Then along came an offer.

The Offer and The “Offerers”
$81 a share. That’s what Apollo Management and the Texas Pacific Group have offered for Harrah’s Entertainment. That’s a 20% premium on the cost of the stock at the time of the offer (although it has gone up since then to no one’s big surprise). That’s more than $15 billion and if you throw in the $10 billion in debt the groups will assume, the numbers are staggering. And some say the offer could go even higher.

If it happens, it will be the fifth largest leveraged buyout in history.

The two groups making the offer are what are called private equity firms. For folks like me who don’t even have a savings account, perhaps a little explanation is in order here.

If you have boatloads of money, you have several options for investments. You can dump it into the stock market; you can buy companies, real estate, and the like; or, you can pool a chunk of your money with other folks with boatloads of money into a group that can then use that to go after bigger fish than you could afford on your own. That’s a private equity firm.

There’s not a lot of information on who, exactly, is behind the firms bidding for Harrah’s, or any other firm of its ilk. Hence the whole “private” thing. All that is really public is what they own and have owned in the past. In the case of Apollo and Texas Pacific, it reads like a diversity investment playbook: Burger King, Continental Airlines, MGM, the AMC movie theater chain, and a long, long list of chemical, technology, and manufacturing companies that you’ve most likely never heard of unless you work for one of them.

The one thing they have never done is gaming. There are other private equity firms involved in the industry – Colony Capital, owners of the Las Vegas Hilton among other properties is probably the most well known – but this would be the largest gambling play by a wide margin.

It’s All About Timing
Some say it’s probably the last thing Harrah’s execs wanted right now was an unsolicited offer to buy the company. With all of the big projects in the pipeline, a buyout bid throws a serious monkey wrench into the works.

The fallout has already become evident. Late last week, Harrah’s announced that they were pulling out of the bidding for the Singapore gaming license. Executives with the company didn’t say it was because of the buyout offer but keep in mind this is something the folks at Harrah’s wanted very, very badly – so badly in fact that their original proposal was a multi-billion casino cum theme park with an entertainment component to be designed by “Titanic” director James Cameron.

And the announcement on the big Strip development, which was supposed to come in December, could be in jeopardy as well. It’s not known, exactly, what they were planning to do but it was going to be big and most likely would’ve included tearing down the Imperial Palace, Barbary Coast, and Bally’s; expanding and dramatically revamping Harrah’s, The Flamingo, and possibly Paris and Caesars Palace; linking all of them together in some sort of coherent fashion; and building new hotels and/or condominiums on the land behind all of those properties.

Moving forward on such a big development could put them in hot water as they go through the process of trying to decide whether to accept or decline the $15 billion bid. Apollo and Texas Pacific could say that they were trying to do something to inflate the value of the company, a no-no when it comes to those pesky corporate laws.

On the other hand, Harrah’s was just getting ready to spend virtual barges full of cash on that major Strip development (whatever it winds up being), while actually decreasing cash inflow due to the fact that the development probably means tearing down at least one hotel if not two or three. It’s possible that a private equity firm would be a little more willing to go along with that kind of risk than shareholders.

In other words, things might get delayed but in the long run it could be good for the company’s future but that all depends on what Apollo and Texas Pacific plan to do with it once they buy it.

The Future of Harrah’s
There are a variety of scenarios being floated about what Apollo and Texas Pacific might ultimately do with Harrah’s if the deal goes through. Before I spell these out, I want to stress that I have no inside knowledge and these are just possibilities that have either been published in other outlets or discussed by industry wags. The real outcome could be any or none of these.

Scenario A is basically the status quo. Apollo and Texas Pacific would have to be licensed in all of the states that have casinos but since they have no experience in the gaming industry they might just let the brains at Harrah’s keep doing what they have been so successfully doing. The company is making money and ultimately that’s what the private investors want, so while some of the grand plans might get delayed (or dropped in the case of the Singapore deal) until all of this sorts itself out, the future would look much like it would right now.

