Station Casinos, Inc.
Station Casinos, Inc.
Sales: $1.34 billion (2006)
Stock Exchanges: New York
Ticker Symbol: STN
NAIC: 721120 Casino Hotels; 722110 Full-Service Restaurants; 722410 Drinking Places (Alcoholic Beverages)
Station Casinos, Inc., is a leading gaming and entertainment company, operating numerous casinos and hotels in the Las Vegas area, while also managing a casino in California that is owned by the United Auburn Indian Community. Frequently cited as one of Fortune magazine's Top 100 Companies to Work For, the company is publicly traded on the New York Stock Exchange. However, in early 2007 the company announced its intentions to be taken private in a management-led buyout. Brothers Frank J. Fertitta III, chairman and CEO, and Lorenzo J. Fertitta, vice-chairman and president, planned to acquire the company in conjunction with real estate investment firm Colony Capital Acquisitions LLC.
LET THE GAMES BEGIN: 1976
Incorporated in Las Vegas, Nevada, in 1976, the company had as its first facility and foundation The Casino (now known as the Palace Station Hotel & Casino), which opened initially as a 5,000-square-foot facility with 100 slot machines, six table games (four of them Blackjack), a small bar, and a buffet next door to the Mini-Price Motel. Through incremental additions and significant expansion projects, the Palace Station, located at the intersection of Interstate 15 and Sahara Avenue, grew. The first addition came in July 1977 when a Bingo parlor was added, bringing 15,000 more square feet of space, including an 8,000-square-foot Bingo room, 300 more slot machines, an enlarged buffet, a Keno game, and the property's first full-service restaurant. The facility became The Casino and Bingo Palace.
By April 1978, the facility had tripled in size to 60,000 square feet, including more casino space, a new restaurant and buffet, another new Bingo room, and a sports facility. In 1979, Frank J. Fertitta, Jr., one of the original founders, bought out his three partners, becoming the sole owner. In 1981, a new Bingo room was built, and the facility was a full-scale casino. The name was changed to the Palace Station in 1983.
In April 1984, the property tripled in size again, adding more casino space, along with upgrades of the restaurant and buffet and the addition of banquet/meeting rooms on a second floor. Concurrently, Frank J. Fertitta III joined the company as a vice-president and director. In November 1985, the company bought the Mini-Price Motel.
The years following brought tremendous growth and development for the facility and by 1998 it featured 39 acres; a 1,028-room hotel; 3,700 parking spaces; an 84,000-square-foot casino; five full-service restaurants (including the 24-hour Iron Horse Café, featuring a Chinese menu in addition to American fare; the all-you-can-eat Feast Gourmet Buffet; The Broiler, a steak and seafood restaurant; The Pasta Palace, an Italian restaurant; and The Guadalajara Bar & Grille, a Mexican restaurant); several fast-food outlets; a 20,000-square-foot banquet and convention center; two swimming pools; a gift shop; a nongaming video arcade; more than 2,200 slot and video poker machines; 55 gaming tables; two Keno lounges; a Bingo parlor; a poker parlor; a race and sports facility; and more than 100,000 square feet of public space.
EXPLOSIVE LATE 20TH-CENTURY GROWTH
In May 1994, the company introduced riverboat and dockside gaming in Missouri with the opening of its Station Casino St. Charles, located on 52 acres at Interstate 70 and the Missouri River in the city of St. Charles, approximately seven miles from the St. Louis airport. The facility would quickly become the number one tourist attraction in the region. The three-deck, 387-foot riverboat and dockside facility, with more than 170,000 cars passing it daily, included all the newest exciting games, fine dining, and live entertainment, and could handle 2,000 passengers at a time. Including a 150-seat bar and lounge, fast-food outlets, a lobby and ticketing facility, and a gift shop, it was the first dockside gaming facility in Missouri to offer two casinos with fluctuating odd/even hours so that customers would not have to wait to board, revolutionizing gaming in the state and leading to duplication by other Missouri gaming operators. The facility introduced a number of new games to its customers, as well as featured its standard creations such as Reversible Royals Video Poker, Million-Coin Video Poker, and the state's first Red, White and Blue Progressive Slot Machine Game.
