My commentary piece on casino debt came out in the Las Vegas Business Press yesterday:
Like households, all businesses take on debt as a part of their usual operations. Without borrowing money, it is difficult, if not impossible, to grow. Casinos are no different; for decades, theyve been borrowing money to build, expand and renovate. Over the past four years, however, casino debt levels have risen to unprecedented heights, something that may have an impact on the financial performance of Nevadas casino industry in the future.
I think this is a topic that hasn’t gotten enough attention. It’s certainly got the potential to upset the applecart.
I’m aware that many analysts and experts don’t see problems with casinos having taken on this debt. But I’m also aware that many experts didn’t see any problems with casinos overleveraging themselves to take themselves private or investing on the continued growth of the condo market in Las Vegas. If more people with doubts had spoken up then, it’s possible that things would be different today.
And if you’re interested in what people who rate debt for a living think, Moody’s believes that debt might be a problem for certain Nevada gaming operators, too.