Wikipedia

Caesars World

Caesars World Inc.was ahotelandcasinooperator. It began asLum's Inc.,owner of theLum'schain of restaurants. It shifted into the gaming business with the purchase ofCaesars Palaceon theLas Vegas Stripin 1969, selling off the restaurants and changing its name. Caesars grew to eight casinos and resorts over the years, until going through a series of ownership changes beginning in 1995 and was ultimately absorbed byPark Place Entertainmentin 1999.

Caesars World
FormerlyLum's Inc. (1956–1971)
IndustryGaming
Founded1956;68 years ago(1956)
FounderClifford S. Perlman
Defunct1999;25 years ago(1999)
FateAcquired byPark Place Entertainment
Headquarters
Paradise,Nevada
,
U.S.

History

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A Lum's restaurant inFort Lauderdale,Floridain 1966

In 1956, brothers Stuart andClifford Perlmanbought a hot dog stand inMiami Beachnamed Lums. They expanded to more locations, and took the company public in 1961. In partnership with Ken Chivers, they began offeringfranchisesin 1965, growing from 15 restaurants to 90 within a few months.[1]

In the late 1960s, Lum's went on a buying spree, acquiring ameat packer,a chain ofarmy-navy stores,and the Cove Haven honeymoon resort in thePoconos.They capped it off with Caesars Palace, bought in 1969 for $58 million.[1]Shifting its focus to the Las Vegas property, the company in 1971 sold 350 restaurants, nearly the entire chain,[2]toJohn Y. Brown,owner ofKentucky Fried Chicken,for $4 million,[3]and changed its name to Caesars World.[4]

In 1971, the company made a foray into the technology sector, buying 21 percent ofCentronics,a maker of printers and gaming control systems, from co-founder Samuel Lang for $1.7 million.[5]Caesars sold part of its stake toBrother Industriesin 1974 for $3 million,[6]and then sold its remaining shares in a public offering for $3.5 million.[7]

In 1972, Caesars World bought theThunderbirdcasino, up the Strip from Caesars Palace, fromDel Webb Corporationfor $13.6 million.[8]A $150-million, 2,000-room resort called theMark Anthonywas planned for the site, but Caesars was unable to find financing,[9]and sold the property four years later for $9 million to a group led by bankerE. Parry Thomas.[10]

The company moved its headquarters from Miami in 1973 to be closer to Caesars Palace, but choseCentury Cityin Los Angeles over Las Vegas, because of its proximity to financial centers.[11]

Caesars extended its presence in the Poconos, buying the Paradise Stream Resort in 1973, the Pocono Palace in 1976,[12]and Brookdale-on-the-Lake in 1983, which it renamed as Caesars Brookdale.[13]

The firm returned to the computer industry in 1976, buying 80 percent of Ontel Corporation (Woodbury, NY), a maker ofall-in-one PCs.[14]Caesars had increased its stake to 100 percent by 1980, when it sold 9 percent of Ontel toAEG-Telefunkenfor $3.5 million.[15]By 1983, the subsidiary was losing money, and Caesars sold it toVisual Technology, Inc.(Tewkesbury, MA), a maker ofcomputer terminals,for a $9.5 millionconvertible note.[16]

Caesars expanded to northern Nevada in 1979, taking over operations of thePark Tahoecasino inStateline,on the south shore ofLake Tahoe,under a lease agreement with Park Cattle Corp.[17]Caesars agreed to spend $40 million to complete construction of the hotel portion of the year-old property,[18]which was renamed as Caesars Tahoe Palace,[19]and later simply Caesars Tahoe.

Atlantic City and ouster of the Perlmans

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In the early 1970s, the company had entered into a series of deals with Miami lawyerAlvin Malnik,who was identified by federal law enforcement officials as a close associate of mobsterMeyer Lansky.Caesars bought 400 acres of undeveloped land inNorth Miami Beachfrom Malnik and his partner, Sam Cohen, and later made a sale andleasebackof two of the company's Poconos resorts to Malnik and Cohen's sons, funded by a loan from aTeamsterspension fund.[1]The association with Malnik earned Caesars three warnings from theNevada Gaming Commission,[1]and would continue to haunt the brothers.[20]

