a b Janet Day (December 28, 1993). "2 casino operators in 2 towns merge". Denver Post – via NewsBank.
  16. ^ Marsha Shuler (April 19, 1994). "Shreveport gambling boat opens". The Advocate. Baton Rouge, LA – via NewsBank.
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  18. ^ Francie Noyes (December 29, 1994). "Harrah's glitzy Ak-Chin casino wakes sleepy town". Arizona Daily Star. Tucson, AZ – via NewsBank.
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  22. ^ "New Zealand has Harrah's casino". The Commercial Appeal. Memphis, TN. February 2, 1996 – via NewsBank.
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  24. ^ Bob Williams (November 14, 1997). "Cherokee casino opens". News & Observer. Raleigh, NC – via NewsBank.
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  29. ^ Joe Weinert (June 2, 1998). "Harrah's completes Showboat purchase". The Press of Atlantic City – via NewsBank.
  30. ^ David Flaum (January 5, 1999). "Harrah's closes books on Rio deal, gains Vegas resort". The Commercial Appeal. Memphis, TN – via NewsBank.
  31. ^ Joe Weinert (March 23, 2000). "Done deal: Harrah's gets Players". The Press of Atlantic City – via NewsBank.
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  36. ^ "Casino operator overhauls player club program". Las Vegas Sun. April 4, 2000. Retrieved 2015-11-27.
  37. ^ Gary Thompson (September 4, 1997). "Harrah's launches customer-loyalty program". Las Vegas Sun. Retrieved 2015-11-27.
  38. ^ Rick Alm (September 9, 1997). "Harrah's Total Gold card broadens players' options". Kansas City Star – via NewsBank.
  39. ^ a b David G. Schwartz (February 9, 2015). "The legacy of Gary Loveman and Caesars Entertainment". Vegas Seven. Retrieved 2015-11-27.
  40. ^ Laurel Campbell (March 5, 1998). "Harvard prof to mine Harrah's profit". The Commercial Appeal. Memphis, TN – via NewsBank.
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  42. ^ "Harrahs Entertainment Inc · 8-K · For 4/21/99 · EX-99.1". Retrieved 2007-08-13.
  43. ^ Suzette Parmley (June 14, 2005). "The gambling world gets a new top dog". Philadelphia Inquirer. Retrieved 2015-11-26.
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  51. ^ "Harrah's invests in Macau, of course". Las Vegas Review-Journal. September 13, 2007. Retrieved 2015-12-06.
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  53. ^ Ed Vogel (December 23, 2005). "Board approves Harrah's to run Imperial Palace". Las Vegas Review-Journal – via NewsBank.
  54. ^ Ed Vogel (February 8, 2007). "Regulators recommend land swap". Las Vegas Review-Journal – via NewsBank.
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  58. ^ "Landowners stand in way of 'the gorilla'". Las Vegas Sun. December 17, 2006. Retrieved 2015-11-27.
  59. ^ a b c William D. Cohan (June 5, 2015). "A private equity gamble in Vegas gone wrong". Fortune. Retrieved 2015-12-06.
  60. ^ Oliver Staley; Brett Cole (December 19, 2006). "Harrah's agrees to Apollo, Texas Pacific buyout offer". Bloomberg. Retrieved 2015-12-06.
  61. ^ Arnold M. Knightly (January 29, 2008). "Deal closes: Harrah's now private". Las Vegas Review-Journal. Retrieved 2015-12-06.
  62. ^ "Harrah's plans new 'street' of bars, eateries near Strip".
  63. ^ ESPN - Vegas, baby? Arena envisioned to draw pro team to city - ESPN
  64. ^ Benston, Liz (September 27, 2008). "Harrah's still wants arena, but how much will it pay?". Las Vegas Sun. Retrieved 2010-09-05.
  65. ^ "Insiders Tight Lipped on Las Vegas Arena". KLAS-TV. January 20, 2009. Retrieved April 7, 2015.
  66. ^ Las Vegas foundation drops arena effort
  67. ^ "MGM & AEG Building a 20,000-Seat Arena on the Las Vegas Strip". Billboard. Associated Press. June 19, 2013. Retrieved April 7, 2015.
  68. ^ Stutz, Howard (2008-04-10). "Harrah's opts to hail name of Caesars". Las Vegas Review-Journal. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  69. ^ "Annual Report for the Fiscal Year Ended December 31, 2013". SEC Filings. SEC. Retrieved 17 July 2015.
  70. ^ http://investor.caesars.com/releasedetail.cfm?ReleaseID=888634
  71. ^ Reuters. "Caesars casinos files for bankruptcy". Fortune. Retrieved 2015-01-15. {{cite web}}: |author= has generic name (help)
  72. ^ Farkas, Karen (November 2, 2015). "Rock Gaming takes over management of Horseshoe Cleveland Casino from Caesar's Entertainment". cleveland.com. Retrieved February 26, 2016.
  73. ^ "Rock Gaming Raises Its Stakes in Ohio and Begins Transition of Operational Responsibilities of Gaming Properties" (PDF) (Press release). Rock Gaming, LLC. November 2, 2015. Retrieved February 25, 2016.
  74. ^ "Playtika Acquired by Caesars Entertainment Casino Group for $80M to $90M". Adweek. 2011-05-19.
  75. ^ Culpan, Tim (1 August 2016). "Alibaba's Play Is No Gamble". Bloomberg Gadfly. Retrieved 3 August 2016.

Further reading

  • Shook, Robert L. (2003). Jackpot. Hoboken, N.J.: John Wiley & Sons. ISBN 0-471-26323-0.
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