Players International, Inc.
Players International, Inc.
Sales: $291.2 million (1997)
Stock Exchanges: NASDAQ
SICs: 7999 Amusement & Recreation, Not Elsewhere Classified; 5810 Eating & Drinking Places; 7011 Hotels & Motels; 7948 Racing, Including Track Operation
Players International, Inc. owns and operates gambling (gaming) operations in Illinois, Louisiana, Missouri, and Kentucky. Three of its entertainment and gaming facilities center around riverboat casinos: on the Ohio River in Metropolis, Illinois; in Lake Charles, Louisiana; and in Maryland Heights, Missouri. The company also owns Players Bluegrass Downs, a thoroughbred racetrack in Paducah, Kentucky.
Early History, 1984-92
Brothers Edward and David Fishman founded Players International in 1984 as an entertainment company and took it public. Their interest in the entertainment industry began some 10 years earlier when, in the mid-1970s, they created a TV game show, “Dealer’s Choice,” in Las Vegas.
In 1985, the Calabasas, California-based company introduced Player’s Club, a discount travel service for middle-income recreational gamblers. For a fee of $125 a year, a member received discounts on rooms, food, beverages, and entertainment at participating casino hotels and cruise ships. Membership renewals, which ran at over 57 percent, were Players’ largest source of income. The company also made money by organizing gaming tournaments for casinos in Las Vegas, Atlantic City, and Monte Carlo, and arranging travel for them, and by acting as a marketing agent for an electronic cash advance system for casinos. For the fiscal year ending in March 1990, the company’s revenues reached $16.5 million, up from $12 million the year before, and profits increased from half a million dollars to $4 million.
Even though Players Club boasted 100,000 members, the Fishmans felt it was time to diversify their business. In the middle of 1990, they moved into telephone call-in games. Having met Merv Griffin at a blackjack tournament a few years earlier, they went to Merv Griffin Enterprises to negotiate a lease agreement to produce telephone call-in games based on the popular “Jeopardy!” and “Wheel of Fortune” TV shows.
The company also began exploring other entertainment and gaming options, and within a year was part of a joint venture to operate casinos aboard two cruise ships and had applied for a license to operate a riverboat casino in Illinois. The broadened diversification efforts proved wise. Leisure travel slumped due to the recession and the war in the Persian Gulf, and the call-in games never produced as expected. Although the games were successful enough to pay for development costs, and despite promotions by Telly Savalas, Players’ celebrity spokesman, by the end of the fiscal year in March 1992, Players was in the red.
From Games to Gaming, 1993-95
The brothers revised their strategy to take advantage of the spread of casino gambling. Whereas in 1988, only two states, Nevada and New Jersey, had legalized gambling in casinos, during the beginning of the 1990s several other states began allowing casinos, in hopes of improving local economies as well as increasing state revenues. According to Janet Purdy Levaux in an Investors Business Daily article, by 1993 gamblers were betting $326 billion at casinos and American Indian reservations and wagers at riverboat casinos totaled $27 billion.
For their business this time, however, the Fishmans were not interested in providing discount travel services to casinos. They wanted to get in on the action themselves. Players International decided to concentrate completely on developing riverboat casinos and got out of the call-in games and Players Club activities completely.
Illinois was one of the states that had made casino gambling legal, and that was where the company focused its initial efforts. The Fishmans believed there was a big new market for riverboat casinos in the Midwest, attracting people who would not travel to the gambling operations on the East and West Coasts. As David Fishman explained in a 1991 article in Barren’s, the company was going after the “big army of novices who are won over by the first pull on a slot machine.”
With backing from Merv Griffin, Players opened its first riverboat gambling casino in February 1993, at Metropolis, Illinois, the only riverboat casino operating in southern Illinois. An historical replica of a 19th-century paddlewheeler, the river-boat casino could accommodate 1,200 passengers as it cruised on the Ohio River.
In December, Players expanded its operations south, into southwestern Louisiana, with the opening of a riverboat casino at Lake Charles, Louisiana. The casino in this replica of a paddlewheel riverboat was larger than that in Metropolis, with approximately 27,500 square feet of gaming space. Lake Charles was located about 200 miles west of New Orleans, near the border with Texas. Attracting people from the Houston, Texas, area as well as from western Louisiana, the Players Lake Charles Riverboat soon became one of the highest-grossing riverboat casinos in the country.
But riverboats were not all the company bought that year. It also acquired a thoroughbred racetrack in Paducah, Kentucky, which it named Players Bluegrass Downs. The track hosted live races each fall. During the rest of the year, patrons could watch simulcasts of thoroughbred horse racing events; the track facilities were also leased for special events and activities. The company bought the racetrack for its potential should the Kentucky legislature allow electronic gaming devices at licensed racetracks.