After the 1976 legalization of gambling inAtlantic City,Caesars had bought aHoward Johnson'shotel on the Boardwalk and spent $70 million renovating it.[1]Caesars Boardwalk Regency,the city's second casino, opened in 1979,[21]under a temporary license.[22]When theNew Jersey Casino Control Commission(NJCCC) completed its full review of the Perlmans' applications, however, their permanent gaming licenses were denied, due to their dealings with Malnik and Cohen.[23]The brothers were forced to take a leave of absence, or face a shutdown of the casino.[23]They negotiated to sell their interest in the company to television producersNorman LearandBud Yorkin,but quit the talks without reaching a deal.[20]Analysts speculated that the company might sell the Atlantic City property,[24]but ultimately, Caesars World itself agreed to buy out the Perlmans' 18 percent stake for $98 million in 1980.[25]Clifford remained as chairman of the Las Vegas property until 1982, when he accepted the NJCCC's demand that he step down there as well.[26]

Shortly after Clifford's departure from Caesars Palace, he and Stuart agreed to buy theDuneshotel, across the street. Due to a non-compete clause in their buyout, Caesars was granted a four-week window to negotiate their own purchase of the Dunes, which they considered as an opportunity to reach the "tour and travel" segment of visitors, in contrast with Caesars Palace's more affluent customer base.[27]Caesars ultimately decided not to pursue the purchase.[28]

After the Perlmans

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Financier Martin Sosnoff, who had accumulated a 13 percent stake in Caesars World, made an effort to take over the company in 1987, initially offering $734 million for the remaining shares, or $28 a share.[29]Caesars countered with aleveraged recapitalizationplan that would have given investors a $26 dividend and left each share with a value of $8.50.[30]Sosnoff raised his bid to $32 and then $35 a share,[30]but after a court ruling that his offer exceeded federal limits on the amount of debt used in a takeover, he dropped his plan.[31]The company's recapitalization plan too was later rejected by the NJCCC because of the heavy debt burden involved,[32]and the company instead undertook a $400 millionstock repurchaseprogram.[33]Sosnoff did not participate in the buy-back, but sold two-thirds of his shares a month later, after theBlack Mondaycrash.[34]

Rumbles of another takeover attempt came in December 1988, whenDonald Trump,who had bought a 2.4 percent stake in Caesars World,[35]filed aHart-Scott-Rodinonotice of his intent to acquire at least a 15 percent stake, and said he might seek majority control.[36]Trump planned to sell Caesars Atlantic City, and attach the Caesars brand to his unfinishedTaj Mahalcasino.[35]Caesars adopted apoison pillplan to deter any hostile takeover.[37]Trump dropped his plan and sold off his shares a few months later at a profit of $3.3 million, due to his concerns about heavy competition in the Las Vegas market.[35]

Caesars agreed in 1989 to operate an onboard casino, Caesars Palace at Sea, on theCrystal Harmony,the first ship launched byCrystal Cruises.[38]Another casino on theCrystal Symphonyfollowed in 1995. Caesars received "minute" earnings from the casinos, but considered them good marketing.[39]

In 1992, Caesars World won out over a dozen other companies to develop and operate a casino with theAgua Calientetribe in downtownPalm Springs, California.[40]The $25 million, 80,000 square foot casino would have been built across the street from the tribe's Spa Hotel.[41]After being delayed by lawsuits and GovernorPete Wilson's opposition to Las Vegas-style gaming, the partnership was ended amicably in 1995.[42]The Agua Caliente went on to open a smaller casino within the Spa Hotel that year.[43]

Caesars also made a try at the Louisiana market after the state in 1992 authorized its first land-based casino to be opened at the site of the Rivergate Convention Center in New Orleans. The firm was one of ten bidders for the site's lease,[44]but quickly dropped its bid and instead signed a casino management agreement with the front-runner, resort developerChristopher Hemmeter,who proposed to build the biggest casino in the world, the $1 billion Grand Palais. Hemmeter won the city's lease selection process, but due to tension between the state and city governments, the process for awarding the one and only gaming license was separate, and the state casino board awarded it to a partnership betweenHarrah's Entertainmentand Jazzville, a group of politically well-connected local investors.[45]Under pressure from GovernorEdwin Edwards,Hemmeter joined forces with Harrah's and Jazzville, and Caesars World was sidelined from the project, which ultimately opened asHarrah's New Orleans.Caesars sued Hemmeter and reached a $5 million settlement.[46]

Caesars partnered withCircus Circus EnterprisesandHiltonin a 1993 bid to build and operate a government-owned casino inWindsor, Ontario.[47]They won the bid, and opened an interim casino in 1994 and a riverboat casino in 1995, both of which were closed shortly before the permanentCasino Windsoropened in 1998.[48]

Caesars Palace in 2006

Acquisition and aftermath

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ITT Corporation,a conglomerate whose other assets includedSheraton Hotels and Resortsand theDesert Inn,bought Caesars World in 1995 for $1.7 billion,[49]and was then acquired in 1998 byStarwood.[50]