Scenario B is the complete opposite and involves that old concept of the parts being worth more than the whole. Let’s look at Caesars Palace as an example.

Caesars sits on about 80 acres of some of the most valuable real estate in the known universe. Estimates vary depending on who you’re talking to, but some have said that land along The Strip is currently worth as much as $30 million an acre. That’s $2.4 billion just for the dirt that Caesars sits on. Now throw in the couple billion dollars worth of buildings on top of it, then look at the similar valuations of Harrah’s, Flamingo, Bally’s, and Paris, and then add in the dozens of additional casinos they have around the country and you start to see how $15 billion seems like a comparative bargain.

So this scenario basically involves Apollo and Texas Pacific stripping the company and selling it for parts.

Scenario C is somewhere in between and is the most likely in my opinion. These investors are in it for the money but investments often mean long term solutions instead of short term gain. The Vegas plans make sense in the long run and several other big opportunities exist around the globe (like China and perhaps Japan) so these are the kinds of high return risks the Apollo and Texas Pacific folks are probably interested in. However, they will probably not go through the hassle of getting approved for gaming licenses in every single market in which Harrah’s currently plays and may just sell off some of those properties to raise capital for the big play in Vegas and other more lucrative markets.

Now all of this is presuming that the deal will actually go through. No matter the timing and what it may mean to the company in the short run, most analysts agree that it will be very hard for Harrah’s to say no to this offer. Although shareholders might be missing a larger picture, they’d probably storm the corporate offices with pitchforks and torches.

What Does it Mean To You?
How all of this affects the average Vegas visitor depends on which of the scenarios above (or not listed at all) comes to fruition. The most likely outcome is that it won’t affect you at all, no matter what they do. With the exception of the hotels that might get torn down or remodeled in the grand Harrah’s Strip plan, it will probably be business as usual at the other places no matter who owns them. Yes, you might have to switch players’ clubs again if they sell off one of the casinos to someone else, but other than that I wouldn’t expect a lot of near term changes.

Having said that, if the breakup scenario happens, it could have an affect on the prices you pay for hotel rooms and other services in Las Vegas. Since the bulk of The Strip is controlled by two companies (Harrah’s and MGM Mirage), increased competition could help to control the ever spiraling costs of a Vegas vacation. There are several smaller gaming companies virtually frothing at the mouth to get onto The Strip and if a hotel like The Flamingo, for instance, became available it would get snapped up so quickly it would make your head spin.

What’s Next?
Harrah’s has created an advisory panel tasked with examining the offer and determining if it is in the best interest of the shareholders and the company as a whole. That process is expected to take a couple of months but, as mentioned above, most folks believe it will get a stamp of approval.

After that it goes to the shareholders who would get to vote on it and that too would most likely go through.

Prince will use his new Las Vegas club to highlight new talent every Wednesday and he’ll stage a Latin club night every Thursday. The pop perfectionist is also keen to make sure fans dining at his new club eat in style - a menu has been created by one of Prince’s favorite chefs, Lena Morgan.

Inspired by the spirit of The Beatles and created by Cirque du Soleil, The Beatles REVOLUTION Lounge is set to open in December at The Mirage. Opening its doors only six months after the launch of The Beatles “LOVE,” extravaganza at the hotel will offer an extended experience before and after the show.

This is the first time Cirque du Soleil is creating a nightlife experience in Las Vegas. REVOLUTION will be operated by INK, the premier nightclub operator in Toronto, currently managing seven successful nightlife complexes in Canada.

The Abbey Road Bar, which will be located in front of the main entrance of REVOLUTION, will be open daily from 11 a.m. The REVOLUTION Lounge will be open nightly from 5 p.m. until 5 a.m. Each night at the 400-capacity ultra-lounge, there will be a specific musical direction. A DJ will make a musical progression through the evening from strictly Beatles music, to funky lounge remixes, house, rock, electro, new wave and Brit pop.

