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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Hockey and Hooters can mix in Vegas

20 September 2010

LAS VEGAS, Nevada -- It might be a shock to the New York media, but owning both a Las Vegas casino and a National Hockey League team isn't a novel concept.

Real estate developer Ed Roski Jr. has owned the Silverton since 1997. He is also co-owner of the Los Angeles Kings.

But a New York Post writer last week seemed to believe hedge fund operator Phil Falcone, who owns a 40 percent stake in the Minnesota Wild, might have some issues with the league.

Falcone's $8 billion New York-based Harbinger Capital Management controls the $130 million debt covering the troubled Hooters Hotel.

The difference is Roski owns the Silverton and has a say in the casino's operations. Falcone's hedge fund is just an investor and can't influence Hooters' executives.

That may change, however, and Falcone may have an increased role.

Hooters' ownership, 155 East Tropicana, said in March that the company was struggling to service its debt and might be forced into filing a Chapter 11 bankruptcy restructuring plan.

The move could leave Falcone's hedge fund in control of the off-Strip property with 696 hotel rooms and a 29,000-square-foot casino that is separate from the Hooters restaurant chain.

Harbinger spokesman Eliot Hoff said he couldn't comment on the Hooters investment. The hedge fund tends to favor investing in distressed industries.

"Gaming is an industry with undervalued assets," Hoff said.

Whether that means taking a larger role in Hooters remains to be seen. In May it was reported that Hooters had not made interest payments on its debt in more than a year and that the hotel-casino had a net loss of almost $4 million in the first quarter.

Analysts classified the casino a going concern and bankruptcy is an option.

Hooters President Michael Hessling said the company is paying its bills, except the mortgage. Constant talks are taking place with note holders.

Even if Falcone's hedge fund takes an ownership presence in Hooters, it shouldn't affect his stake in the Wild.

Leroy's Race and Sports Books Chief Executive Officer Vic Salerno said the NHL seems to have the least concern of any of the major sports leagues about casinos being controlled by its team owners.

Hooters' sports book isn't an issue because Leroy's operates the facility.

The company runs books in 60 casinos in Nevada, including the Silverton, where it doesn't accept wagers on the Kings at Roski's request.

Salerno said bets on the Wild could be taken off the Hooters board if Falcone's hedge fund takes over.