Showing posts with label Station Casinos bankruptcy. Show all posts
Showing posts with label Station Casinos bankruptcy. Show all posts
Saturday, July 24, 2010
INTERESTING FERTITA FAMILY AND STATION CASINO LINKS
Penn National Gaming not expected to bid on Station properties
Station Casinos Inc. sold for $1.7 billion (1998)
GAMING CHIPS: Fertitta sings Station Casinos' praises to Wall Street (1999)
RICHARD RAINWATER
New Titans of Las Vegas Reinvent Old Formula
INTERESTING LORENZO FERTITTA INTERVIEW ABOUT THE UFC'S EXPANSION
UFC OWNERS DEFENDANT IN XYIENCE LAWSUIT
Monday, July 12, 2010
STATION CASINOS, FERTITTA ENTERPRISES, KIRK SANFORD AND A BUNCH OF ZEROES
By: Rich Bergeron
It's been a while, but I created this nice new blog and wanted to formally update the Xyience saga. Right now there has been no action in my own legal matters in the adversary case in more than 6 months. I'm preparing a few filings of my own to change that.
Meanwhile, I've been reading up on what's going around about all the old "Usual Suspects." While the UFC is seemingly still doing smashingly well, Station Casinos is facing resistance from all fronts. Whether it is the culinary union with a bone to pick (pun intended) or the company's major creditors, adversaries and critics are popping up everywhere to claim the casino chain is being shady. Just check out a few of these links if you don't believe me:
NATIONAL LABOR RELATIONS BOARD COMPLAINT AGAINST STATION CASINOS AND OTHER FILES
Station Casinos bondholders renew interest in suing over deal
Propco/Opco: Playing With the House’s Money?
Bankrupt Casino Goes On With Fireworks as Usual
This is just a small sampling of what I've been reading out there about Station Casinos and the "stalking horse bidder" ploy the Fertittas will use to get the best out of this deal at auction, just like they did for Xyience.
Consider this: When Xyience went bankrupt there was a stalking horse bidder for that company, too. What was that company's name???
GOOD THING THE INTERNET REMINDED ME IT WAS MANCHESTER CONSOLIDATED CORP, WHO "bought" THE COMPANY FOR $15 MILLION.
Over the course of the bankruptcy there were a lot of name changes. The company that was the chief lienholder of Xyience going into the BK process was a company dubbed Zyen, LLC when Fertitta Enterprises General Manager Bill Bullard signed the paperwork in 2007. When Manchester walked into the picture, the name became MANZEN. Then it appears Manchester's backers defaulted on the purchase, so it looks as if Fertitta Enterprises, through Zyen, LLC outright owns the company now. Check out these listings from the Nevada corporate entity search engine:
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=2ryhJA1g38vr4wHvjZ4vJA%253d%253d&nt7=0
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=N2lDhJztZVB8V0F%252bccSz1w%253d%253d&nt7=0
Gordon and Silver is Gregory Garman's firm. Garman (image below) is the main attorney in my case for Fertitta Enterprises:
"Manzen" only has one manager now: Zyen
And who manages Zyen? BILL BULLARD AND FERTITTA ENTERPRISES:
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=w2mQRKtvYIQG5%252bRhxnaqMA%253d%253d
Meanwhile, Xyience is accordingly in "default."
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=n5MCm0RnmZ2bAWvCkO5bRg%253d%253d
What now looks obvious on paper should have been so obvious from the beginning when I was trying to warn of the conflict of interest involved in the Fertittas owning Xyience. I tried to stop the bankruptcy process before it got too far underway, but at that point I had too little legal experience. Still, my Motion to Suspend the Bankruptcy is true Nostradamus-quality stuff looking back now and comparing it to a more experienced legal mind's take on things.
The Fertittas always hid behind a smaller, more obscure company to do their dirty work with Xyience, but now it's clear who owns everything. The fog is clearing, and the fraud will be exposed in the long run.
Yet, without a few key players like Adam Frank and Kirk Sanford, the Fertittas and their GM William Bullard would not have been able to take control of things in Xyience's darkest hour. Adam Frank signed the bogus declaration that got the whole complaint against me started in Nevada. Frank and Sanford met with me in NYC prior to UFC 78 in Newark, NJ. This was after we had this conversation:
CLICK HERE TO LISTEN TO XYIENCE Co-CEOS ADAM FRANK AND KIRK SANFORD TELL RICH HIS WEB-SITE IS A GREAT RESOURCE ON XYIENCE
Sanford and Frank both pulled off crucial moves that helped sink any hopes the shareholders had of retaining any interest in the company after the Fertittas put their cash in. Frank seemed fully aware of the "Scorched Earth" policy advocated by Sanford and discussed at length during our meeting in Times Square back in November of 2008. Someone on the inside at Xyience found out about my meeting and sent me series of emails that broke the case wide open for me, detailing how plans were made to destroy the company piece by piece. I was bombarded with emails warning me about Frank and Sanford's master plan when I got back from the UFC trip. These dispatches had plenty of facts and insider information exposing the ongoing fraud. Tracing the motives of the main parties who perpetrated it all became much easier over the next few months.
Eventually Kirk Sanford's troubles at his former company, Global Cash Access, would become public knowledge when the Arizona authorities issued a scathing report about the company's troubled past with "mis-coding" issues related to credit card transactions and commissions owed to casinos that were never paid. So, it seems Sanford and his friends were bringing too much heat. Those still close to Sanford that still remained had to be ousted.
Then, Sanford set out to create a new GCA called "Sightline Payments." Here's an interesting advertising post for the company: Sightline Payments: Bunch of Zeros.
Well, I know they've got at least one zero, and his name is Kirk Sanford. He is a slick scam artist who is pegged accurately in circulating complaints about his character outside of the Arizona report. He even went as far as acting like an outsider looking in on the fraud parade he was the grandmaster of at GCA. He actually turned around and filed a ridiculous multi-million dollar lawsuit against his former employer. He claimed GCA's promise not to do business with Sanford and his friends was done as a deliberate attempt to smear his name so as to hinder him from developing a competing company. As if Sightline was going to sprout up overnight into a multi-billion dollar conglomerate? What dream world is Kirk Sanford living in, or what drugs is this guy on?
Kirk Sanford and his crooked track record would have been exposed one way or another, and GCA's willingness to distance themselves from him wasn't the only nail in the coffin. There's a thing called Google you might not be aware of, Kirk. Do a simple search for Kirk Sanford on any search engine. How far do you have to go to find links to his whole fraudulent history? And that's not even giving any creedence to the gossip saying he's a drunk to boot. I suppose you have to drink a great deal of alcohol to be so completely dishonest and deceptive to such good people.
The depth of that kind of conniving is really astounding to me. It's been such a long and painful process to prove everything, but it's all there now in the public eye. Yet, still, people like Kirk Sanford are able to go on and do business like nothing ever happened. Fertitta Enterprises is able to waltz right in and take control of Xyience, the company that sponsors their cash cow: THE UFC. They're able to claim bankruptcy even though the family itself is worth billions. The Fertittas are meanwhile still flying on their private jets, enjoying their lavish lifestyle, and filling up their deep pockets any way they can. The Fertittas found a way to cash in on bankruptcy with Xyience, and now it's obvious that they are trying to duplicate that whole process with Station Casinos.
When will justice be done? What will it take for a wise judge to step up and say enough is enough with this scam after scam mentality? How many people have to be hurt in the long run before the corruption stops?
When the wheels are greased, they don't squeak. Something tells me the Fertittas can be true bastards all their lives. They get a free pass to never be held accountable for their ruthless business practices. Just the mantra of their mob association and lineage is usually enough to keep them safe from getting truly busted. Nothing will get in their way, and they will envision and execute larger schemes that screw more people. It's inevitable that greed and power corrupts, and this is one brotherhood that is built on greed.
Perhaps the only saving grace in the long run will come when some of their fortune has to be handed back over to the victims they swindled to get it. The 18th of July, 2010 marks the 3rd anniversary of the initial filing of Xyience's $25 million defamation suit against me. I've done a lot since then to fight back and fight for the shareholders who lost family trust funds, college funds for their kids, and retirement income they needed to stay afloat. I've done my best to keep telling the story and keep fighting the legal fight no matter what. It's been a while, and I've had a bit of a break from it all, but now I'm back, and I'm not letting up until the job is done on all fronts.
It's been a while, but I created this nice new blog and wanted to formally update the Xyience saga. Right now there has been no action in my own legal matters in the adversary case in more than 6 months. I'm preparing a few filings of my own to change that.
Meanwhile, I've been reading up on what's going around about all the old "Usual Suspects." While the UFC is seemingly still doing smashingly well, Station Casinos is facing resistance from all fronts. Whether it is the culinary union with a bone to pick (pun intended) or the company's major creditors, adversaries and critics are popping up everywhere to claim the casino chain is being shady. Just check out a few of these links if you don't believe me:
NATIONAL LABOR RELATIONS BOARD COMPLAINT AGAINST STATION CASINOS AND OTHER FILES
Station Casinos bondholders renew interest in suing over deal
Propco/Opco: Playing With the House’s Money?
Bankrupt Casino Goes On With Fireworks as Usual
This is just a small sampling of what I've been reading out there about Station Casinos and the "stalking horse bidder" ploy the Fertittas will use to get the best out of this deal at auction, just like they did for Xyience.
