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Castaways Plagued by Problems

LAS VEGAS -- Ask most longtime Las Vegans about the recent bankruptcy filing by the Castaways, and they ask if you're talking about the Showboat.

Even some Castaways customers still call the Fremont Street property by its former name, the property's owners said.

But prior owner Harrah's Entertainment refused to sell the Showboat name, wanting to ensure its Atlantic City Showboat property's brand wouldn't be confused with the Las Vegas locals property, Castaways minority owner and President Michael Villamor said Wednesday.

"It still is a big obstacle for us," Villamor said. "Many of our customers still call it the Showboat, and some mention the old (TV commercials) for 'Boxing at the Boat.' "

Villamor declined to discuss other reasons the Castaways has failed to thrive since he and partners Dan Shaw and Gregg Schatzman bought the former Showboat Hotel, Casino and Bowling Center in March 2000 for $23.5 million.

VSS Enterprises renamed the property and introduced its Spanish ocean theme, and Shaw and Villamor recently bought out Schatzman's 15 percent stake in the company.

Casino industry executives and insiders with knowledge of the Castaways said the property's problems are serious.

"The neighborhood isn't very good, and it's challenged by newer locals joints on Boulder Highway," said one casino executive, referring to local dynamos Sam's Town and Boulder Station.

Since VSS bought the Castaways, about a dozen locals casinos have opened or been remodeled, another boss said. Despite Castaways renovations, business tends to go to the newer properties, he added.

One insider noted that the Castaways is the only locals competitor on the Boulder Strip corridor that has a Culinary Union contract for its maids and food-service workers.

Paying union-scale wages is a big disadvantage, the source said.

Castaways lawyer Gerald Gordon said recently that federal law prevents the property from using the bankruptcy code to unilaterally pull out from a union contract.

The Castaways would have to notify the court and then negotiate in good faith with the union for concessions before asking the court to impose them, Gordon said.

Villamor said property employees have been upbeat since the company filed for bankruptcy protection on June 26, citing debt of more than $50 million.

"Everything's going fine," Villamor said. "The (835) employees have been very supportive." VSS Enterprises secured an emergency $1 million loan from USA Capital in a deal approved two weeks ago by U.S. Bankruptcy Judge Linda Riegle.

That loan will keep Castaways workers paid, property lawyers said in court. The company's $760,000 payroll will be paid, although Riegle cut Shaw's allowed paychecks by 50 percent, a $20,833 monthly cut.

Villamor's $370,000 salary remained intact.

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