Station Casinos sitting on proverbial gold mine

Tomorrow night, Station Casinos debuts its newest property, Red Rock Casino, Resort & Spa. Not only is it the company’s biggest casino to date, it also represents a shift in focus toward the 215 Beltway and the continuing outward expansion of Las Vegas‘ suburbs. Red Rock is but the newest bullet in a bandolier of casino-resorts that will encircle the valley, from Aliante in North Las Vegas, to Siena and Rhodes Ranch in the southwest, and a Cactus Avenue-sited project to the south, just off I-15.

But, as Station reaches outward, will its older, center-valley casinos get left behind? When does it plan to address its inner-city site, where the Castaways formerly languished? How does expansion into Reno fit into this timetable? And what of the frequent rumors that have Station, once mooted as a bidder on the Tropicana Resort & Casino, kicking the tires of various projects down on the Strip, where it owns the Wild Wild West Gambling Hall & Hotel?

In the second part of a conversation with the Business Press, Station Casinos Chief Financial Officer Glenn Christenson addresses these and other questions.

Business Press: Given Mayor Michael Montandon’s opposition to additional gambling in North Las Vegas, what do you do with your other, non-gaming-enabled parcel up there: Hang onto it or sell it to generate cash?

Glenn Christenson: Owning land in Las Vegas these days is a very good thing and this is an excellent location for a gaming site, if the city fathers decide that they would allow one there. If they don’t, that’s fine. Whatever the rules are, we are in an enviable position. For right now, we’ll own it. We’ll see how things shake out in the future and if we can build something there, we will. We’ll either develop it ourselves in a non-gaming fashion or sell it to someone else who will.

BP: People have been speculating for years over whether Station would get into the Strip market. Is that window of opportunity still there?

GC: We have had many opportunities over the years to invest in the Las Vegas Strip and we continue to be presented opportunities. If we saw something on the Las Vegas Strip that we thought made sense for our shareholders, we certainly could go down there. Right now, our primary focus is on the local market.

As people see the evolution of our properties from Sunset Station to Green Valley Ranch to Red Rock Resort, they understand that we have the ability to go down there (to the Strip) and be successful. It’s just a question of whether we would or not. If we saw the right opportunity, we would take advantage of it. I’ll tell you that we have looked at numerous opportunities down there and thus far we have not found the right one.

The other thing we need to remember is we own 67 acres at the Wild Wild West site. That piece of property is as large as the land where the Frontier and the Tropicana sit today — combined. So it’s a very large piece of property that we can develop in a number of ways. I would anticipate that property would have more of a tourist orientation than some of our others because its proximity to the Strip would require us to build more hotel rooms there.

BP: How much of your staff out at Red Rock is new to the company and how many are from other Station properties?

GC: We have had no problems staffing Red Rock and one of the reasons for that is we were recognized as one of the top 100 companies to work for, by Fortune magazine. When we open up new properties, it’s very important to seed them with folks that have come to understand the culture at Station Casinos, but it’s also refreshing to get some new blood in there and have new ideas that we can take advantage and expand on.

BP: What’s your casino-development timeline after Red Rock?

GC: We have probably as strong a growth pipeline as anyone in the gaming industry, arguably the strongest. Right now, our primary focus is making sure that Red Rock opens in the way that we want it to. We have three other master-planned expansions that will come on line during the course of this year — at least the first phases of those. The total of all that development is about a billion-two (dollars), so we want to make sure that those things come on line.

We’ll start on (Aliante) at the beginning of next year and it’ll be open in the middle of ’08. We’ll announce what’s after Aliante when we are prepared to, but we are actively in the design phase of each one of those projects.

BP: For the redevelopment of the Castaways site, how far out are we talking?

GC: Oh, it depends on what’s in front of us in terms of investment opportunities. We have, right now, between $ 900 million to $ 1.3 billion of developable land and our focus over the next five to seven years is to convert as much of that into cash-producing assets as we can. It’s our intention to be aggressive. We’re just not prepared today to lay out how we see these things coming together.

BP: As far as the older properties, do you have any sort of schedule for refurbishing them?

GC: We’re constantly tweaking the properties and keeping them fresh. We’re looking at a master-plan expansion at Boulder Station (and) Sunset Station. We’ve done several already at Santa Fe and Green Valley Ranch.

Probably the mother of all master-planned expansions or future opportunities would be here at Palace Station. We’ve got about 40 acres here that is arguably one of the best off-Strip locations in Las Vegas. We have chosen to let Palace operate as it has historically because we’ve had so many other opportunities to develop. But there’ll come a day when we decide we want to do something at Palace. When it is, it’ll be a very special project. But that’s farther down the road than these other things. The Durango (Rhodes Ranch) site, Reno and Castaways are much more near-term.

BP: How do you make sure the older properties don’t get left behind, given the understandable temptation to focus on the new?

GC: Boulder Station continues to crank out record numbers and we’ve kept that property very fresh. Our customers over there love it. We don’t allow (our casinos) to get run down and it’s part of our overall financial discipline. We’re spending a lot of time looking at master-planned expansions of some of the older properties now.

I say „older.“ (Boulder Station is) only like it’s 12 years old. It’s not ancient. In dog years here at Station, it seems like it. [Laughs]