IT WILL ALL COME OUT IN THE WASH

Implications: Harrah's has completed their land purchase that will give them close to 350 acres that front on the strip from the Venetian to Flamingo Rd. There has been no mention of their plans for this property, however I look for them to play Can You Top This with MGM Mirage (Project City Center) and Boyds Echelon. If I were a betting man, my money would ride on the side of spectacular. Thats what it will have to be to justify land costs.

Analysis: So, what does this all mean for Harrah's and their investors. If they maintain control of their company as it looks at the moment - announcements of their new project will be made sooner than later. If Harrah's is sold, it may, alter the starting time of the new project. I really don't think that new owners would pass up an opportunity to be the newest and brightest star on the Vegas Strip especially if they maintain their top management now in place. They have Caesars Palace across the street from this property and it is their attempt to enter into the high end play business - they have not proven beyond a shadow of a doubt that they are able to run a high end casino. They will have to do just that when this 300 plus acres are developed. Understand that they certainly have the ability - they really need to change their direction and thinking and devise a correct approach to marketing.

Paying about $84 million an acre for the rather small piece of land that the Barbary Coast sits on is an outrageous number. It's ok to pay through the nose if it's a rather small nose, but this seems hard to swallow. I mentioned in other articles that if they wanted the land the Boyd Group would come out smelling like a rose and Harrah's would have to dig deep into their pockets. There is no doubt that a justification can be made when you add all the land together and average out costs. It does make it look better. Keep in mind that the decision makers at Harrah's are no dummies and have their reasons for making this acquisition. It does finish off the area that they planned to develop in the first place.

On the other side of the coin, Boyd Group picked up an additional 24 acres with the trade and buy scenario. This will easily be incorporated into the plans for the Echelon. My real guess is that they have been planning for this addition for quite some time. There has been no secret that these two companies have been at this deal for quite a while.

The bottom line for Harrah's will be now that they have what they want - How long can they afford to sit on this extremely valuable land. There has been no talk if they are planning to do this project without outside financing - it would be hard to believe that they would. This project could easily reach the $10 to $15 billion figures and it's my guess they would be hard pressed to layout that kind of dollars on their own. Having said that, I am sure that the investment community would expect them to get off the mark ASAP.  Harrah's is a top company, but are responsible to their investors and financial partners to see that this rather exciting new project gets started.

This new property will be a boom for the Las Vegas resort market - it will put lots of people to work, give a boost to retail in all forms and generally pump up the entire economy of this terrific city.