SEARCH NEWS:

 

Low Debt, High Times for Icahn Properties

LAS VEGAS -- In 3 1/2 years, Icahn Gaming Chief Executive Officer Rich Brown has seen a handful of smaller casinos more than quadruple their cash flow.

The operator of the Stratosphere, two Arizona Charlie's and the Sands in Atlantic City, Icahn Gaming bought all of its holdings out of bankruptcy sales or foreclosure auctions.

Brown, the company's top gaming executive, credits the company's owner, Carl Icahn, and an operating strategy that's allowed Icahn Gaming to dramatically improve cash flow.

"Three-and-a-half years ago there were no economies of scale, no corporate culture, and little communication among managers," said Brown, a former Harrah's Entertainment executive. "Then, the three Las Vegas casinos produced $11.5 million in combined (cash flow). This year, we'll do $47 million."

Brown said Icahn's strategy of keeping debt low, operating efficiently and making strategic investments that promise strong returns has proven itself.

The most recent example of Icahn Gaming investments is the "seven-figure" X Scream ride, slated to open to the public at 10 a.m. Friday, joining two other top-of-the-tower rides, the Big Shot and the High Roller roller coaster, in Brown's arsenal of attractions.

X Scream, perched on the edge of the Stratosphere's outdoor observation deck, sends riders in an eight-passenger car over the edge of the deck, approximately 900 feet above the Strip, at speeds reaching 30 miles per hour.

The extreme thrill ride's teeter-totter-like track extends more than 30 feet past the deck's edge.

"This is the next piece for us," said Brown, who promises additional, unspecified, future attractions. "X Scream is a little edgier. This ride will absolutely re-energize the tower. This is a city of excitement. In this town you've got 45 properties on the Strip, you've got to provide something new, you've got to innovate. X Scream raises the bar for the tower."

Icahn can rest easy about his investment, as Brown said projections call for the ride's ticket sales to pay for its cost in 15 months.

And that return doesn't include the extra business the Stratosphere's other revenue generators will garner as a result of X Scream business, or the significant publicity the extreme thrill ride's recent airborne installation generated.

"Attractions are the highest margin part of the business," Brown explained.

The new ride and extensive tower refurbishment come on top of other improvements the property's made in recent years, including a $70 million, 1,000-room hotel tower and a new pool, buffet and cafe.

An indoor grand prix racetrack concept is now being studied as a new tower attraction, and a new nightclub is expected to take the now underused spot where Stratosphere's closed poker room used to be.

Brown's management team last year lost a Las Vegas City Council battle to build a thrill ride that would have dropped riders at high speeds from the tower's top to a base across Las Vegas Boulevard.

The ride, which would have cost about 10 times the price of X Scream, execs said, was opposed by some nearby residents who worried about noise and the effect on their neighborhood.

Since the political defeat, Stratosphere bosses have found new ways to attract people to a property that Brown says symbolizes fun.

"Of all the properties in Las Vegas, the Stratosphere is physically positioned to create excitement, and X Scream will add to its excitement," he said.

Stratosphere executives talked to neighborhood residents to ease potential concerns about the new ride and positioned X Scream away from the nearby residential neighborhood.

Brown said other recent Icahn Gaming investments in its two Arizona Charlie's properties have started paying dividends as well.

New ticket-in, ticket-out slots and a new buffet at its Arizona Charlie's Decatur as well as a $5 million bingo parlor and race and sports book addition at its Arizona Charlie's East property on the Boulder Strip have been big positives, Brown said.

The company is more likely to be a buyer than a seller of casinos, he added.

"Our game has sort of been distressed properties, and we're very pro-growth," Brown said. "I probably look at a deal a week and we have (expert analysis available at Icahn's New York offices). I'd hope to think 2004 will be a good year for us for growth."

Copyright GamingWire. All rights reserved.

< Gaming News