This year, Las Vegas’ four-hour plus New Year’s Eve celebration will air exclusively on DIRECTV’s “CD USA” with a lineup that includes live performances from chart toppers Five for Fighting, All-American Rejects, Rockstar:SuperNova, Smash Mouth, OK Go and Chicago.

Partygoers at the Las Vegas venue will have access to two stages located at either end of the four-block mammoth screen that will feature a simulcast of the band performances. The entire four blocks and 200,000 square feet of the downtown Vegas venue will be gated, with access granted only to ticket holders. Fremont Street will be replete with outdoor bars and vendors, easy access to casino gambling, numerous restaurants, and other guest-friendly amenities. All ticket holders must be at least 18 years old. Tickets are $80 per person and available on their website.

Each year, hundreds of thousands of tourists and locals alike gather in Las Vegas for the world-renowned New Year’s Eve celebration known as America’s Party. This citywide event encompasses activities throughout the entire destination including a pyrotechnic display launched from nine rooftops on the Las Vegas Strip.

MGM Mirage’s Project CityCenter has opened a Residential Gallery inside the Bellagio to give prospective purchasers the opportunity the get a close-up view of the plans for the $7 billion master plan scheduled to open late 2009. The gallery is open daily from 10 a.m. to 7 p.m.

Palace Station’s “Pit 8,” which features Pai Gow Poker, Pai Gow Tiles and Mini Baccarat, is known as the casino’s Asian gaming pit. Earlier this month, Pit 8 became the first casino in Las Vegas to offer tableside food service in a public pit with a traditional noodle menu available everyday from 6 p.m.-midnight. Casinos in Asia and card rooms in California already provide this service on a regular basis.

The Society of Seven, one of Las Vegas’s top attractions after being transplanted from Hawaii where they were headliners for more than three decades, will be inaugurated into the Las Vegas Walk of Stars on Tuesday, Nov. 28. The ceremony starts at 2 p.m. at the Flamingo Showroom where the group now appears, Wednesdays-Sundays at 3 p.m. SOS has performed in Las Vegas in the past at the old Thunderbird, Sahara, Golden Nugget, Aladdin and Bally’s.

Society of Seven with featured singer Lani Misalucha will serve as special guest hosts for Ethel M® Chocolates’ 13th Annual Holiday Cactus Lighting. The spectacular holiday light show will be free for public viewing from Nov. 16, 2006 through to Jan. 1, 2007.

But the best was saved for last (in the tour it was the first thing we visited) and that was the spectacular new pool. The Tank is a new $20-million pool with a fantastic three-story waterfall and a variety of fabulous marine life. There are five species of sharks and an assortment of game fish within the 200,000 gallon shark aquarium. There is also a waterslide for that adventuress person to ride - it shoots you down a curving three stories and right through the shark tank. It’s perfectly safe, but wow what a ride! Especially when the sharks take a look at you as you speed through their space.

The shark species include sandtiger sharks (they are the largest ones in The Tank,) brown sharks, Pacific blacktip sharks, nurse sharks and a beautiful zebra shark. There are also southern stingrays and other fish all within this wonderful and colorful man-made reef habitat.

It’s been more than a month since rumors surfaced about a possible Prince residency in Las Vegas, two weeks since the Rio confirmed it would be the host hotel and several days since the Purple One unveiled his new show to the public, yet worldwide, folks remain bewildered about the move. What prompted the funky guitar god, Rock and Roll Hall of Famer and author of such enduring hits as “Little Red Corvette,” “When Doves Cry” and “Raspberry Beret” to suddenly set up indefinite headquarters at Club Rio (renamed Club 3121, after Prince’s most recent album) every Friday and Saturday night? We attempt to unravel the mystery.

More here:
http://www.lasvegasweekly.com/2006/11/16/feature1.html