World Series of Poker owner Caesars Entertainment has defaulted on a $225 million bond payment and is rumored to be close to signing a bankruptcy deal.
It’s no secret that Caesars’ debt is monumental, and currently stands, as of September, at an all-time industry high of $22.8 billion, which is more than the bankrupt city of Detroit.
The company acquired most of this when it went private in 2008 following a $30.1 billion takeover by hedge-funds Apollo Global Management and TPG Capital.
This was just at the time of the global economic downturn, and, as recession hit the land-based casino industry in US, Caesars, with its 50 casinos, felt it the hardest.
It has lost money every year since 2009 and has struggled to pay the interest on its gargantuan debt. It recently posted 2014 Q3 losses of $908.1 million.
Caesars has been negotiating with its creditors to restructure its debt in order to ward off the seemingly inevitable bankruptcy filing, but according to sources at Bloomberg it is now close to reaching a deal that would put its most debt-ridden arm, Caesars Entertainment Operating Co (CEOC), into Chapter 11 proceedings by January 15. CEOC is responsible for some $18 billion of the entire $22.8 billion.
Following that, the restructuring-support agreement would commit creditors to vote for a reorganization plan that they have been instrumental in writing, says Bloomberg.
But what does all this mean for the World Series of Poker? Well, hopefully very little. It is a profitable brand, which helps, and while it is owned by the parent company, Caesars Entertainment, it is now part of Caesars Interactive Entertainment (CIE), a subsidiary of Caesars Growth Partners (CGP), which should be untouched by the proceedings.
CIE also looks after the WSOP.com online poker brand in Nevada and New Jersey, as well as a number of social gaming operations, and this year saw its net revenue double to $161.6 million. It seems that CIE is one of the few things that is going right for Caesars at the moment.
It has been speculated for some time, however, that a change of venue for the Series could be in the cards.
The Rio is a largely unprofitable and unfashionable casino and it’s likely that Caesars may wish to sell some properties during the restructuring process.
If this is the case, The Rio would be a prime candidate, and that would mean that the WSOP would shift to another Caesars Vegas property, which probably wouldn’t be a bad thing, as far as most poker players are concerned.
Caesars Entertainment, then known as Harrahs, acquired the WSOP brand when it purchased Binions Horseshoe in 2004. In the midst of the poker boom, it sold the casino and kept the rights to the Series, moving the competition to The Rio in 2005.
That same year, it launched the WSOP Circuit series of tournaments, held at Harrahs properties across the US, and then, in 2007, expanded to Europe, and later Australia. Caesars Interactive has been able to leverage the WSOP brand to help it become the market-leading online poker site in Nevada, and the second in New Jersey.
With the possibility of other US markets opening up in the future, it remains a prized asset.