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El Dorado CEO looking to make $500 Million in cost cuts if they buy CET

Discussion in 'Casino Industry & Development' started by sinnerman, May 15, 2019.

  1. sinnerman

    sinnerman Low-Roller

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    El Dorado's Chief Executive Tom Reeg has a target of $500 million in cost cuts in mind if El Dorado were to buy or merge with CET. Carl Icahn has been talking about significant cost cuts as well.

    https://nypost.com/2019/05/14/caesars-entertainment-bidder-could-be-looking-to-clean-house/

    Unfortunately, this is probably not good news for the employees or customers of CET.

    Currently, it looks like Tillman Fertilla doesn't have the financing to move ahead, although that could change.
     
    Last edited: May 15, 2019
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  2. nostresshere

    nostresshere Mr. Anti Debit Card

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    The could surely save some money in their marketing department that comes up so many lame promotions to get points worth nothing - LOL!

    Seriously though, how can someone that is not intimate with the books of CET make a statement on how much they can trim?
     
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  3. VegasBJ

    VegasBJ VIP Whale

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    lot of dupilicty in several departments would be where the cuts come from. El Dorado would bring in their own upper management team, thereby releasing all of the current CZR Exec's who have similar posts.
     
  4. sinnerman

    sinnerman Low-Roller

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    So he is actually now familiar with CET's books. Eldorado and Fertilla were invited to audit CET's books and they have till the end of this month to make an offer.

    Bu yeah, CET's marketing promotions have been super lame. They really need to focus on encouraging gamblers to gamble some more

    Yeah, definitely can do some trimming but I doubt it will be anywhere close to $500M. They would need massive cost cuts across the board to hit that.
     
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  5. nostresshere

    nostresshere Mr. Anti Debit Card

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    Thanks for adding they have are already getting close to how CET runs... wonder just how far under the sheets they let competitors look? Eldorado is far bigger than I thought. They have 26 casinos - though many of them are very small. Been to a few over the years but did not know who owned them. Sure would be a major change in operations, some how.

    Corporate Page
     
  6. sinnerman

    sinnerman Low-Roller

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    In a standard invitation for such a scenario, usually, companies give the competitors a lot of access to the financial numbers, even at a casino by casino level. However, their access to marketing and operations costs is much more limited. Obviously things like strategy and customer targeting documents will be off limits.
     
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  7. Tonyfromjersey

    Tonyfromjersey High-Roller

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    No matter what happens it really won’t effect me too much. I’m a low level player and to compound matters I don’t always use my player cards ( sometimes not at all ). Not a fan of CET to begin with. The mega casino corporations have Really changed how Vegas operates. For the worst.
     
  8. azlefty

    azlefty High-Roller

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    They are in a due diligence period. They review financial documents and analyze how to improve the return on their investment. CZR is already loaded with debt, so they have to figure out how to manage the financing. Similar to when you offer to buy a house, you get access for a number of days to get inspections, and meanwhile secure financing, etc.
     
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  9. sinnerman

    sinnerman Low-Roller

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    CET is my home casino so I am pretty nervous about this merger. Lets hope it works out for total rewards players
     
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  10. oghuman

    oghuman VIP Whale

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  11. JeJas

    JeJas VIP Whale

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    There is no f**king way they can save $500M a year by cutting costs.
    Well, they could turn off all electricity and water, A/C in all casinos and hotel rooms
    to save some money.
     
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  12. spdandpwr

    spdandpwr VIP Whale

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    I don't know how much it would save them, but they would save/make a lot by:
    - Removing TC promotions and restructuring entire loyalty program for faster RC earning rate (this would be a nice compromise for players and the casino, since using RCs actually makes people spend more)
    - Removing aspiration tiers
    - Consolidating back-end systems / infrastructure and IT support
    - Consolidating hosts and re-structuring host privileges (i.e. making the bar a little higher)...as it stands, the system is perfectly self-service for lower-level players anyway. So now hosts won't spin their wheels chasing / coding players
    - Raising the threshold for room comps and lowering the rack rate (I don't think they're at the pricing equilibrium here)
    - Sell the RIO
    - Transfer WSOP to Bally's -- Bally's could use a headline (if they can make it fit)
    - Consolidating executive positions
    - Renegotiating / structuring existing debt financing
    - Re-negotiating union contracts while they have leverage and benefit of time

    And this is without looking at the books and seeing where the fat can be trimmed. The more I think about it, though, the more I realize that people are so quick to be like: they make so much money how can they be bankrupt. The problem is, there's a law of diminishing returns on scale and these companies get so leveraged up, that they end up getting themselves in a hole. Running a public company is rough, especially when you're valued at 20x forward earnings and you need to increase share-holder value year after year. Investments take a long time to recoup their costs...Wynn right now is looking to sell their Boston Harbor project...
     
  13. tatterdema

    tatterdema VIP Whale

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    I find it really funny and ironic that CET started out as a small bingo parlor in Reno, and now it is possibly being purchased by Eldorado, who started out with a small casino in Reno.
     
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  14. 3544quebec

    3544quebec Low-Roller

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    Look, I'll cut back on beer - that should get them halfway there
     
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  15. dmr

    dmr Registered Abuser

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    Yeah, but it sounds good to some when they say it!
     
  16. nostresshere

    nostresshere Mr. Anti Debit Card

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    And do not forget they were owned by Holiday Inn at one time, with part of the corporate team based in Memphis.