On the management side of the company, David Fishman retired from the company, having served as secretary since 1985. Edward continued to serve as chairman of the board and chief executive officer, and Howard Goldberg, a lawyer who specialized in representing casinos in New Jersey, was named president and chief operating officer.
Expanding and Enhancing Operations, 1994-95
With the improving economy came greater competition for the American leisure dollar. Gaming proliferated as additional states legalized casino gambling and more Native American tribes opened casinos on tribal land. By 1995, some two dozen states had casinos. In addition to such direct gaming competition were the many vacation and tourist options—amusement and theme parks, cruises, resorts—vying for customers, who were demanding more entertainment for their buck. To attract customers, casino operators had to offer more than gaming tables and slot machines. They had to make their properties tourist attractions in and of themselves. Players, with a healthy balance sheet and strong earnings, was in a good position to move in that direction, beginning in Metropolis.
In 1994, a joint venture, in which Players was a partner, built and opened a 120-room hotel adjacent to the Metropolis facility. The company also leased the Merv Griffin Theatre, a cabaret-style theater, which was located beside the hotel and was used for special events and promotions. The company’s docking facilities, known as Merv Griffin’s Landing, consisted of three permanently moored barges. One barge housed Merv Griffin’s Bar and Grill, the Celebrity Buffet restaurant, and meeting rooms. Another barge contained the ticketing area, a gift shop, restrooms, waiting rooms, and a VIP lounge. The third barge was used as a queuing area for people waiting to board the riverboat. Under an agreement with The Griffin Group, Players had the right to use Merv Griffin’s name in connection with these properties through December 1996. Mr. Griffin, a major shareholder in the company, acted as the public representative for all of Players’ riverboat and dockside casinos and provided promotional services, with the Griffin Group receiving a fee and warrants to buy company shares.
During the fiscal year that ended in March 1995, the company’s two riverboat casino facilities brought in $224 million in revenues, and Players had net income of $46 million.
During 1995, the company turned its attention to Lake Charles, beginning a $150 million expansion with the addition of a second riverboat casino. In January, Players acquired all the interests in a partnership that owned the Star Riverboat, which had operated on Lake Pontchartrain near New Orleans, and relocated it to Lake Charles, reopening it in April. The smallest of its three riverboat casinos, the three-deck Star Riverboat, offered approximately 21,730 square feet of air-conditioned gaming space, including 733 slot machines and 47 game tables. The two Lake Charles riverboats shared the same docking facilities.
Under Louisiana law no gambling was allowed while a river-boat was docked, except for 45 minutes between cruises, and a cruise had to be at least three hours long. With two boats, the company was able to stagger those three-hour cruise schedules so that each boat was operating up to 24 hours a day, and a boat was almost continually available for boarding (and gaming).
In October that year, the company replaced the original Lake Charles riverboat, Players II, with the Players III, a larger, more spacious riverboat, with 29,200 square feet of gaming space, 896 slot machines, and 62 tables on its three decks. The new boat could handle over 1300 passengers. The company also acquired the Downtowner, a 134-room hotel, renaming it the Players Hotel, built a 540-space parking garage, and began plans for a 60,000-square-foot entertainment island at the Lake Charles docking area.
The Lake Charles riverboat was moved to Metropolis, where it replaced the company’s first riverboat casino. The more spacious riverboat casino, with 862 slot machines and 51 table games, helped accommodate the larger numbers of passengers coming to Metropolis on the weekends and holidays.
But Players was not satisfied with expanding its riverboat casino operations. In June, the company moved on-shore, opening its only land-based entertainment facility, the Players Island Resort, in Mesquite, Nevada. Located about an hour’s drive northeast of Las Vegas, the property was marketed as a destination resort with gaming. Visitors had the option of staying at the 500-room hotel, in one of four three-room villas, or making use of the 50-unit recreational vehicle facility. While at the resort, they could take advantage of the world class health spa, a lagoon swimming pool complete with waterfall, an 18-hole golf course, tennis courts, a children’s arcade, four restaurants, as well as a 40,000-square-foot casino.
By the middle of 1995, the company was doing so well its stock price had nearly doubled and there was speculation that Players might be a takeover target. BusinessWeek cited “its growth prospects, healthy balance sheet, strong earnings, and robust cash flow” as the reasons for the price jump.
In November 1995, Players moved its corporate offices from Las Vegas to Atlantic City, New Jersey. In December, Howard Goldberg was named chief executive officer, replacing Edward Fishman, who remained chairman of the board.
1996 to the Present
Players continued to expand and improve its facilities during 1996. In February the company opened The Island at its Lake Charles facility. This 60,000-square-foot floating entertainment area was designed with a tropical theme, complete with lush vegetation, waterfalls, and rockscapes. Passengers heading for the riverboat casinos walked through it to board, and could visit one of three new restaurants, a sports bar, and a large gift shop. They could also watch an animatronics show with a pirate theme.