Consider this: When Xyience went bankrupt there was a stalking horse bidder for that company, too. What was that company's name???
GOOD THING THE INTERNET REMINDED ME IT WAS MANCHESTER CONSOLIDATED CORP, WHO "bought" THE COMPANY FOR $15 MILLION.
Over the course of the bankruptcy there were a lot of name changes. The company that was the chief lienholder of Xyience going into the BK process was a company dubbed Zyen, LLC when Fertitta Enterprises General Manager Bill Bullard signed the paperwork in 2007. When Manchester walked into the picture, the name became MANZEN. Then it appears Manchester's backers defaulted on the purchase, so it looks as if Fertitta Enterprises, through Zyen, LLC outright owns the company now. Check out these listings from the Nevada corporate entity search engine:
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=2ryhJA1g38vr4wHvjZ4vJA%253d%253d&nt7=0
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=N2lDhJztZVB8V0F%252bccSz1w%253d%253d&nt7=0
Gordon and Silver is Gregory Garman's firm. Garman (image below) is the main attorney in my case for Fertitta Enterprises:
"Manzen" only has one manager now: Zyen
And who manages Zyen? BILL BULLARD AND FERTITTA ENTERPRISES:
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=w2mQRKtvYIQG5%252bRhxnaqMA%253d%253d
Meanwhile, Xyience is accordingly in "default."
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=n5MCm0RnmZ2bAWvCkO5bRg%253d%253d
What now looks obvious on paper should have been so obvious from the beginning when I was trying to warn of the conflict of interest involved in the Fertittas owning Xyience. I tried to stop the bankruptcy process before it got too far underway, but at that point I had too little legal experience. Still, my Motion to Suspend the Bankruptcy is true Nostradamus-quality stuff looking back now and comparing it to a more experienced legal mind's take on things.
The Fertittas always hid behind a smaller, more obscure company to do their dirty work with Xyience, but now it's clear who owns everything. The fog is clearing, and the fraud will be exposed in the long run.
Yet, without a few key players like Adam Frank and Kirk Sanford, the Fertittas and their GM William Bullard would not have been able to take control of things in Xyience's darkest hour. Adam Frank signed the bogus declaration that got the whole complaint against me started in Nevada. Frank and Sanford met with me in NYC prior to UFC 78 in Newark, NJ. This was after we had this conversation:
CLICK HERE TO LISTEN TO XYIENCE Co-CEOS ADAM FRANK AND KIRK SANFORD TELL RICH HIS WEB-SITE IS A GREAT RESOURCE ON XYIENCE
Sanford and Frank both pulled off crucial moves that helped sink any hopes the shareholders had of retaining any interest in the company after the Fertittas put their cash in. Frank seemed fully aware of the "Scorched Earth" policy advocated by Sanford and discussed at length during our meeting in Times Square back in November of 2008. Someone on the inside at Xyience found out about my meeting and sent me series of emails that broke the case wide open for me, detailing how plans were made to destroy the company piece by piece. I was bombarded with emails warning me about Frank and Sanford's master plan when I got back from the UFC trip. These dispatches had plenty of facts and insider information exposing the ongoing fraud. Tracing the motives of the main parties who perpetrated it all became much easier over the next few months.
Eventually Kirk Sanford's troubles at his former company, Global Cash Access, would become public knowledge when the Arizona authorities issued a scathing report about the company's troubled past with "mis-coding" issues related to credit card transactions and commissions owed to casinos that were never paid. So, it seems Sanford and his friends were bringing too much heat. Those still close to Sanford that still remained had to be ousted.
Then, Sanford set out to create a new GCA called "Sightline Payments." Here's an interesting advertising post for the company: Sightline Payments: Bunch of Zeros.
Well, I know they've got at least one zero, and his name is Kirk Sanford. He is a slick scam artist who is pegged accurately in circulating complaints about his character outside of the Arizona report. He even went as far as acting like an outsider looking in on the fraud parade he was the grandmaster of at GCA. He actually turned around and filed a ridiculous multi-million dollar lawsuit against his former employer. He claimed GCA's promise not to do business with Sanford and his friends was done as a deliberate attempt to smear his name so as to hinder him from developing a competing company. As if Sightline was going to sprout up overnight into a multi-billion dollar conglomerate? What dream world is Kirk Sanford living in, or what drugs is this guy on?
Kirk Sanford and his crooked track record would have been exposed one way or another, and GCA's willingness to distance themselves from him wasn't the only nail in the coffin. There's a thing called Google you might not be aware of, Kirk. Do a simple search for Kirk Sanford on any search engine. How far do you have to go to find links to his whole fraudulent history? And that's not even giving any creedence to the gossip saying he's a drunk to boot. I suppose you have to drink a great deal of alcohol to be so completely dishonest and deceptive to such good people.
The depth of that kind of conniving is really astounding to me. It's been such a long and painful process to prove everything, but it's all there now in the public eye. Yet, still, people like Kirk Sanford are able to go on and do business like nothing ever happened. Fertitta Enterprises is able to waltz right in and take control of Xyience, the company that sponsors their cash cow: THE UFC. They're able to claim bankruptcy even though the family itself is worth billions. The Fertittas are meanwhile still flying on their private jets, enjoying their lavish lifestyle, and filling up their deep pockets any way they can. The Fertittas found a way to cash in on bankruptcy with Xyience, and now it's obvious that they are trying to duplicate that whole process with Station Casinos.
When will justice be done? What will it take for a wise judge to step up and say enough is enough with this scam after scam mentality? How many people have to be hurt in the long run before the corruption stops?
When the wheels are greased, they don't squeak. Something tells me the Fertittas can be true bastards all their lives. They get a free pass to never be held accountable for their ruthless business practices. Just the mantra of their mob association and lineage is usually enough to keep them safe from getting truly busted. Nothing will get in their way, and they will envision and execute larger schemes that screw more people. It's inevitable that greed and power corrupts, and this is one brotherhood that is built on greed.
Perhaps the only saving grace in the long run will come when some of their fortune has to be handed back over to the victims they swindled to get it. The 18th of July, 2010 marks the 3rd anniversary of the initial filing of Xyience's $25 million defamation suit against me. I've done a lot since then to fight back and fight for the shareholders who lost family trust funds, college funds for their kids, and retirement income they needed to stay afloat. I've done my best to keep telling the story and keep fighting the legal fight no matter what. It's been a while, and I've had a bit of a break from it all, but now I'm back, and I'm not letting up until the job is done on all fronts.
Sunday, July 11, 2010
Station Casinos' Executives Out To Lunch Without a Cell Phone: What's the Potential UFC Impact?
By: Rich Bergeron
$900 an hour lawyers should know better than to come into a casino bankruptcy without an open dialogue going with state gaming regulators. Yet, Station Casinos attorneys were caught with their pants down by the Reno, Nevada judge handling the case recently. It seems there has been no effort to even contact state regulators yet, though the company is already deep into bankruptcy. This Las Vegas Review Journal Article Says it All:
Lack of talk in Stations' bankruptcy case puzzles judge
Dana White Twitters with the best of them. Why can't the Fertittas or their attorneys follow his outspoken lead and pick up a phone and talk to some regulators? Probably because they are worried and leery of regulators finding out what's been going on there since the privatization of Station Casinos. That leveraged buyout is now being shrouded in conspiracy theories, and high-caliber lawyers are just now starting to dig into how that deal was done and who benefited most. We reported here on the suspicious lending anomalies regarding Station Casinos long before the bankruptcy was even looming. Frank Fertitta III had his signature on a few senior secured credit facilities for Station Casinos that are eerily similar to the one illustrated here (from a few years ago).
Another player, Vulture Capitalist Tom Barrack (His Colony Capital is part owner of Station Casinos and financed much of the buyout) is also raising eyebrows with billion dollar deals like this one. If the SEC slept on Bernie Madoff, they are in a coma in regards to this case and the tiers of corrupt players. From Xyience to Station Casinos, from Arc Investments to Zuffa this whole web of corruption is astounding in its scope and structure. This web is Global (Global Cash Access), National, and Local, and the longer it goes on unchecked the bigger the risk that MMA will end up with the black eye as a sport because of a few misguided people at the top levels of the sport. It is going to come crashing down at some point as all great schemes do. The Fertittas have made their money by borrowing upon borrowing and taking "dividends" from the company proceeds. They found a way to legally rape and pillage their own company with promises of a better tomorrow that turned out to be untrue.
Today, one can only hope the bankruptcy court and the regulators (whenever they do get involved) will find all the red flags and figure out what's really been going on all these years. The brothers Fertitta will have to eventually face the music. It's an open question as to how that will affect the UFC. If they have to shell out hundreds of millions of dollars in considerations and potential settlements with Station creditors, the family fortune may be so dwindled that they are forced to sell a large piece of the UFC organization to a friendly player. Mark Cuban or Vince Jr. (Shane McMahon) could be potential future insiders who wind up with controlling interests in the UFC if the Fertittas' funding sources run out and their credit dries up. Whatever happens, keep your eye on this Station situation and watch for the ripple effect.
