Things are slow in Vegas, maybe, but they’re even slower in Mesquite. From the LVRJ:
If you think the slowing economy has hit casino operators in Las Vegas hard, travel 80 miles northeast to Mesquite.
Black Gaming, operator of three hotel-casinos in the town, reported an operational loss of $15 million for the quarter ended June 30, driving the company to a net loss of $20.3 million.
The latest loss is wider than the $2.6 million net loss posted for the same quarter last year. For the year, the company has posted a loss of $24.3 million.
Chairman and Chief Executive Randy Black Sr. said the company has been put in a "defensive position" and "at some point you just can't cut your way to profitability."
Late last year, Black Gaming, which owns the CasaBlanca, Virgin River and Oasis casinos along Interstate 15, began an aggressive campaign to combat the economic downturn by eliminating departments, reducing management salaries and conducting layoffs.
Black told investors the company cut more than $10.5 million in operating expenses in the first six months of the year, but it hasn't been enough.
"The combination of reduced spending by customers and price reductions we have implemented to remain competitive has impacted our profitability and continued to decrease our (cash flow)," Black said last week in a conference call with investors.
On Aug. 5, Moody's Investors Service downgraded Black Gaming's bond ratings for the second time in three months based on declining market revenues.
Black told investors that he believes an infusion of funds will be necessary next year for the company to meet "liquidity needs." However, enough money should be available to meet working capital requirements, capital expenditures and scheduled interest payments through the end of this year.
ReviewJournal.com – Business – Black Gaming posts $20.3 million loss for quarter
“You can’t cut your way to profitability” has become the new mantra of the gaming industry. It sounds like merging the sports book with South Point might help a little, but there are clearly some major structural issues here.
