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The news came through the grapevine late last night, but its official now: Caesars Entertainment has sold the Rio All-Suite Hotel & Casino to the New York-based real estate company Imperial Companies for $516.3 Million.
According to the terms of the deal, “Caesars will continue operating the property for two years and pay annualized rent of $45 million. The buyer has an option to pay Caesars $7 million to extend that lease a third year under similar terms. Once the lease terms ends, Caesars can keep managing it or provide transition services to Imperial. Shares of Caesars were unchanged in premarket trading.”
Despite selling off one of its prime properties, Caesars will be retaining ownership of the world’s biggest poker festival – World Series of Poker (WSOP).
WSOP Vice President of Corporate Communications Seth Palansky had tweeted on September 14 that the WSOP will be staying at the Rio at least till 2020.
Can 100% confirm @WSOP will take place at the Rio in Las Vegas in 2020
— Seth Palansky (@SethPalansky) September 14, 2019
In June, earlier this year, Caesars Entertainment was bought by another casino giant Eldorado Resorts. Caesars had been plagued with long-standing debt troubles, and the sale to Eldorado for $8.58 Billion in cash and stock was made to clear a sizeable portion of the company’s debts. Including the debt, the deal was worth roughly $17.3 Billion.
Even before to the sale of Caesars, rumors and speculations were afoot regarding the merger with billionaire investor Carl Icahn backing the deal. Icahn controls a 14.75% stake in Caesars and is the company’s largest shareholder. He joined the Caesars Board of Directors in February.
Since joining the board, Icahn had vehemently pushed for the sale of the company. He even brought in three of his representatives on-board Caesars and endorsed the appointment of Anthony Rodio as Caesars’ new CEO.
Following the sale of Caesars to Eldorado, the merger of the two companies was expected to bring in benefits of $500 Million. The sale of the Brazil-themed hotel-casino was foreshadowed in June by Eldorado CEO Thomas Reeg when he told investors that he expected one or two of Caesars’ nine Las Vegas properties to be sold as part of their deal.
Through a Securities and Exchange Commission filing made on Monday, the official sale of the Rio was announced to the public.
CEO of Caesars Entertainment Anthony Rodio said in a statement announcing the deal, “This deal allows Caesars Entertainment to focus our resources on strengthening our attractive portfolio of recently renovated Strip properties and is expected to result in incremental (cash flow) at those properties.”
The Rio has reportedly been on the selling block for several years now, both before and after Caesars’ 30-month bankruptcy reorganization was completed in October 2017.
“This deal allows Caesars Entertainment to focus our resources on strengthening our attractive portfolio of recently renovated Strip properties and is expected to results in incremental EBITDA at those properties,” Rodio further added.
However, the WSOP which is owned by Caesars will continue to be conducted at the Rio Convention Center for at least the next two years. Rio will also remain part of the Caesars Rewards customer loyalty program.
“The retention of the World Series of Poker and retention of Caesars Rewards customers are all factors that make this a valuable transaction for Caesars,” Rodio said in his statement.
Before the sale of the property, in an interview with CardPlayer, Seth Palansky had stated, “I mean, even if the property were to change hands, you think a new owner wouldn’t want to have the WSOP there, based on what it’s brought into the property for all these years? It’s a known quantity in a slow time period for convention business and the city in general.”
Further clarifying the intricacies of hosting a poker festival as massive as the WSOP, Palansky explained, “People have to understand in the convention business, you have to block out. We need 62 days blocked out to be able to hold the event. It’s not easy to get 200,000 square feet of convention space. You need years in advance to do that. If you were to recall the early days at the Rio when we started there, we were working around other conventions going on at the same time. The World Series of Poker footprint was much smaller.”
When asked if there was a contract in place, Palansky had confirmed, “Oh yeah. The convention space is booked years out. In fact, people should feel confident that the 2021 WSOP will be at the Rio as well. These things are booked and resolved years in advance.”
So, for poker players, fans and enthusiasts who have yet to see the Rio in all its glory hosting the ‘World’s Biggest Poker Festival’ will still be able to do so, at least for the next two years.