$900 an hour lawyers should know better than to come into a casino bankruptcy without an open dialogue going with state gaming regulators. Yet, Station Casinos attorneys were caught with their pants down by the Reno, Nevada judge handling the case recently. It seems there has been no effort to even contact state regulators yet, though the company is already deep into bankruptcy. This Las Vegas Review Journal Article Says it All: Lack of talk in Stations' bankruptcy case puzzles judge
Dana White Twitters with the best of them. Why can't the Fertittas or their attorneys follow his outspoken lead and pick up a phone and talk to some regulators? Probably because they are worried and leery of regulators finding out what's been going on there since the privatization of Station Casinos. That leveraged buyout is now being shrouded in conspiracy theories, and high-caliber lawyers are just now starting to dig into how that deal was done and who benefited most. We reported here on the suspicious lending anomalies regarding Station Casinos long before the bankruptcy was even looming. Frank Fertitta III had his signature on a few senior secured credit facilities for Station Casinos that are eerily similar to the one illustrated here (from a few years ago).
Another player, Vulture Capitalist Tom Barrack (His Colony Capital is part owner of Station Casinos and financed much of the buyout) is also raising eyebrows with billion dollar deals like this one. If the SEC slept on Bernie Madoff, they are in a coma in regards to this case and the tiers of corrupt players. From Xyience to Station Casinos, from Arc Investments to Zuffa this whole web of corruption is astounding in its scope and structure. This web is Global (Global Cash Access), National, and Local, and the longer it goes on unchecked the bigger the risk that MMA will end up with the black eye as a sport because of a few misguided people at the top levels of the sport. It is going to come crashing down at some point as all great schemes do. The Fertittas have made their money by borrowing upon borrowing and taking "dividends" from the company proceeds. They found a way to legally rape and pillage their own company with promises of a better tomorrow that turned out to be untrue.
Today, one can only hope the bankruptcy court and the regulators (whenever they do get involved) will find all the red flags and figure out what's really been going on all these years. The brothers Fertitta will have to eventually face the music. It's an open question as to how that will affect the UFC. If they have to shell out hundreds of millions of dollars in considerations and potential settlements with Station creditors, the family fortune may be so dwindled that they are forced to sell a large piece of the UFC organization to a friendly player. Mark Cuban or Vince Jr. (Shane McMahon) could be potential future insiders who wind up with controlling interests in the UFC if the Fertittas' funding sources run out and their credit dries up. Whatever happens, keep your eye on this Station situation and watch for the ripple effect.
Station Casinos Collapse Backing UFC-owning Fertitta Brothers into a Corner
By: Rich Bergeron
When it rains, it pours for the Fertitta family. Last Friday the patriarch Frank Fertitta, Jr. died while undergoing treatment for heart disease in a California hospital. The death comes at the tail end of a long and painful campaign of pending bankruptcy that finally ended in the Chapter 11 proceedings that are now ongoing for Station Casinos. Services for the founding father of Station Casinos have been set for this Friday and Saturday. Yet, amidst all the major media reporting of this tragedy, only the Los Angeles Times piece on the subject has so far included the truth about the skimming investigation Frank was suspected in. Even then it was too little, too late.
The fact that Frank had been suspected of and investigated for skimming during his early career was much more important to the downfall of Station Casinos than many might think. It is this bare fact and the stigma that Frank never quite shook which kept him from being in charge of the company until his death. Instead, he was CEO of Fertitta Enterprises for a time, working on investments and land deals since he couldn't get involved in running the casinos. He left that job to his sons, with Frank III taking the reigns first in 1993. It just might be this early mantle laid upon Frank's oldest son that created the conditions which now exist today. The billionaire Fertitta brothers have shown over the years that they were never quite prepared to run the family business, unless the goal was to run it into the ground.
Perhaps the fatal blow to the family business and maybe even the father himself was the potential loss of Palace Station to Boyd gaming, a long-standing opponent and major competitor in the locals Vegas gaming market. Frank Junior reportedly spent every lunch hour he could at Palace Station, which was his true pride and joy and a place he might have loved even more than his own sons. This was the place that made the pauper into a prince. It all began with a little place called simply "The Casino." The name changed almost overnight after Frank Junior bought the shabby property and turned it into The Bingo Palace:
Knowing that Palace Station might be snatched away from the family by a well-placed bid in bankruptcy court must have been hard for Frank Junior to deal with. His sons must have been equally disturbed by the fact that their poor financial management of the company and over extending of company debt could ultimately lead to them losing their father's prized property to the highest bidder. Despite early rejections of Boyd's offers to purchase a group of core, less debt-laden properties during the days before bankruptcy set in, the competitor is now more intent than ever on acquiring whatever it can from its ailing enemy. If they get what they're looking for, it might even come at a lower price than they initially offered.
THE UFC IMPACT COULD BE SEVERE IN TIME
Dana White's attitude about Station Casinos falling on hard times was glib at first, and he insisted the casino troubles wouldn't translate into bad times ahead for the UFC. Yet, there is now talk of consolidating the WEC and UFC operations in what would ultimately be a cost-saving measure. The Fertittas seem to be showing signs of financial stress and things continue to get worse for the casino environment. There seems to be no bottom to the depression the company is experiencing with a reported $65.3 million loss posted by Station Casinos in the second quarter of this year.
Just a little less than a month before Station Casinos went bankrupt, Frank Fertitta III bought a $28 million home in Emerald Bay, which is a prime beachfront community in Orange County, California. The family was at one point ready to put up $244 million of their own family money to save the company from a painful bankruptcy. It seems Frank III decided to spend a considerable percentage of that bid when it seemed most apparent that the company couldn't be saved for that price. Meanwhile, now Lorenzo Fertitta is selling his Vegas house for 2.95 million bucks, meaning he may not be Dana White's close neighbor for much longer. Check out this amazing mansion on the market for a bargain:
Now that the company is in bankruptcy, the $244 million pre-packaged bankruptcy solution proposed by the Fertittas is out of the question.The company already reportedly has legal bills in excess of $16.2 million for the months leading up to the actual BK filing. The Fertittas themselves will also have to retain their own lawyers along with the rest of the company's directors. The road ahead is sure to be filled with turmoil as the finger of blame will likely be pointed squarely at the Fertitta brothers due to their ultimate oversight of the company during its fall from grace. More litigation will compound the bankruptcy as lenders and bondholders will try to exact revenge by trying to bust the big Fertitta piggy bank with the aid of high powered lawyers and law firms.
The Las Vegas Sun reports, "Station has already advanced retainers to Nave's law firms totaling $750,000 and to the Colony directors' law firm of $1 million; and has agreed to cover the costs of the attorneys for the Fertitta directors, the filing said. Additional costs for all the directors should be paid by Station as they are incurred, the company argued." Yet, even if the company does foot the legal bills for the moment, it will be Lorenzo and Frank III paying the price in the long run if litigation can prove they were reckless and irresponsible in their operation and oversight of Station Casinos. Though it's true that Lorenzo, Frank III, and Delise Sartini only own 24 percent of the company combined, Frank III and Lorenzo had the most principal management roles leading up to the bankruptcy. Lorenzo's departure for full-time UFC duty in 2008 is not likely to absolve him of culpability and may have been more of a cost-saving measure in hindsight. Of course, many experts would argue that Dana White really needed a babysitter, but it is also a strong possibility that Lorenzo knew the bankruptcy was coming and wanted nothing to do with burdening the company when he could be better used elsewhere.
The uglier the Station Casinos bankruptcy case gets, the more chances that the debacle will impact the UFC's operations in a negative manner. The so-called "experts" in the fight industry will claim that the two companies are wholly separate and unrelated. As such, they will further try to justify that the UFC is safe and secure no matter what happens to Station Casinos. At the same time these "experts" will harp on the bogus $1 billion price tag bestowed on the UFC by a Forbes magazine writer who seemingly never took into account the fact that there is a heavy debt load associated with the fight league that few talk about when a possible sale is discussed. My Enron of MMA page outlines all the details of the $350 million senior-secured credit facility that will make the UFC difficult to sell for a high profit margin. Even if the UFC's growth and success is perpetual, that loan will still have to be paid off in full before any sale would be worthwhile for all the players involved.
The vast wealth of the Fertitta family may actually be a barrier to the success of the UFC rather than a benefit considering the fact that the deepest pockets make the best targets when it comes to litigation. It doesn't take a rocket scientist to analyze the moves made by Station Casinos over the years and conclude that while the company itself suffered, the Fertitta family cashed in hand over fist. The litigation buck doesn't stop with Station Casinos, either. Though it's been a case that's been flying under the radar in recent months, the lawyers for the former PRIDE organization are still pursuing legal action against the Fertittas, Dana White, and Zuffa over allegedly false promises made that were supposed to guarantee PRIDE would continue as an active organization as part of the sale agreement. I have spoken personally with some of the lawyers on the case who are leaving no stone unturned and not giving up anytime soon.
While Frank Fertitta Jr.'s recent death may mean the brothers inherit some of their father's leftover fortune, even that influx of cash may not be enough to weather the storms to come. Of course, there are plenty of scenarios that could play out that might keep the Fertittas in great financial standing through all of this. Yet, to say that they are guaranteed to get through this with no real impact on the UFC is to neglect to consider the true facts at hand. Those facts point to the very real possibility that the Fertittas could exhaust their existing cash reserves while Station Casinos languishes in bankruptcy. If that happens, you might see the Fertittas seek another big loan package for the UFC putting that outfit in further debt. After all, the last UFC loan came only after the Fertittas overextended their credit with similar instruments they secured for Station Casinos. Those huge loans and an overzealous expansion of the company's gaming interests and land holdings have resulted in the current Station Casinos bankruptcy situation, and if something that big can fail so miserably, so can the UFC.
