Executives unsure about Aliante's performance

LAS VEGAS, Nevada -- Station Casino executives told state gaming regulators Thursday they don't know how well the $662 million Aliante Station will perform when it opens next month given current economic conditions.

"There's not a lot of visibility in our business today," said Thomas Friel, Station Casinos' chief accounting officer. "It's a bit of a crap shoot to figure out where things might be."

The Nevada Gaming Commission unanimously approved licensing of the North Las Vegas property, which is scheduled to open Nov. 11, but asked the gaming company's executives questions about how the company plans to operate the property in the current market.

Gaming revenue in North Las Vegas declined 17.81 percent in August to $18.1 million, and is down 6.3 percent to $284.7 million for the last 12 months ending Aug. 31.

Commission Chairman Peter Bernhard asked Friel if "anything in the last six weeks or so" has caused the company to adjust its projections or raised concerns about meeting debt covenants for the property.

"In terms of the covenants, we really just don't know," Friel said. "We're just going to have to wait and see how the property opens."

Aliante Station is the fifth 50-50 joint venture between Station Casinos and the Greenspun Corp.

The financing and management structure is similar to that of Green Valley Ranch Resort with Station Casinos collecting a management fee of 2 percent of the property's revenues and 5 percent of the cash flow.

However, the nearly $400 million in debt that Aliante Station will open with will be leveraged against the property and not added to Station Casinos' current $5.3 billion debt load.

If the property's cash flow is unable to meet banking covenants, the partnership could contribute cash to cover any shortfall, Friel said.

Station Casinos owns two other properties in North Las Vegas, Texas Station and Fiesta Rancho, as well as Santa Fe Station just outside the city's boundaries.

Company officials said the new property is expected to draw customers from its existing properties for the first few months.

Aliante general manager Joe Hasson told regulators the population around the new property will be similar in number to the area around Green Valley Ranch Resort in late 2001 when 100,000 people were living within a three-mile radius and 250,000 within a five-mile radius.

However, the area suffers from high foreclosures, with 10 houses in the hotel-casino's 89084 ZIP code foreclosed between Oct. 3 and Oct. 8, according to Blockshopper.com, a Chicago-based real estate data service.

The similarities between the two properties at opening don't stop there. Green Valley Ranch Resort opened with 201 hotel rooms, 2,212 slots and 49 table games. Aliante is opening with 202 hotel rooms, 2,554 slots and 40 table games.

Station Casinos declined to disclose projections for revenue and cash flow for the new property.

Nor would the company say if it expects to reap anything close to the $4.6 million in management fees it realized its first year of operating the Henderson property.

"I guess that's why they call the business gambling," Bernhard said.