Starwood headBarry Sternlichtopted to sell off ITT's gaming businesses, preferring the stable cash flow of upscale hotels to volatile casino winnings.[51]Interested parties includedMirage Resorts,Sun International,andPark Place Entertainment,the newly spun-off gaming unit of Hilton. Park Place ultimately won, buying Caesars for $3 billion,[52]though it did not buy the Desert Inn due to its weak location and lack of foot traffic.[51]Starwood also retained the Poconos resorts, with a 10-year license to continue using the Caesars brand.[53]

The Caesars corporate name lived on, as Park Place changed its name to Caesars Entertainment in 2004,[54]and was bought in 2005 byHarrah's Entertainment,[55]which changed its own name to Caesars Entertainment five years later.[56]

Properties at time of acquisition

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See also

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References

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  1. ^abcdeKarasik, Ellen (April 28, 1979)."Getting a N.J. gambling license is not easy".Montreal Gazette.Philadelphia Inquirer.RetrievedApril 21,2012.
  2. ^Gersten, Alan (September 30, 1971)."New Lum's operators laying foundation".Miami News.RetrievedApril 21,2012.
  3. ^Rau, Herb (November 16, 1971)."Look for Lums to change hands".Miami News.RetrievedApril 21,2012.
  4. ^Jones, Chris (July 21, 2004)."Caesars Earns Niche in Gaming Pantheon".Casino City Times.Gaming Wire.RetrievedApril 21,2012.
  5. ^"Caesars World Inc. Disputing Centronics Over Lease, Stock".Wall Street Journal.May 11, 1972.ProQuest133696453.(subscription required)
  6. ^"Brother International Corp".Wall Street Journal.January 4, 1974.ProQuest133845114.(subscription required)
  7. ^"Centronics Data Computer".Wall Street Journal.February 15, 1974.ProQuest133875002.(subscription required)
  8. ^"Caesars World closes hotel deal".Miami News.November 1, 1972.RetrievedApril 22,2012.
  9. ^"Las Vegas hotel plan canceled".Press-Courier.Oxnard. AP. June 12, 1975.RetrievedApril 21,2012.
  10. ^"Caesars World Agrees To Sell Hotel-Casino To Group for $9 Million".Wall Street Journal.September 15, 1976.ProQuest133987703.(subscription required)
  11. ^"Miami firm will move to Calif".Ocala Star-Banner.AP. January 14, 1973.RetrievedMay 3,2012.
  12. ^Iams, David (May 8, 1983)."Pocono resorts, lawmakers play with the idea of legal gambling".Philadelphia Inquirer.via NewsBank.RetrievedMay 23,2012.(subscription required)
  13. ^"4th resort purchased by Caesars".Reading Eagle.UPI. March 13, 1983.RetrievedApril 24,2012.
  14. ^"Caesars World Acquires 79.6% Holding in Ontel Corp".Wall Street Journal.April 20, 1976.ProQuest134096116.(subscription required)
  15. ^"AEG Invests in Ontel".Wall Street Journal.June 17, 1980.ProQuest134379522.(subscription required)
  16. ^"Caesars Completes Sale of Ontel Corp. To Visual Technology".Wall Street Journal.January 4, 1983.ProQuest134861437.(subscription required)
  17. ^"Takeover of resort in offing".Spokane Daily Chronicle.AP. August 29, 1979.RetrievedApril 23,2012.
  18. ^"Caesars World board backs buying lease of hotel in Nevada".Wall Street Journal.October 23, 1979.ProQuest134353780.(subscription required)
  19. ^Young, Terry (December 4, 1979). "Reno – after the money's gone".Oakland Post.ProQuest371722794.(subscription required)
  20. ^ab"Perlmans balk sale of Caesars World".Reading Eagle.AP. January 7, 1981.RetrievedApril 23,2012.
  21. ^"Second casino opened".Evening News.Newburgh, New York. AP. June 28, 1979.RetrievedApril 23,2012.
  22. ^Lyall, Sarah (January 6, 1988)."Stuart Perlman, 60, Co-Founder Of Caesars World With Brother".New York Times.RetrievedApril 23,2012.
  23. ^ab"Perlmans step aside, Caesars gets OK in N.J."Miami News.AP. October 27, 1980.RetrievedApril 23,2012.
  24. ^Hollie, Pamela (March 27, 1981)."Analysts see a shift at Caesars".New York Times.RetrievedApril 23,2012.
  25. ^"Caesars World to buy founding firm".Ocala Star-Banner.AP. December 30, 1981.RetrievedApril 23,2012.