The bottom line here is that while the UFC brass and the associated spin machine will try to convince the fans that everything is on the up and up, behind the scenes times are very tough. The UFC continues to find success and expand its fan base in a manner that makes it appear ironclad and in no danger, but behind the smoke and mirrors there's a real possibility that things could soon start to go downhill fast. It all depends on what kind of impact the impending litigation and bankruptcy of Station Casinos has on the Fertitta family war chest. This is a family used to spending money at a rapid rate, and Frank III's $28 million home purchase during the toughest time Station Casinos has ever faced is a clear indicator of that. Those who might argue that it would be impossible for this family to lose everything over this might be the same folks who once thought Station Casinos would never go bankrupt.
As a huge fan of the UFC myself, I would never want to see the organization as a whole suffer over issues at a company that is supposed to be unrelated. At the same time, I have to wonder why the Fertittas would promise up to $244 million to keep Station Casinos out of a nasty bankruptcy. The only answer to that question is my mind is that they must have known if they couldn't make that deal things would get very ugly very fast. That's exactly what's happening. The only folks who will truly capitalize here are the bankruptcy lawyers, and there are already reports of huge legal fees accruing (as much as $995 per hour for some of these top-tier hot-shot attorneys).
As long as Station Casinos continues to lose revenue due to the poor economy and a prolonged bankruptcy, the Fertitta Brothers will have less money to invest in the UFC. If a complete catastrophe drains the Fertitta family coffers, they may very well try to leverage Zuffa's assets somehow. If at that point they are shafted by potential creditors and/or lenders, the real troubled waters for the company will start churning. A sale of the company might never take place as some have reported, but the lack of cash reserves could result in the UFC becoming a much more streamlined organization. Whether or not that streamlining negatively impacts the business remains to be seen, but those who tell you there will be no impact whatsoever are wishful thinkers. It all depends on how bad things get in the days to come.
SAINTS OR SINNERS? WILL THE FERTITTA REPUTATION RECOVER?
"A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was." Joseph Hall
The Fertitta family still has a rock-solid reputation in Las Vegas. Numerous reports of Frank Fertitta, Jr.'s death in the Vegas media have made no mention of the family patriarch's troubles or tribulations. The most familiar refrain in these Vegas reports reflects the fact that Station Casinos has been repeatedly represented as one of the best companies to work for in Las Vegas. These articles also laud Frank Junior for virtually inventing the locals casino market. As far as Station Casinos bankruptcy news, I've yet to find an article that even suggests that anyone in the Fertitta family was reckless or irresponsible in the business practices that led to the bankruptcy.
Only a nasty and contentious bankruptcy process, which seems inevitable, will tarnish the Fertitta image in Sin City and beyond. Local reporters will have no choice but to explain what's happening when things get truly ugly. The cracks in the facade of the once untouchable family reputation will only then become fully visible.
As the truth emerges as to just how irresponsible the Fertittas have been leading up to this bankruptcy, it will become increasingly harder for the Fertitta Brothers to do business elsewhere. The way Fertitta Enterprises handled the Xyience bankruptcy is a perfect example of how powerful people can get away with impropriety with little consequence, but that was really small potatoes compared to the current situation with Station Casinos. I truly believe the Xyience debacle was a practice run for the bigger and bolder Station Bankruptcy. Though the Xyience situation was a much less sordid and scandalous affair than the Station Casinos bankruptcy process promises to be, there are some common threads. Unlike Xyience, though, the Fertittas have much more to lose when it comes to the casino business. I wouldn't be surprised if the Fertitta brothers completely sell off the business and confine themselves to either just a few properties or the consulting business alone.
Whatever happens, it will expose the true nature of just how ruthless billionaire business tycoons can be and what lengths they will go to in order to keep the money coming in. Those who think the Fertittas are saints and can do no wrong will ultimately have to accept that the sinner label is more appropriate. Just think about how much these guys are worth, what kind of money they're spending, and then look at what their fighters in the UFC get paid. No matter how successful the UFC becomes, it seems the league's top fighters will never get the kind of paydays that the best boxers get. This reality seems lost on most fans, and any fighter who speaks up about it knows there's a strong possibility of being blacklisted at best or thrown out of the league at worst.
For those few folks out there who know the real truth about how the Fertittas operate and the "family" history that put them where they are today, their comeuppance can't arrive too soon. Karma is a bitch.
When it rains, it pours for the Fertitta family. Last Friday the patriarch Frank Fertitta, Jr. died while undergoing treatment for heart disease in a California hospital. The death comes at the tail end of a long and painful campaign of pending bankruptcy that finally ended in the Chapter 11 proceedings that are now ongoing for Station Casinos. Services for the founding father of Station Casinos have been set for this Friday and Saturday. Yet, amidst all the major media reporting of this tragedy, only the Los Angeles Times piece on the subject has so far included the truth about the skimming investigation Frank was suspected in. Even then it was too little, too late.
The fact that Frank had been suspected of and investigated for skimming during his early career was much more important to the downfall of Station Casinos than many might think. It is this bare fact and the stigma that Frank never quite shook which kept him from being in charge of the company until his death. Instead, he was CEO of Fertitta Enterprises for a time, working on investments and land deals since he couldn't get involved in running the casinos. He left that job to his sons, with Frank III taking the reigns first in 1993. It just might be this early mantle laid upon Frank's oldest son that created the conditions which now exist today. The billionaire Fertitta brothers have shown over the years that they were never quite prepared to run the family business, unless the goal was to run it into the ground.
Perhaps the fatal blow to the family business and maybe even the father himself was the potential loss of Palace Station to Boyd gaming, a long-standing opponent and major competitor in the locals Vegas gaming market. Frank Junior reportedly spent every lunch hour he could at Palace Station, which was his true pride and joy and a place he might have loved even more than his own sons. This was the place that made the pauper into a prince. It all began with a little place called simply "The Casino." The name changed almost overnight after Frank Junior bought the shabby property and turned it into The Bingo Palace:
Knowing that Palace Station might be snatched away from the family by a well-placed bid in bankruptcy court must have been hard for Frank Junior to deal with. His sons must have been equally disturbed by the fact that their poor financial management of the company and over extending of company debt could ultimately lead to them losing their father's prized property to the highest bidder. Despite early rejections of Boyd's offers to purchase a group of core, less debt-laden properties during the days before bankruptcy set in, the competitor is now more intent than ever on acquiring whatever it can from its ailing enemy. If they get what they're looking for, it might even come at a lower price than they initially offered.
THE UFC IMPACT COULD BE SEVERE IN TIME
Dana White's attitude about Station Casinos falling on hard times was glib at first, and he insisted the casino troubles wouldn't translate into bad times ahead for the UFC. Yet, there is now talk of consolidating the WEC and UFC operations in what would ultimately be a cost-saving measure. The Fertittas seem to be showing signs of financial stress and things continue to get worse for the casino environment. There seems to be no bottom to the depression the company is experiencing with a reported $65.3 million loss posted by Station Casinos in the second quarter of this year.
Just a little less than a month before Station Casinos went bankrupt, Frank Fertitta III bought a $28 million home in Emerald Bay, which is a prime beachfront community in Orange County, California. The family was at one point ready to put up $244 million of their own family money to save the company from a painful bankruptcy. It seems Frank III decided to spend a considerable percentage of that bid when it seemed most apparent that the company couldn't be saved for that price. Meanwhile, now Lorenzo Fertitta is selling his Vegas house for 2.95 million bucks, meaning he may not be Dana White's close neighbor for much longer. Check out this amazing mansion on the market for a bargain:
Now that the company is in bankruptcy, the $244 million pre-packaged bankruptcy solution proposed by the Fertittas is out of the question.The company already reportedly has legal bills in excess of $16.2 million for the months leading up to the actual BK filing. The Fertittas themselves will also have to retain their own lawyers along with the rest of the company's directors. The road ahead is sure to be filled with turmoil as the finger of blame will likely be pointed squarely at the Fertitta brothers due to their ultimate oversight of the company during its fall from grace. More litigation will compound the bankruptcy as lenders and bondholders will try to exact revenge by trying to bust the big Fertitta piggy bank with the aid of high powered lawyers and law firms.
The Las Vegas Sun reports, "Station has already advanced retainers to Nave's law firms totaling $750,000 and to the Colony directors' law firm of $1 million; and has agreed to cover the costs of the attorneys for the Fertitta directors, the filing said. Additional costs for all the directors should be paid by Station as they are incurred, the company argued." Yet, even if the company does foot the legal bills for the moment, it will be Lorenzo and Frank III paying the price in the long run if litigation can prove they were reckless and irresponsible in their operation and oversight of Station Casinos. Though it's true that Lorenzo, Frank III, and Delise Sartini only own 24 percent of the company combined, Frank III and Lorenzo had the most principal management roles leading up to the bankruptcy. Lorenzo's departure for full-time UFC duty in 2008 is not likely to absolve him of culpability and may have been more of a cost-saving measure in hindsight. Of course, many experts would argue that Dana White really needed a babysitter, but it is also a strong possibility that Lorenzo knew the bankruptcy was coming and wanted nothing to do with burdening the company when he could be better used elsewhere.
