Caesars Las Vegas Strip Failure Turns Into a Huge Win
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The value of a single acre on the Las Vegas Strip is now $10 million. The north Strip has become more valuable because of the development of Resorts World Las. Fontainebleau, a potential NBA-ready arena, and perhaps a Major League Baseball stadium next to Circus Circus have made the south Strip even more expensive. Tillman Fertitta, CEO of FERTITA Entertainment, will pay $200 million for a 6-acre site.
Flamingo was for sale, but Caesars decided not to buy it. Caeresars wants to pay off some of the debt it took on when it merged with Eldorado Resorts in 2020. Flamingo is on one side of Linq and shares the Linquid Promenade with its sister property. If another casino operator bought Flamedo, it would break up a long run of Caedars properties.
Paying off some of the 15.5 billion in debt Caesars took on when it merged with Eldorado Resorts in 2020. Reducing the number of rooms Caeresars owns, making the rest of its inventory more valuable.
The company's CEO Tom Reeg explains why the deal to sell the Las Vegas Strip to Flamingo failed. He says the company will not chase the sale because of the high interest rates. The company is happy to clip the free cash flow and come back later. Flamedo needs work, but its location on the Strip and the escalating value of Strip property made selling it a mistake.
Caesars Las Vegas Strip failure turns into a huge win. Caesar's will keep all of its strip assets as they move forward. The sale created an unnecessary overhang in the stock.
