Landry’s Marina takeover talk in Two Way Hard Three

If you’ve missed it, I’ve got a post up at Two Way Hard Three that explains Landry’s purchase of Trump Marina and the return of the Golden Nugget to Atlantic City, with some bonus historical context:

Landry’s Inc. a Houston-based company that owns a full spread of restaurant chains and Downtown Las Vegas and Laughlin’s Golden Nuggets, has officially taken ownership of the now-former Trump Marina and will be putting about $100 million into renovating it. Meanwhile, a vaunted plan to allow "mini-casinos" has resulted in exactly zero construction to date. That’s exactly what anyone would have predicted when the mini-casino concept was first mooted, and it’s a good sign that some operators, at least, see some upside in the market.

via Landry’s Marina takeover just as predicted | Two Way Hard Three | Las Vegas Casino & Design Blog | from ratevegas.com.

Since I wrote it, I’ve seen two stories, one of which confirms something I said. Trump Plaza is potentially on the market, which I alluded to in the TWHT piece. Second, Hard Rock is apparently about to pull permits to build a $300 million mini-casino at Albany Avenue and the Boardwalk–right across from the site of the old Atlantic City High School.

I spent a lot of time in my TWHT piece talking about what a lousy idea that was, and I haven’t seen anything to convince me otherwise. When you can get 1,000 rooms and 2,000 slots in a totally renovated building for $138 million, why would you pay $300 million for one-quarter or less of a facility–200-500 rooms with about 510 slots? I ran the numbers and I just don’t see how it could possibly be profitable.

If anyone has an explanation, I’m willing to listen. It’s totally possible that I’m missing something here, but it’s also possible that I’m not. Back in 2007 there were a lot of smart people who thought Strip condos were a can’t-lose proposition, so I’m not so sure that, just because someone can borrow hundreds of millions of dollars they’re smart enough to spend it.