The uglier the Station Casinos bankruptcy case gets, the more chances that the debacle will impact the UFC's operations in a negative manner. The so-called "experts" in the fight industry will claim that the two companies are wholly separate and unrelated. As such, they will further try to justify that the UFC is safe and secure no matter what happens to Station Casinos. At the same time these "experts" will harp on the bogus $1 billion price tag bestowed on the UFC by a Forbes magazine writer who seemingly never took into account the fact that there is a heavy debt load associated with the fight league that few talk about when a possible sale is discussed. My Enron of MMA page outlines all the details of the $350 million senior-secured credit facility that will make the UFC difficult to sell for a high profit margin. Even if the UFC's growth and success is perpetual, that loan will still have to be paid off in full before any sale would be worthwhile for all the players involved.
The vast wealth of the Fertitta family may actually be a barrier to the success of the UFC rather than a benefit considering the fact that the deepest pockets make the best targets when it comes to litigation. It doesn't take a rocket scientist to analyze the moves made by Station Casinos over the years and conclude that while the company itself suffered, the Fertitta family cashed in hand over fist. The litigation buck doesn't stop with Station Casinos, either. Though it's been a case that's been flying under the radar in recent months, the lawyers for the former PRIDE organization are still pursuing legal action against the Fertittas, Dana White, and Zuffa over allegedly false promises made that were supposed to guarantee PRIDE would continue as an active organization as part of the sale agreement. I have spoken personally with some of the lawyers on the case who are leaving no stone unturned and not giving up anytime soon.
While Frank Fertitta Jr.'s recent death may mean the brothers inherit some of their father's leftover fortune, even that influx of cash may not be enough to weather the storms to come. Of course, there are plenty of scenarios that could play out that might keep the Fertittas in great financial standing through all of this. Yet, to say that they are guaranteed to get through this with no real impact on the UFC is to neglect to consider the true facts at hand. Those facts point to the very real possibility that the Fertittas could exhaust their existing cash reserves while Station Casinos languishes in bankruptcy. If that happens, you might see the Fertittas seek another big loan package for the UFC putting that outfit in further debt. After all, the last UFC loan came only after the Fertittas overextended their credit with similar instruments they secured for Station Casinos. Those huge loans and an overzealous expansion of the company's gaming interests and land holdings have resulted in the current Station Casinos bankruptcy situation, and if something that big can fail so miserably, so can the UFC.
The bottom line here is that while the UFC brass and the associated spin machine will try to convince the fans that everything is on the up and up, behind the scenes times are very tough. The UFC continues to find success and expand its fan base in a manner that makes it appear ironclad and in no danger, but behind the smoke and mirrors there's a real possibility that things could soon start to go downhill fast. It all depends on what kind of impact the impending litigation and bankruptcy of Station Casinos has on the Fertitta family war chest. This is a family used to spending money at a rapid rate, and Frank III's $28 million home purchase during the toughest time Station Casinos has ever faced is a clear indicator of that. Those who might argue that it would be impossible for this family to lose everything over this might be the same folks who once thought Station Casinos would never go bankrupt.
As a huge fan of the UFC myself, I would never want to see the organization as a whole suffer over issues at a company that is supposed to be unrelated. At the same time, I have to wonder why the Fertittas would promise up to $244 million to keep Station Casinos out of a nasty bankruptcy. The only answer to that question is my mind is that they must have known if they couldn't make that deal things would get very ugly very fast. That's exactly what's happening. The only folks who will truly capitalize here are the bankruptcy lawyers, and there are already reports of huge legal fees accruing (as much as $995 per hour for some of these top-tier hot-shot attorneys).
As long as Station Casinos continues to lose revenue due to the poor economy and a prolonged bankruptcy, the Fertitta Brothers will have less money to invest in the UFC. If a complete catastrophe drains the Fertitta family coffers, they may very well try to leverage Zuffa's assets somehow. If at that point they are shafted by potential creditors and/or lenders, the real troubled waters for the company will start churning. A sale of the company might never take place as some have reported, but the lack of cash reserves could result in the UFC becoming a much more streamlined organization. Whether or not that streamlining negatively impacts the business remains to be seen, but those who tell you there will be no impact whatsoever are wishful thinkers. It all depends on how bad things get in the days to come.
SAINTS OR SINNERS? WILL THE FERTITTA REPUTATION RECOVER?
"A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was." Joseph Hall
The Fertitta family still has a rock-solid reputation in Las Vegas. Numerous reports of Frank Fertitta, Jr.'s death in the Vegas media have made no mention of the family patriarch's troubles or tribulations. The most familiar refrain in these Vegas reports reflects the fact that Station Casinos has been repeatedly represented as one of the best companies to work for in Las Vegas. These articles also laud Frank Junior for virtually inventing the locals casino market. As far as Station Casinos bankruptcy news, I've yet to find an article that even suggests that anyone in the Fertitta family was reckless or irresponsible in the business practices that led to the bankruptcy.
Only a nasty and contentious bankruptcy process, which seems inevitable, will tarnish the Fertitta image in Sin City and beyond. Local reporters will have no choice but to explain what's happening when things get truly ugly. The cracks in the facade of the once untouchable family reputation will only then become fully visible.
As the truth emerges as to just how irresponsible the Fertittas have been leading up to this bankruptcy, it will become increasingly harder for the Fertitta Brothers to do business elsewhere. The way Fertitta Enterprises handled the Xyience bankruptcy is a perfect example of how powerful people can get away with impropriety with little consequence, but that was really small potatoes compared to the current situation with Station Casinos. I truly believe the Xyience debacle was a practice run for the bigger and bolder Station Bankruptcy. Though the Xyience situation was a much less sordid and scandalous affair than the Station Casinos bankruptcy process promises to be, there are some common threads. Unlike Xyience, though, the Fertittas have much more to lose when it comes to the casino business. I wouldn't be surprised if the Fertitta brothers completely sell off the business and confine themselves to either just a few properties or the consulting business alone.
Whatever happens, it will expose the true nature of just how ruthless billionaire business tycoons can be and what lengths they will go to in order to keep the money coming in. Those who think the Fertittas are saints and can do no wrong will ultimately have to accept that the sinner label is more appropriate. Just think about how much these guys are worth, what kind of money they're spending, and then look at what their fighters in the UFC get paid. No matter how successful the UFC becomes, it seems the league's top fighters will never get the kind of paydays that the best boxers get. This reality seems lost on most fans, and any fighter who speaks up about it knows there's a strong possibility of being blacklisted at best or thrown out of the league at worst.
For those few folks out there who know the real truth about how the Fertittas operate and the "family" history that put them where they are today, their comeuppance can't arrive too soon. Karma is a bitch.
STATION CASINOS OFFICIALLY FILES BANKRUPTCY
By: Rich Bergeron
Station Casinos has filed for bankruptcy after negotiations with creditors failed to produce a workable solution. While the bankruptcy filing only affects a portion of the vast business and its many arms, it could be a very long fight. The company, laden with an estimated $5.7 billion in debt, is playing off the move as nothing to get alarmed about in recent press reports:
LAS VEGAS REVIEW-JOURNAL: CHAPTER 11 PROTECTION: Station Casinos regroups, continues normal operations at resorts
Hurt by Debt, Casino Firm Station Files for Chapter 11
Station Casinos ends negotiations with bondholders, files for Ch. 11 protection
ASSOCIATED PRESS STORY ON BANKRUPTCY
CASINO CONSULTING AND MANAGEMENT COMPANY NOT PART OF BANKRUPTCY
Station Casinos has filed for bankruptcy after negotiations with creditors failed to produce a workable solution. While the bankruptcy filing only affects a portion of the vast business and its many arms, it could be a very long fight. The company, laden with an estimated $5.7 billion in debt, is playing off the move as nothing to get alarmed about in recent press reports:
LAS VEGAS REVIEW-JOURNAL: CHAPTER 11 PROTECTION: Station Casinos regroups, continues normal operations at resorts
Hurt by Debt, Casino Firm Station Files for Chapter 11
Station Casinos ends negotiations with bondholders, files for Ch. 11 protection
ASSOCIATED PRESS STORY ON BANKRUPTCY
CASINO CONSULTING AND MANAGEMENT COMPANY NOT PART OF BANKRUPTCY
Looking FOR LEVERAGE: Fertittas' Station Casinos Empire Running Out of Time
By: Rich Bergeron
The Fertitta Family is in crisis mode to save Station Casinos from the throes of bankruptcy, and without a solution materializing by Thursday there could be some major trouble brewing for the multi-billion dollar gaming empire.
While the Fertittas are not the only ones who find themselves stuck in the stagnant economy and obliterated by Las Vegas' worst-in-the-nation housing crisis, they are one of the most heavily leveraged casino operators and land-owners in an industry that depends on both locals and tourists alike being able to pay to play.
The Las Vegas Sun got the jump on the situation yesterday by printing a piece about commonly situated Harrah's and Station's different approaches to getting out from under their massive private debt. Sun Reporter Liz Benston described the troubling outlook in no uncertain terms:
"Analysts say Station will likely default on the company’s bank loans by year’s end because it has too much debt relative to cash flow. That could allow the bank to demand repayment, triggering a filing for bankruptcy protection."
