A smaller investment in capital improvements at Caesars Entertainment’s Atlantic City Boardwalk casinos has resulted in a historic revenue dip at the two properties, according to a report by the New Jersey Division of Gaming Enforcement.
According to the report, since 2008, Caesars and Bally’s Atlantic City have spent a combined $176 million on capital improvements at the two Boardwalk properties. Meanwhile, Harrah’s Resort, which is owned by a separate arm of Caesars, spent more than $215 million and Borgata Hotel Casino & Spa spent more than $207 million on capital improvements, according to an analysis of the report by the Press of Atlantic City.
Regulators said they hope the recently approved Caesars bankruptcy reorganization, which could go into effect in late September, leads to more capital improvements at the properties
“The relatively low level of capital expenditures is, in the division’s view, one reason that the net revenues from Caesars AC and Bally’s remain well below historical levels,” the report said. “In the Division opinion, the projected capital expenditures for 2017 and 2018 would not be sufficient to address past deficiencies and provide a much-needed boost to their competitive positions.”
For 2017, Caesars Atlantic City has budgeted only $2 million for improvements, while Bally’s has budgeted $4.4 million. Funding for improvements in 2018 will increase to $5 million for both properties, according to the state report.
Caesars officials have said they intend to increase investment in the Boardwalk properties, but it could take some time.
“In the first few years, I suspect that there was not any impact,” said Eric Hession, chief financial officer for Caesars Entertainment, during a recent state Casino Control Commission hearing on the issue. “As the years went on, capital was a lot tighter. Bally’s and Caesars likely received less capital during that time.”
“We have done a small amount of rooms at Bally’s and roughly 450 rooms at Caesars, and those are performing well,” Hession said. “We are in the process of putting our capital plan to together for the next couple of years. Suites at Caesars are on that list, and we are looking at a block of 100 rooms at Bally’s for 2018/2019.”