  26. ^"The Region".New York Times.August 4, 1982.RetrievedApril 23,2012.
  27. ^"Caesars Is Considering Offer for Dunes Hotel Near a Las Vegas Unit".Wall Street Journal.December 22, 1982.ProQuest134700523.(subscription required)
  28. ^"Caesars Drops Bid For Dunes Hotel".New York Times.January 8, 1983.RetrievedApril 26,2012.
  29. ^Gillott, Roger (April 7, 1987)."Sosnoff studies new plan by Caesars World".Schenectady Gazette.AP.RetrievedApril 29,2012.
  30. ^abCowan, Alison (June 3, 1987)."Sosnoff raises bid for Caesars World".New York Times.RetrievedApril 29,2012.
  31. ^Cowan, Alison (June 16, 1987)."Sosnoff gives up bid for Caesars World".New York Times.RetrievedApril 29,2012.
  32. ^Cowan, Alison (August 14, 1987)."Ruling on Caesars startles Wall St".New York Times.RetrievedApril 29,2012.
  33. ^"Caesars World begins note offering linked to stock buy-back".Wall Street Journal.September 30, 1987.ProQuest398054133.(subscription required)
  34. ^"Sosnoff slashed his stake in Caesars in market crash".Wall Street Journal.October 26, 1987.ProQuest135267958.(subscription required)
  35. ^abc"Trump stipulates investment curbs in casino sector".Wall Street Journal.May 3, 1989.ProQuest135396156.(subscription required)
  36. ^Yoshihashi, Pauline (December 14, 1988). "Caesars World stake sought by Trump, who may try to get control of concern".Wall Street Journal.ProQuest398157115.(subscription required)
  37. ^"Caesars World Inc. adopts rights plan to deter hostile bids".Wall Street Journal.January 11, 1989.ProQuest398176408.(subscription required)
  38. ^Yoshihashi, Pauline (April 5, 1989). "Cruise line owned by Japanese bets on floating casino".Wall Street Journal.ProQuest398213610.(subscription required)
  39. ^Berns, Dave (March 17, 1997)."Cruise ships lure gaming clients".Las Vegas Review-Journal.RetrievedMay 3,2012.
  40. ^"Tribe to build Caesars casino".Star-News.Wilmington, NC. November 19, 1992.RetrievedApril 28,2012.
  41. ^Gorman, Tom (November 16, 1993)."Caesars Plans $25-Million Palm Springs Indian Casino".Los Angeles Times.RetrievedApril 28,2012.
  42. ^Gorman, Tom (April 5, 1995)."Caesars, Tribe End Pact to Build Casino in Palm Springs".Los Angeles Times.RetrievedApril 28,2012.
  43. ^Lieberman, Paul (June 19, 1995)."Tribe Tosses the Dice With Its Own Casino".Los Angeles Times.RetrievedApril 28,2012.
  44. ^Marcus, Frances (June 12, 1992)."Louisiana Legislature Approves Casino Gambling".New York Times.RetrievedApril 28,2012.
  45. ^Elkind, Peter (December 8, 1997)."The Big Easy's bad bet".Fortune.RetrievedApril 28,2012.
  46. ^Hiltzik, Michael (December 2, 1996)."A 'Sure Thing' Gone Awry".Los Angeles Times.RetrievedApril 28,2012.
  47. ^"Company news: Caesars, Circus Circus, and Hilton in casino deal".New York Times.December 4, 1993.RetrievedApril 26,2012.
  48. ^Ankeny, Robert (July 20, 1998)."Windsor ups casino ante".Crain's Detroit Business.[dead link](subscription required)
  49. ^"Company news; ITT attracts 94% of Caesars World's shares".New York Times.January 26, 1995.RetrievedApril 25,2012.
  50. ^Berns, Dave (February 24, 1998)."Starwood purchase of ITT is official".Las Vegas Review-Journal.RetrievedApril 25,2012.
  51. ^abBerns, Dave (April 22, 1999)."Wynn pursues Caesars".Las Vegas Review-Journal.RetrievedMay 1,2012.
  52. ^Berns, Dave (February 2, 2000)."Park Place considers adding new tower to Caesars Palace".Las Vegas Review-Journal.RetrievedApril 25,2012.
  53. ^Brelje, Beth (January 8, 2010)."Caesars' three resorts in Poconos switch branding to Starwood".Pocono Record.RetrievedJune 17,2015.
  54. ^Smith, Rod (January 7, 2004)."Business: Park Place hails change to Caesars".Las Vegas Review-Journal.
  55. ^Stutz, Howard (June 14, 2005)."Gaming goliath springs to life".Las Vegas Review-Journal.RetrievedMay 1,2012.
  56. ^"Harrah's changes corporate name to Caesars".St. Louis Business Journal.November 23, 2010.RetrievedMay 1,2012.
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