The company's new deadline for a debt exchange Hail Mary has been set. They have until 5PM on December 11 to consider all the options on the table. Assets could potentially be sold, and reports have surfaced indicating the Fertitta Family is willing to put their own money to the cause, but they certainly won't be getting any sweetheart deals out of this scenario.
One thing's for sure, Uncle Sam will not be bailing out any casinos.
The Fertittas live in the lap of luxury, and it's not out of the realm of possibility to maintain that lifestyle even despite a potentially ugly bankruptcy of Station Casinos. Right now Frank Fertitta, Jr ranks at #20 on the list of the top 100 property tax payers in the Spring Valley CDP district of Vegas.
Frank's next-door neighbor is none other than former Aladdin Casino owner Jack Sommer, so he has someone one door down who could give him all the casino-related bankruptcy advice he needs should Station Casinos decide to go that route.
Frank Junior's sons live in mansions, too. Lorenzo's got a multi-million dollar house on Greensboro Lane, and brother Frank Fertitta III has the kind of obnoxiously huge spread that is best classified as a complex. Here's a great shot of the manse:
Vegas has been very, very good to the Fertitta family so far, but this economic crunch time comes at the worst possible moment. They are stuck at the apex of their aggressive development and massive expansion of the Station Casinos suburban hot-spot model. The company's strategy of developing huge resort-style casino communities in the suburban areas of Vegas backfired amidst the massive wave of foreclosures in those very same areas.
A town that has seen its fair share of casino implosions is undergoing a major makeover of the strip, evidenced by the recent completion of what is sure to become the next big Vegas spectacle: A GIANT VOLCANO AT THE MIRAGE THAT COST $25 MILLION JUST TO CONSTRUCT. Cranes and crowds of construction workers populate the strip now, fast at work creating a new lavish landscape for tourists to be amazed by.
And for those who didn't want to be spectacles themselves there would always be the off-strip offerings of Station Casinos like the new Red Rock facility and the still unique and secluded Green Valley Ranch--each promising pampering, privacy, and perfect ambiance. Yet, no longer are so many bigwig executives throughout the busted economy able to blow so much money without batting an eye. The out of the way premium stops are being skipped over for the conglomerated and concentrated on-strip locations. Facilities like Red Rock may be obsolete before they even get off and running, but there's no doubt a whole new level of luxury available there:
Green Valley Ranch looks like the kind of fantasy land that makes you forget you're there for the casino in the first place:
By the time the Fertittas cornered the suburban market, the market had suddenly disappeared. Yet, Station Casinos has faced difficulty before, and they'll hang on tight here and do what it takes to weather the rough patch. Industry suggestions that the company will be bankrupt by the end of the year may be premature, but not impossible at this point. If the Fertittas have mastered one thing in the business it is how to make their customers feel welcome. They represent the image of cut and polished business masterminds, yet they maxed out the company's available debt limit with massive senior secured credit facilities based on a gamble that didn't account for any downturns or deep recessions. You almost have to ask at this point if this is another Kansas City Shuffle going on behind closed doors. The way you get maximum leverage is to always be building.
As the folks who jacked up Boston's "Big-Dig" highway project know all too well, you can come up with some legendary billing proportions for construction on that kind of scale. I think the Dig's not even done yet. What is finished barely even solved the problem and went waaaaaaaaaaayyyyyyyyyyyyy over budget. Not to mention it literally had fatal flaws.
It's easy to lose track of small expenditures when you're dealing in hundreds of millions and every now and then even billions of dollars in contracts, land grabs, and expansion plans. If you cut corners you can free up more dough to play around with.
In organized crime terminology when it comes to casino operations, the off the top tariff called "the skim" has evolved drastically. There is a whole new atmosphere in town. There are corporate land barons and casino magnates running things now rather than Mafia capos. Yet, are we to imagine by any stretch that all the strawmen are truly gone from Vegas? Something tells me the Mob always finds a way to infiltrate from afar and will always have some kind of iron grip on Vegas. Being pushed further underground has only made the organization more tight knit and unwilling to give up any new secrets. They have to come up with more sophisticated schemes and more subtle ways to exert influence. But if they're still entrenched in town, they're hurting, too.
The Fertitta family aren't the only ones in Vegas feeling the pinch.
They're not even the only ones in the world suffering. Australia's gaming interests are reeling, too.
Tourists pinching pennies seem to be going for a look but don't touch approach, and it can't be good for the future of gaming. Boxing and Mixed Martial arts events promoted in Vegas may also suffer in the long run. Only time will tell.
The Fertittas financial issues are by no means limited to Vegas, either. California has been troublesome, too.
The Fertitta family's foray into being publicly traded doesn't seem to have turned out as the Fertittas had planned, and the private buyback last year seems to have over-burdened the brand with hard to shed debt instruments. The Fertittas are reciting a new rendition of the old Robert Frost poem this winter in Vegas:
These times are ugly, dark and deep,
But we have promises to keep,
And billions to pay before we sleep,
And billions to pay before we sleep.
Like the lawyers who promote needless delay in the bankruptcy case, the Fertittas seem to be putting off the inevitable, scrambling to figure out a deal. Lately they've been pushing back deadlines as the local Vegas tourism numbers begin to look weaker and weaker:
Station Casinos extends bond offer deadline again
LAS VEGAS TOURISM: Visitor tally continues to slide
UNLV economist says unemployment eventually may hit 10 percent locally
It should be no surprise that nobody in Vegas saw this coming or bothered to try and stop the corruption at the heart of this whole series of reports, spanning more than two years of my life now. After all, we're talking about a town spending $50 Million on a Mafia Museum project bolstered by its main backer: ex-mob-lawyer-turned-Mayor Oscar Goodman. Regardless of who is looked upon as the lesser of two evils, be it the Corporate Conglomerate or the Criminal Enterprise both now sharing Space in the new age Vegas, the common people always lose in the long run when greed takes over.
OTHER LINKS OF INTEREST:
STATION CASINOS FIGHTING OFF BANKRUPTCY
History of Las Vegas
JACK SOMMER'S GOOD FORTUNE
Aladdin Property History
The Fertitta Family is in crisis mode to save Station Casinos from the throes of bankruptcy, and without a solution materializing by Thursday there could be some major trouble brewing for the multi-billion dollar gaming empire.
While the Fertittas are not the only ones who find themselves stuck in the stagnant economy and obliterated by Las Vegas' worst-in-the-nation housing crisis, they are one of the most heavily leveraged casino operators and land-owners in an industry that depends on both locals and tourists alike being able to pay to play.
The Las Vegas Sun got the jump on the situation yesterday by printing a piece about commonly situated Harrah's and Station's different approaches to getting out from under their massive private debt. Sun Reporter Liz Benston described the troubling outlook in no uncertain terms:
"Analysts say Station will likely default on the company’s bank loans by year’s end because it has too much debt relative to cash flow. That could allow the bank to demand repayment, triggering a filing for bankruptcy protection."
The company's new deadline for a debt exchange Hail Mary has been set. They have until 5PM on December 11 to consider all the options on the table. Assets could potentially be sold, and reports have surfaced indicating the Fertitta Family is willing to put their own money to the cause, but they certainly won't be getting any sweetheart deals out of this scenario.
One thing's for sure, Uncle Sam will not be bailing out any casinos.
The Fertittas live in the lap of luxury, and it's not out of the realm of possibility to maintain that lifestyle even despite a potentially ugly bankruptcy of Station Casinos. Right now Frank Fertitta, Jr ranks at #20 on the list of the top 100 property tax payers in the Spring Valley CDP district of Vegas.
Frank's next-door neighbor is none other than former Aladdin Casino owner Jack Sommer, so he has someone one door down who could give him all the casino-related bankruptcy advice he needs should Station Casinos decide to go that route.
Frank Junior's sons live in mansions, too. Lorenzo's got a multi-million dollar house on Greensboro Lane, and brother Frank Fertitta III has the kind of obnoxiously huge spread that is best classified as a complex. Here's a great shot of the manse:
Vegas has been very, very good to the Fertitta family so far, but this economic crunch time comes at the worst possible moment. They are stuck at the apex of their aggressive development and massive expansion of the Station Casinos suburban hot-spot model. The company's strategy of developing huge resort-style casino communities in the suburban areas of Vegas backfired amidst the massive wave of foreclosures in those very same areas.
A town that has seen its fair share of casino implosions is undergoing a major makeover of the strip, evidenced by the recent completion of what is sure to become the next big Vegas spectacle: A GIANT VOLCANO AT THE MIRAGE THAT COST $25 MILLION JUST TO CONSTRUCT. Cranes and crowds of construction workers populate the strip now, fast at work creating a new lavish landscape for tourists to be amazed by.
And for those who didn't want to be spectacles themselves there would always be the off-strip offerings of Station Casinos like the new Red Rock facility and the still unique and secluded Green Valley Ranch--each promising pampering, privacy, and perfect ambiance. Yet, no longer are so many bigwig executives throughout the busted economy able to blow so much money without batting an eye. The out of the way premium stops are being skipped over for the conglomerated and concentrated on-strip locations. Facilities like Red Rock may be obsolete before they even get off and running, but there's no doubt a whole new level of luxury available there:
Green Valley Ranch looks like the kind of fantasy land that makes you forget you're there for the casino in the first place:
By the time the Fertittas cornered the suburban market, the market had suddenly disappeared. Yet, Station Casinos has faced difficulty before, and they'll hang on tight here and do what it takes to weather the rough patch. Industry suggestions that the company will be bankrupt by the end of the year may be premature, but not impossible at this point. If the Fertittas have mastered one thing in the business it is how to make their customers feel welcome. They represent the image of cut and polished business masterminds, yet they maxed out the company's available debt limit with massive senior secured credit facilities based on a gamble that didn't account for any downturns or deep recessions. You almost have to ask at this point if this is another Kansas City Shuffle going on behind closed doors. The way you get maximum leverage is to always be building.