March saw the opening of a brand new entertainment and gaming facility in Maryland Heights, Missouri, a suburb of St. Louis. A joint venture with Harrah’s, the $300 million Riverport Casino Center consisted of four permanently docked riverboat casinos, totaling some 120,000 square feet. Players was responsible for the licensing, operation, and marketing of two of the four casinos, but shared equally in the development and marketing of the hotel, entertainment, and parking properties. Called Players Island, the company’s two riverboat casinos, with a total of 60,000 square feet of gaming space, offered 1,230 slot machines and 75 table games. Carrying the tropical theme established at the Lake Charles Island right into the Maryland Heights casinos, passengers could play the machines and tables amid waterfalls, rockscapes, and palm trees. A massive salt water aquarium served as a partition wall between the two casinos.
All four casinos were on barges moored to an entertainment facility that resembled a turn-of-the-century Missouri riverboat town, containing retail shops, two restaurants, a 600-seat buffet, a child care facility, a 125-seat entertainment lounge, a 10,000-square-foot convention center, and parking for over 5,000 vehicles. A hotel with 291 rooms completed the facility.
Meanwhile, the company added more parking in Metropolis, increasing the total number of spaces to 1,300. In October, Players bought a restaurant barge with plans to renovate it with upgraded buffet facilities, a larger dining room, and a more spacious gift shop. The company hoped to have the new facilities ready by the fall of 1997.
Despite these additions and improvements, the increasing competition in the gaming industry led to a drop in revenues and a net loss for the company in the year ending March 1997. In response, Players decided to eliminate its development activities and to concentrate on operating its existing properties. It closed its development department, sold off a corporate airplane and the original Metropolis riverboat, saw the retirement or termination of 21 senior management staff, and began reviewing the growth opportunities of each of its properties. One conclusion was that the Mesquite resort was not generating sufficient income, so the company sold it in 1997 to RBG, LLC for $30.5 million, using the proceeds to pay down some of its debt. Players also determined that, since the Kentucky legislature still had not taken any action on allowing gaming machines at racetracks, Players Bluegrass Downs was impaired and wrote down the facility to a value of $475,000.
The company moved back into the black again. The Maryland Heights complex more than doubled the revenues from the sold Mesquite property and compensated for the continued drop in revenues from the Lake Charles facility due to increased competition. Despite the difficulties at Lake Charles, the company believed the property still had great potential and, in November 1997, bought the Lake Charles Holiday Inn for $18.5 million. Located right beside Players’ existing facility, the hotel had 269 rooms, five restaurants, and over 4,000 square feet of meeting space. Players also undertook a cooperative marketing campaign with its major competitor there, the Isle of Capri Casino. As was becoming more common among vying tourist attractions, the two competitors worked together to sell more people on the idea of Lake Charles as a destination.
The company’s belt tightening and shift from developer to operator strengthened its position. However, despite the popularity of Maryland Heights, a cloud hung over it as 1997 ended. In November, the Missouri Supreme Court overturned a ruling by a lower court that it was legal under the state’s gaming act for floating casinos to be located in artificial basins fed by either the Mississippi or Missouri Rivers. The court ruled that such casinos must be contiguous to the rivers and sent the case back to the trial court for a hearing. Since the riverboat casinos at Maryland Heights are not on the Missouri River, the ruling threatened their existence.
Metropolis, IL 1292 Limited Partnership; PCI, Inc.; Players Bluegrass Downs, Inc.; Players Development, Inc.; Players Entertainment, Inc.; Players Holding, Inc.; Players Lake Charles, LLC; Players Lake Charles Riverboat, Inc.; Players LC, Inc.; Players Maryland Heights, Inc.; Players MH, L.P.; Players Maryland Heights Nevada, Inc.; Players Mesquite Golf Club, Inc.; Players Mesquite Land, Inc.; Players Nevada, Inc.; Players Resources, Inc.; Players Riverboat, LLC; Players River-boat, Inc.; Players Riverboat Management, Inc.; Players Services, Inc.; Riverfront Realty Corporation; Riverside Joint Venture; Showboat Star Partnership; Southern Illinois Riverboat/ Casino Cruises, Inc.; WCBJ Enterprises, Inc.
Byrne, Harlan S., “Players International: It Places Big Chips on 900-Number TV Tie-ins,” Barren’s, April 29, 1991, p. 40.
Horowitz, Carl, “Gambling: Boon or Social 111,” Investor’s Business Daily, October 18, 1995.
Levaux, Janet Purdy, “Some Are Rolling Snake Eyes in Louisiana,” Investor’s Business Daily, June 20, 1995.
Marcial, Gene G., “... And Casinos on the River,” BusinessWeek, June 19, 1995.
“Missouri Gaming Rules Could Cost Locals Money,” Reuters, November 26, 1997.
“The New America: On a Roll—Players International,” Investor’s Business Daily, July 7, 1995.
—Ellen D. Wernick