Boyd Gaming to evaluate alternatives for halted Echelon - Breaking News

PRINT THIS Popular

Oct. 28, 2008
Copyright © Las Vegas Review-Journal

Boyd Gaming to evaluate alternatives for halted Echelon

By HOWARD STUTZ
REVIEW-JOURNAL

Boyd Gaming Corp. will take most of 2009 to evaluate alternatives for the now halted $4.8 billion Echelon, although the company’s CEO Tuesday ruled out selling the project.

Chief Executive Officer Keith Smith said the company’s options range from reducing the scope of the Strip development to bringing in new joint venture partners. However, he said a sale of the 87-acre site was not in the plans.

Most Popular Stories

Three suspects arrested in shooting death of police officer

Station Casinos posts $455 million third-quarter loss

Two of three suspects in slaying of officer could face death penalty

Man sentenced to 15 years for federal tax crimes

Las Vegas police shoot at man fleeing after traffic stop

Escalator accident at Caesars Palace still under investigation

Las Vegas man denied pardon in killing of abusive father

Man pleads guilty in death of girlfriend's child

Visitors authority urges officials to call off mock nuclear blast

Palms agrees to pay $100,000 to settle complaint

“It’s not a blank sheet of paper anymore, but we need to look at alternatives,” Smith said.

During Las Vegas based-Boyd Gaming’s third-quarter earnings conference call with analysts, Smith said construction of Echelon, a 5,000-room, multiple hotel development, would not resume in 2009. The company stopped the project Aug. 1, saying it hoped to resume construction in nine to 12 months.

“Our long-term strategic direction for the company is to have a significant presence on the Strip,” Smith said in an interview following the conference call. “That is still our current view.”

One joint venture partner, Morgans Hotel Group Co., is all but out of the Echelon, even though its agreement was amended. The agreement with another partner, mall developer General Growth Properties Inc., was dissolved earlier this month. General Growth is in serious financial trouble and put several of its Las Vegas retail sites up for sale on Monday.

Smith believes the company made the correct decision to stop Echelon, which now has three steel-framed hotel towers sitting at nine stories each. The project was not so far along that the company couldn’t reconfigure the site. He said Boyd will spend about $150 million over the next few quarters to finish some of the site’s steel fabrication.

Results for the third quarter ended Sept. 30 were hit by souring economic conditions nationally and in Las Vegas, increased competition for its Indiana casino and hurricane-related closures in the Gulf Coast.

Boyd Gaming (BYD) said its net income in the quarter was $8.7 million, or 10 cents a share, down from $31.9 million, or 36 cents a share, a year earlier.

Analysts polled by Thomson Reuters had expected Boyd Gaming to earn 19 cents a share.

Company revenues fell 13 percent to $426.5 million from $490.1 million. Reduced customer spending in Las Vegas and at Boyd Gaming’s riverboat casinos hurt results in most of the company’s operating regions. In the Gulf Coast, the Treasure Chest casino in New Orleans and the Delta Downs racetrack in western Louisiana were each shut for nearly two weeks because of hurricanes.

“People are still visiting our casinos, although they are more cautious with their discretionary spending,” Smith said. “These are tough economic times, but our balance sheet remains strong, and we continue to produce significant cash flow. We are well-positioned to weather the current economic environment.”

In Las Vegas, Boyd Gaming is adding third-party restaurant options at its Coast Casinos that will reduce expenses and offer customers an alternative dining option that might bring them into the casinos.

The company opened T.G.I. Friday’s this month at the Gold Coast and Sam’s Town, replacing the company’s owned and operated coffee shops. A T.G.I. Friday’s is also being added to the Suncoast. At The Orleans, the company is adding quick dining options, such as Fuddruckers.

“It’s an economic model in our favor,” Boyd Gaming Chief Operating Officer Paul Chakmak said. “They are profit centers for us in a material way.”

Deutsche Bank gaming analyst Andrew Zarnett said the company needed to do something to boost its Las Vegas locals business following a 25.5 percent decline in adjusted cash flows during the quarter.

“This is quite illustrative of the erosion taking place amongst local Las Vegas operations,” Zarnett said in a note to investors. “We expect this data point to continue to grind down as we go deeper into this recession.

The current slump in the locals market is likely to persist through 2009 as unemployment, job layoffs, stoppage in construction projects, decline in discretionary consumer spending and more home foreclosures continue to add pressure on the locals economy.”

Shares of Boyd Gaming, which have fallen more than 90 percent from a 52-week high of $42.85 on Nov. 5, closed at $4.38 on the New York Stock Exchange Tuesday, up 55 cents or 14.36 percent.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

Share & Save

Leave Your Comment	11 Reader Comments
Terms & Conditions The following comments are provided by readers and are the sole responsiblity of the authors. The reviewjournal.com does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please notify the web editor. Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 48 hours. Please do not submit a comment more than once.
Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. J Dubs wrote on October 31, 2008 04:17 PM: That inactve construction site ON THE STRIP is a freaking eyesore now, they may as well tear that down if they still have the money to do so. Then the Boyd executives should expose the fact that they are idiots for tearing down the Stardust in the name of speculation. They made their bed, now they shall sleep in it. CHRIS wrote on October 31, 2008 12:59 PM: The Stardust was a Vegas legend which could still be turning a decent profit among all of the "Mega Resorts" which are losing their profit margins. The Stardust held its own. The main tower wasnt even old- opened in 1991 I beleive. I will bet Bill Boyd is kicking himself about now. LVCasinoInfo.com wrote on October 29, 2008 09:29 AM: Becky, Im with you... I loved the 'dust for years as they made even this mid-roller feel like a big wig. There was always a free room and a nice cash bonus waiting for you and I never paid a dime for food. Once it closed, my days of gambling on the strip ended. I am now a huge South Point fan as Michael Gaughan gets it. He knows that a good deal is what Vegas USED to be about and he is trying to bring that back. We need more guys like him to be running casinos. Becky wrote on October 29, 2008 08:12 AM: The Stardust was my home casino for so long. I was saddened when they tore it down and now to have the construction halted is just a slap in the face. John T wrote on October 29, 2008 02:16 AM: This "so-called" echelon, will NEVER come to fruition, period. I agree, what a shame they tore down the glamorous, colorful historied Stardust! I also feel it was a nice place, this Plaza remake isnt going to bear fruit either folks. the money just isnt there, EOS! T. Ryan wrote on October 28, 2008 10:06 PM: The Stardust was OUTSTANDING!!! Nothing like it in Vegas. There were so many great little places to hang out in there. It's really too bad it was taken down for this nightmare. Boyd sucks! All their properties are going downhill. mike s. wrote on October 28, 2008 08:40 PM: The stardust was a dump! You can't stop progress-If Las Vegas listened to "locals" we would still have Ralph Lamb running around, and people would still be waiting for the sunrise mountain area to be "THE" part of town. Thank god neither happened. Face it people-Las Vegas finally became a real city. If you don't it like-move to Pahrump and live yesteryear again!(and yes-I'm a long time resident-that never wants vegas to be what it was) NativeNevadian wrote on October 28, 2008 07:38 PM: Way to go morons.......... for tearing down the Stardust... we need HISTORICAL LANDMARKS in Vegas....... tw wrote on October 28, 2008 04:32 PM: Keith Smith will be parking cars at another casino soon Where's the Stardust? wrote on October 28, 2008 04:32 PM: What a shame they tore down the Stardust. It was the perfect place for this kind of economy. And, it was a nice place to boot! If they had kept it, they'd be the only company making money by the bucket loads. Read All Comments