Caesars Weighs Closing Atlantic City CasinosChristopher Palmeri
Caesars Entertainment Corp., the largest operator of casinos in Atlantic City, New Jersey, is looking for ways to reduce capacity in the struggling market, including closing properties.
“We are looking at all of our options to reduce the cost of doing business here,” Chief Executive Officer Gary Loveman said yesterday on a conference call after reporting a wider first-quarter loss. “All the businesses in A.C. are under tremendous pressure.”
Caesars has been struggling to remain solvent amid a glut of casinos and weak consumer spending, following a 2008 leveraged buyout that left the company with about $23 billion in debt. The company said in March it would close a property in Tunica, Mississippi. That move may set a precedent for other markets like Atlantic City, Loveman said.
“These markets can reach points when no new supply is indeed the right answer,” Loveman said. “In some cases reducing supply is the right answer.”
The company owns four casinos in Atlantic City -- Caesars, Bally’s, Harrah’s and Showboat. Loveman didn’t say specifically that a casino would close. The company has already taken steps to cut costs, such as reducing restaurant hours, according to a spokesman.
Las Vegas-based Caesars, the largest owner of casinos in the U.S., reported yesterday that its loss first-quarter widened to $386.4 million from $217.6 million in the same period last year. Sales fell 1.9 percent to $2.1 billion due to continued weakness in the U.S. midwest and Atlantic coast.
On May 6 the company announced a debt refinancing and sale of a 5 percent interest in Caesars Entertainment Operating Co., its largest unit. Caesars removed guarantees by the parent company on a large portion of its borrowings, a move that sets the stage for broader negotiations with creditors.
The shares rose 14 percent to $21.18 at the close in New York yesterday, the biggest gain since April 2013. They are down 1.7 percent this year.
The closely held Atlantic Club, formerly the Atlantic City Hilton, closed in January, a trend Loveman expects to continue.
“That’s the normal, self-correcting healing that you’d like to see in a market like this,” he said.