Several months later, in August, the company opened the Boulder Station Hotel & Casino at the intersections of Interstate 515 and Boulder Highway in Nevada. The facility featured 337,000 square feet of main facility area in a low-rise complex; a 15-story hotel tower; 4,350 parking spaces; an 83,000-square-foot casino; 300 hotel rooms; five full-service restaurants with a total of more than 1,400 seats (including the Iron Horse Café; the Feast Gourmet Buffet; The Broiler; the Pasta Palace, with an adjacent 24-seat pizza bar; and the Guadalajara Bar & Grille); a number of quick-service food outlets; a 280-seat entertainment lounge; eight additional bars; a swimming pool; a nongaming video arcade; a gift shop; more than 3,000 slot and video poker machines; 54 table games; a Keno lounge; a poker room; and a race and sports facility. Total revenue for 1994 climbed to $169.5 million, with net income of $9.4 million.
In July 1995, the company opened the Texas Station Gambling Hall & Hotel at the corner of Lake Mead Boulevard and Tonopah Highway in North Las Vegas. Offering a fully integrated, "down-home" Texas atmosphere throughout, the property was located on 47 acres, featuring more than 198,000 square feet of public space, with 67,800 square feet of casino space; 200 hotel rooms; five full-service restaurants with more than 1,400 seats (including the 24-hour Yellow Rose Café coffee shop; the Stockyard Steakhouse; the Laredo Cantina and Café Mexican restaurant; the San Lorenzo Italian restaurant; and the Feast Around the World Buffet, featuring authentic Texas-style barbecue); three bars (including the Whiskey Bar, with its seven-foot-high bronco rider that rotates on a pedestal; the Garage Bar, with its 1976 fire-engine-red Cadillac Eldorado featuring seven-foot Texas Longhorns on the hood; and the Armadillo, with its 3,000-piece cut-glass armadillo in the dance hall); several quick-food outlets; 1,840 slot and video poker machines; 35 table games; a 165-seat race and sports facility; parking for 3,000 vehicles; and a 12-screen movie complex, which opened in August, operated by Portland, Oregon-based Act III Theatres.
Station Casinos pioneered and developed the "local's" gaming market in Las Vegas and caters primarily to people who live and work in the area. The Company prides itself on providing a complete, high-value gaming and entertainment experience with unparalleled convenience, high quality assets, unique gaming products, personalized customer service, and consistency in execution.
In November of that year, the company added to its Boulder Station facility Boulder Cinemas, an 11-theater movie complex operated by Act III, and a "Kids Quest" childcare center, the first such facility in a gaming entertainment complex in Las Vegas, in addition to planning a 500-room expansion of its hotel facilities in 1999. Total revenue for 1995 jumped to $290.3 million, with a net loss of $7.9 million.
In 1996, the company introduced two of its most successful Las Vegas dining concepts, the Feast "Action" Buffet and the Broiler Steak and Seafood Restaurant, into the Midwest at the Station St. Charles facility. The Feast, which copied the Japanese restaurant style of having food prepared right before the customers, was the largest buffet dining room in the St. Louis area, with more than 800 seats. Business was so successful that only three months following its opening the restaurant was expanded with an additional 140 seats. Like its Las Vegas and Kansas City counterparts, the Station St. Charles restaurant offered breakfast, lunch, and dinner, ranging in price from $3.95 to $9.95, seven days a week, featuring Mexican, Chinese, Italian, barbecue, and American fare. The Broiler's gourmet dining selections quickly earned it many five-star reviews from the St. Louis Post-Dispatch, the St. Louis Business Journal, and the Riverfront Times, the region's leading daily and weekly newspapers. Following traditional menu guidelines beta-tested in Las Vegas at Palace Station and Boulder Station, broiler chefs at the Station St. Charles developed fare consisting of steak, seafood, and veal specialties, which were soon major hits in the Midwest, complete with a gourmet wine list.
In May, the company opened a 10,000-square-foot Bingo parlor on the south side of the Texas Station complex, with space for 85 additional slot and video poker machines, and a snack bar. The following month, the company expanded its buffet into space previously used by the Galveston Bay Seafood Co. restaurant, renaming the facility The Feast. Total revenue for 1996 jumped again, this time to $466.9 million, with a net income of $25.5 million.
The company started off 1997 by opening the Station Casino Kansas City. It would become one of the nation's largest casinos and Missouri's largest gaming and entertainment complex. The facility featured 730,000 square feet of gaming and entertainment space, with twin 70,000-square-foot floating casinos that held 3,000 slot machines and 190 gaming tables; a 200-room hotel; six full-service restaurants; 6 quick-serve and specialty restaurants; 11 bars and lounges; the 1,400-seat, state-of-the-art Grand Pavilion; parking for 5,000 vehicles; a "Kids Quest" childcare facility; the Phoenix Piano Bar & Grill; and Arthur Bryant's Barbecue.