As the folks who jacked up Boston's "Big-Dig" highway project know all too well, you can come up with some legendary billing proportions for construction on that kind of scale. I think the Dig's not even done yet. What is finished barely even solved the problem and went waaaaaaaaaaayyyyyyyyyyyyy over budget. Not to mention it literally had fatal flaws.
It's easy to lose track of small expenditures when you're dealing in hundreds of millions and every now and then even billions of dollars in contracts, land grabs, and expansion plans. If you cut corners you can free up more dough to play around with.
In organized crime terminology when it comes to casino operations, the off the top tariff called "the skim" has evolved drastically. There is a whole new atmosphere in town. There are corporate land barons and casino magnates running things now rather than Mafia capos. Yet, are we to imagine by any stretch that all the strawmen are truly gone from Vegas? Something tells me the Mob always finds a way to infiltrate from afar and will always have some kind of iron grip on Vegas. Being pushed further underground has only made the organization more tight knit and unwilling to give up any new secrets. They have to come up with more sophisticated schemes and more subtle ways to exert influence. But if they're still entrenched in town, they're hurting, too.
The Fertitta family aren't the only ones in Vegas feeling the pinch.
They're not even the only ones in the world suffering. Australia's gaming interests are reeling, too.
Tourists pinching pennies seem to be going for a look but don't touch approach, and it can't be good for the future of gaming. Boxing and Mixed Martial arts events promoted in Vegas may also suffer in the long run. Only time will tell.
The Fertittas financial issues are by no means limited to Vegas, either. California has been troublesome, too.
The Fertitta family's foray into being publicly traded doesn't seem to have turned out as the Fertittas had planned, and the private buyback last year seems to have over-burdened the brand with hard to shed debt instruments. The Fertittas are reciting a new rendition of the old Robert Frost poem this winter in Vegas:
These times are ugly, dark and deep,
But we have promises to keep,
And billions to pay before we sleep,
And billions to pay before we sleep.
Like the lawyers who promote needless delay in the bankruptcy case, the Fertittas seem to be putting off the inevitable, scrambling to figure out a deal. Lately they've been pushing back deadlines as the local Vegas tourism numbers begin to look weaker and weaker:
Station Casinos extends bond offer deadline again
LAS VEGAS TOURISM: Visitor tally continues to slide
UNLV economist says unemployment eventually may hit 10 percent locally
It should be no surprise that nobody in Vegas saw this coming or bothered to try and stop the corruption at the heart of this whole series of reports, spanning more than two years of my life now. After all, we're talking about a town spending $50 Million on a Mafia Museum project bolstered by its main backer: ex-mob-lawyer-turned-Mayor Oscar Goodman. Regardless of who is looked upon as the lesser of two evils, be it the Corporate Conglomerate or the Criminal Enterprise both now sharing Space in the new age Vegas, the common people always lose in the long run when greed takes over.
OTHER LINKS OF INTEREST:
STATION CASINOS FIGHTING OFF BANKRUPTCY
History of Las Vegas
JACK SOMMER'S GOOD FORTUNE
Aladdin Property History
Fertitta Enterprises, the Fertitta Brothers, PRIDE, Zuffa, and Xyience: Inside the pattern of fraud
Xyience, Incorporated completed a sale of the company recently (see April Fools Day Sale article) through bankruptcy court, leaving creditors and investors looking elsewhere to lay the blame for the damages done to them. Fertitta Enterprises may be the first in line to face the throng of disappointed and devastated folks left in the lurch by the bankruptcy. Shareholders were promised the Fertitta funding would save the company from this fate, but instead it seems that very funding is what drove Xyience into the ground. In addition to the Xyience case, present and past litigation against Fertitta interests reveals some very troubling patterns of alleged fraudulent business activity.
The situation only gets more complicated with each day, and though adversary cases are still pending in bankruptcy court, a recent ORDER filed in the main case leaves the company in new hands “free and clear of liens.” In other words, Xyience itself may never have to pay out a dime in damages or past due bills despite all the victims the company left in the wake of its Chapter 11 filing.
Having to compile court documents of my own to illustrate a direct pattern of fraudulent behavior on behalf of the Fertittas, I recently dug up some interesting findings. First of all, I checked the financial history of Station Casinos. A great effort to take the company private came to a crescendo last year, but there is still a great deal of public information available about the major chain of casinos.
To prevent rehashing too much of the boring details here, I’ve taken the liberty of listing the following sites where more information about the financials of Station Casinos can be found:
SEC SCHEDULE 13D FOR STATION
CLASS ACTION REPORTER ACCOUNTS OF STATION'S MERGER-RELATED LAWSUITS
SEC INFO REGARDING THE MERGER SUITS AND A CLASS ACTION CASE BEING PURSUED BY STATION EMPLOYEES
SEC INFO ON FRANK FERTITTA III
SEC FORM 10-K FOR STATION
Though the company is off the trading block, I found the following passage in my research explaining why there are still some reporting duties required:
“The Surviving Corporation will, however, continue to file periodic reports with the Securities and Exchange Commission, because the voting common stock of the Surviving Corporation will be registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, and such reports may be required by indentures governing the outstanding indebtedness of the Surviving Corporation or applicable law.”
First, let’s examine exactly what entities merged to create the newly consolidated Station Casinos under the banner of Fertitta Colony Partners (FCP): FCP is a company formed by Frank J. Fertitta III, chairman and chief executive officer of Station; Lorenzo J. Fertitta, vice chairman and president of Station; and Colony Capital Acquisitions, LLC, an affiliate of Colony Capital, LLC..
The new business entity left behind a situation not all that different from the Xyience bankruptcy. Multiple lawsuits resulted, and the recent public reporting of the financial condition of Station Casinos reveals the who, what, and why:
WHO SUED:
Roessler v. Station Casinos, Inc., et al., Case No. A532637;
Filhaber v. Station Casinos Inc., et al., Case No. A532499;
Traynor v. Station Casinos, Inc., et al, Case No. A532407;
Goldmann v. Station Casinos, Inc., et al., Case No. A532395;
Griffiths v. Station Casinos, Inc., et al., Case No. A533806; and
West Palm Beach Firefighters' Pension Fund v. Station Casinos, Inc., et al., Case No. 07-A536211.
WHY THEY SUED:
On June 1, 2007, the plaintiffs filed an amended consolidated class action complaint (the "Amended Complaint") in the District Court against Station, Station's directors, Frank J. Fertitta III, Lorenzo J. Fertitta, Blake L. Sartini and Delise F. Sartini, Colony Capital, LLC ("Colony"), Colony Capital Acquisitions, LLC ("Colony Acquisitions") and FCP. The Amended Complaint alleges that Station's directors breached their fiduciary duties to Station and its stockholders. The Amended Complaint also alleges that Frank J. Fertitta III, Lorenzo J. Fertitta, Blake L. Sartini, Delise F. Sartini, FCP, Colony and Colony Acquisitions knowingly aided and abetted the Company's directors in breaching their fiduciary duties to the Company's public stockholders. The Amended Complaint sought an injunction preliminarily and permanently enjoining the defendants from proceeding with, consummating or closing the Merger transaction, and demanded that the plaintiffs be awarded their costs and disbursements incurred in connection with this action, including reasonable attorneys' fees and reimbursement of expenses.
WHAT HAPPENED:
In November 2007, in order to resolve the litigation and avoid further cost and delay, the Company and the individual defendants, without admitting any wrongdoing, entered into a global stipulation of settlement with plaintiffs ("Proposed Settlement"). Pursuant to the Proposed Settlement, the Company made supplemental disclosures in its Definitive Proxy Statement filed with the SEC on July 9, 2007, to address certain claims raised in the Consolidated Action. As part of the Proposed Settlement, plaintiffs' counsel applied to the Court for an award of attorneys' fees in the amount of $1.9 million, inclusive of costs and expenses. The Company agreed to pay the fees and expenses on behalf of all plaintiffs as awarded by the court in an amount up to $1.9 million.
On December 11, 2007, the District Court preliminarily approved the Proposed Settlement. Thereafter, notice of the Proposed Settlement was disseminated to more than 31,000 former shareholders of Station and published in the Wall Street Journal (national edition), the Los Angeles Times and the Las Vegas Review Journal.
None of the former shareholders objected to the terms of the Proposed Settlement. Consequently, at a hearing on February 11, 2008, Judge Mark R. Denton of the District Court approved the Proposed Settlement of the Consolidated Action.
Station dodged that bullet only to face another uprising from its own former employees:
On February 4, 2008, Josh Luckevich, Cathy Scott and Julie St. Cyr filed a class action complaint in the United States District Court for the District of Nevada, Case No. CV-00141, against Station Casinos. The plaintiffs are all former employees of the Company. The complaint alleges that the Company (i) failed to pay its employees for all hours worked, (ii) failed to pay overtime, (iii) failed to timely pay wages and (iv) unlawfully converted certain earned wages. The complaint seeks, among other relief, class certification of the lawsuit, compensatory damages in excess of $5,000,000, punitive damages and an award of attorneys' fees and expenses to plaintiffs' counsel.
The latest class action complaint is peculiar to say the least when matched up with some choice quotes from Lorenzo Fertitta that I discovered on the spring of 2007 CLASS NOTES PAGE FOR NYU’S STERN BUSINESS SCHOOL:
“Of all the success we’ve had with Station Casinos, I am most proud to have been selected by Fortune magazine as one of the top 100 companies for whom to work,” said Fertitta. “We were ranked at number 18 and are up there with industry giants Nordstrom and Google. One of the best pieces of advice I’ve received is to surround yourself with good people and treat them right. Being ranked as one of the top 100 companies to work for was validation for me that we’re doing just that.”
Hypocritical though it may seem now when looking back at that statement in light of the employee suit, an even bigger whopper came later in his remarks. The follow up Lorenzo offered was just plain ironic:
“Asked to offer insider’s tips on gambling to his fellow alumni, Fertitta stepped outside his professional persona and exclaimed, ‘Yes, stop doing it! I took finance with Professor Aswath Damodaran and know that there are better ways to get a return, dollar for dollar.’”
Seems hard to believe a man who owes his fortune to gambling and casinos—built off the backs of previous generations of similar (and sometimes much more devious/illegal) business interests—would advise anyone not to gamble.
It appears there may be trouble ahead for Station Casinos because so many people seem to be taking Lorenzo Fertitta’s advice. Recent Station financial reports reveal that there may be trouble ahead for the heavily leveraged corporation. (see www.secinfo.com/dVut2.t26p.htm)The reports point the finger of blame at the state of the national economy, the credit and mortgage crises, and the conditions of the merger. Here’s a snippet:
“Our high leverage and debt service obligations could adversely affect our ability to raise additional capital to fund our operations, increase our vulnerability to general adverse economic and industry conditions, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations. As a result of the Merger, we are highly leveraged. Our ability to make scheduled payments on, or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to general economic, financial, competitive and other factors that are beyond our control. While we believe that we currently have adequate cash flows to service our indebtedness, if our economic performance were to deteriorate significantly, we may be unable to maintain a level of cash flows from operating activities sufficient to enable us to pay the principal, premium, if any, and interest on our indebtedness.”
The Fertittas are facing other threats due to their interests in Zuffa. Brothers Lorenzo and Frank Fertitta III own 90% of Zuffa, LLC which includes the UFC, WEC, and what’s left of PRIDE. Illustrating a common theme of complaints lodged against the famed casino magnates, a lawsuit filed by former PRIDE owners cites “fraudulent and negligent misrepresentation and breach of the covenant of good faith and fair dealing” regarding the deal that ultimately resulted in the death of the premiere MMA league. The suit came on the heels of Zuffa’s own suit against the PRIDE principals, and the fight ahead promises to get pretty ugly.
The litigation all revolves around agreements reached between PRIDE and Zuffa in mid-April to late May of 2007. The PRIDE complaint explains:
“As a result of the world-class reputation that Sakakibara created with the PRIDE brand, numerous entities were very interested is purchasing PRIDE. Included among these interested purchasers were the Fertittas. Although Plaintiffs had numerous "suitors" for PRIDE, Plaintiffs ultimately selected Defendants as the buyer for PRIDE. Although the financial amounts offered by other suitors would have exceeded that offered by the Defendants, Plaintiffs sold PRIDE to the Defendants. The biggest reason for such decision was the Defendants' insistence and promise to keep the PRIDE brand as a global top-level brand.”
Those involved in the Xyience situation as investors ratifying the Fertitta infusion of capital in November of 2007 also trusted the billionaire businessmen to maintain and build on the Xyience brand. Instead, they bankrupted Xyience and broke all their promises. Though they have a long list of excuses for why they ultimately dismantled PRIDE, Zuffa originally came out publicly with Dana White claiming they would create a “Superbowl” type event every year by coordinating both leagues and keeping both running strong. Also like Xyience, the litigation regarding PRIDE alleges that the plan all along was to destroy the business to enrich the players who made the deal happen.
Remember that the $350 million senior secured credit facility Zuffa received in the summer of 2007 paid for the PRIDE purchase while also providing huge dividends to the Fertitta brothers and Dana White. Yet, despite Dana White being the front man for Zuffa and spouting promises about what would happen to PRIDE, according to the Sakakibara suit it was primarily the Fertitta brothers who made the most significant vows to make the marriage happen during October, 2006 negotiations:
“During the negotiations, Lorenzo J. Fertitta told Sakakibara that for the sound growth of the entire mixed martial arts industry over the course of the next 20 to 30 years, it was essential for both PRIDE and UFC to have the same owner who would manage and maintain these two brands from a position akin to a commissioner so that appropriate order and rules could be created to protect fighters and maintain and expand the market. Based on these comments made by the Fertittas, Sakakibara was pleased that the Fertittas' seemed to share a sincere concern and understanding for the industry and the PRIDE
brand. This sincerity proved untrue based on subsequent events.”
The lawsuit claims Dana White’s culpability in the deal only came later when he allegedly revealed the true motives of Zuffa for acquiring PRIDE:
“Dana White, the president of Zuffa, was present during the initial negotiations, and later stated that the goal of the entering into the transaction with Plaintiffs was acquiring PRIDE fighters and PRIDE's video footage of prior PRIDE fights.”
Having denied several other interested parties the opportunity to purchase the league, the asset purchase agreement signed on April 17, 2007 stipulated a requirement that PRIDE be maintained as a top-tier MMA brand. The lawsuit alleges that the sale only went through (at a much lower price than other entities offered) because the former PRIDE owners were confident Zuffa would fulfill all their promises. The suit goes on to explain that there has not been a single PRIDE show since the sale and all former PRIDE employees were fired. The Japan offices closed as a result.
In addition to problems with the sale stipulations, the suit also outlines issues with the consulting agreement signed by the parties:
“While Defendants made the immediate payment portion of the Consulting Fee due to Plaintiffs, as well as three (3) Monthly Consulting Fee payments, the last monthly payment paid by Defendants to Plaintiffs was the August, 2007 payment. Defendants have not made the required Monthly Consulting Fee payments since that time. Plaintiffs have demanded payment of the Consulting Fee through letters or emails to Defendants dated October 3, 2007, October 10, 2007 and October 17, 2007, and in a Notice of Default dated November 20, 2007. Defendants have refused to pay the Consulting Fee, either on a monthly basis or in a lump sum as required by the Consulting Agreement.”
Zuffa apparently refused those payments due to the lack of background checks done on the plaintiffs in the Sakakibara suit. The lawsuit claims those checks are actually not required as part of the consulting agreement. Though mentioned in the sale agreement, the checks were designed for those former PRIDE employees retained by Zuffa after the sale, and the Sakakibara suit plaintiffs were allegedly never meant to be actually employed by Zuffa at any time. There is a gray area regarding Sakakibara’s own requirement to pass background checks, but the plaintiff claims that under Nevada Gaming Commission rules he actually obtained a license based on sufficient checks of his background that revealed he has never committed a crime.
Despite the lack of any connection between Zuffa’s operations and the Nevada Gaming Commission beyond the Fertittas being operating owners of Station Casinos, apparently there is some argument as to whether or not the former PRIDE officials should have been subject to the background checks required by Nevada Gaming Commission regulations.
Ironically, the complaint was actually filed on April 2, 2008 and dated April 1, the same day that the Xyience “auction” resulted in a purchase agreement being signed by Manchester Consolidated Corporation. The complaint seeks at least $10 million in damages.
A hearing will be held on April 28th regarding Dream Stage Entertainment’s motion to dismiss the lawsuit brought against the former PRIDE owners by Pride FC Worldwide Holdings, LLC (the entity created by Zuffa upon purchasing PRIDE).
To make matters worse for Zuffa and the Fertittas, the Randy Couture debacle rages on in three separate proceedings, including one that is now destined to be decided in the Texas courts due to HDNet’s involvement. Dallas Mavericks Owner and HDNET Pioneer Mark Cuban (see above picture) entered into the fray against Zuffa with the intention of helping free Couture from his contract in order to help make the Couture vs. Fedor fight happen under the banner of his MMA league. An order filed on April 9th granted a remand of the dispute to the 193rd Judicial District Court of Dallas County, Texas.
Despite instigating so much suffering and victimizing so many innocent people, the brothers Fertitta are still firmly in control of an empire worth billions. They even allegedly shortchanged the same people who helped them sustain that empire by toiling at their casinos day after day. Past victims tried various attempts to hold these men accountable for their financial transgressions, but so far even civil litigation has fallen short of taking them to task. While poised to get away with their latest round of fraud in a court system that may be more friendly to them than any other litigant in Nevada, the Fertittas truly live in the lap of luxury.
Take a look for yourself at the mansions they occupy (according to PRIDE suit address listings for the brothers):
LORENZO'S HOUSE
Frank's Old House (Dana White Lives There Now)
FRANK'S New Neighborhood
As another famous crooked millionaire might say: “Only in America.”
Stay tuned for further reports focused on Xyience’s ongoing bankruptcy situation and the aftermath of the recent sale of Xyience’s assets to Manchester Consolidated Corporation.
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