In June 1997, the company opened the Sunset Station Hotel & Casino in the Henderson/Grass Valley area, near Las Vegas, the first full-service gaming and entertainment facility in that area, one of the fastest-growing communities in the country. The facility featured a Spanish/Mediterranean theme, with 350,000 square feet of entertainment space, including an 80,000-square-foot casino; a 20-story hotel with 450 rooms; a 13-screen Act III movie theater complex; 12 world-class, full-service restaurants; more than 2,700 slot and video machines; 41 table games; a poker parlor; a Keno lounge; a race and sports facility; and more than 5,000 parking spaces located on 100 acres at the intersection of Interstate 515 and Sunset Road.
In October 1997, the Station St. Charles introduced Silicon Gaming Inc.'s new Odyssey Interactive Slot Machine game, featuring five games in one machine, an exclusive in the state of Missouri and in the St. Louis market until the fall of 1998. Total revenue for 1997 soared to $583.5 million, with a net income of $13.8 million.
- The company opens its casino in Las Vegas.
- Frank J. Fertitta, Jr., one of the original founders, becomes sole owner.
- The Casino and Bingo Palace is renamed the Palace Station.
- Frank J. Fertitta III joins the company as a vice-president and director.
- The company introduces riverboat and dockside gaming in Missouri; the Boulder Station Hotel & Casino is opened in Las Vegas.
- The company opens the Station Casino Kansas City, which becomes one of the nation's largest casinos and Missouri's largest gaming and entertainment complex.
- The company acquires the Santa Fe Hotel & Casino; the Missouri properties, Station Casino St. Charles and Station Casino Kansas City, are sold.
- The company joins with the Greenspun Corporation to open the Red Rock Station Casino, Resort & Spa.
- Station Casinos agrees to be acquired in a management-led buyout.
In January 1998, Crescent Real Estate Equities Company announced its plans to merge with Station Casinos Inc. in a stock swap and debt assumption transaction valued at a total of approximately $1.7 billion, which would give the former a total market capitalization of nearly $8.5 billion. Crescent Real Estate was a fully integrated real estate company owning, through its various subsidiaries, a portfolio of real estate assets consisting of 88 office and seven retail properties totaling 32 million square feet; a 38 percent interest in 94 refrigerated warehouse facilities; 89 behavioral healthcare facilities; six hotel and casino properties; seven full-service hotels totaling 2,276 rooms; two destination health and fitness resorts; and economic interests in five residential development corporations, all in 21 metropolitan submarkets in the states of Texas and Colorado.
Crescent Real Estate also announced plans to contribute substantially all of the real estate assets it would acquire from Station Casinos to a new Casino Partnership, owned initially in full by Crescent Real Estate, which would invest primarily in casinos, other gaming properties, and other real estate properties in the Las Vegas area. The hotel and casino properties were leased to an operating company, with the profits being shared equally by Crescent Operating Inc. and Station Casino's management team. Frank J. Fertitta III, president and CEO, and the more than 10,000 employees of Station Casino continued to operate the properties as the tenants.
In April, expansion began at the company's Sunset Station facility. The $45 million master-plan expansion featured 11 new movie screens with THX sound and stadium-style seating to complement the existing 13-screen multiplex movie theaters operated by Act III, which resulted in the largest movie theater complex to date in the Las Vegas area; a 2,000-space covered parking garage adjacent to the theater; a 20,000-square-foot expansion of the casino; the Wayne Gretzky Roller Hockey Center and Ice Skating Arena, a dual-rink, state-of-the-art complex featuring in-line roller hockey and ice skating surfaces for a wide range of league activities, public skating, clinics, instruction, and other events; a steakhouse restaurant; a food court area; and expanded and improved conference facilities.
Phase II expansion on the Texas Station Gambling Hall & Hotel began in May of that year. The $51 million project, designed to enhance Texas Station's reputation for quality entertainment, included six additional movie screens with THX sound and stadium-style seating being added to the existing 12-screen multiplex movie theater operated by Act III; a 2,000-space covered parking garage adjacent to a new theater entrance, designed to provide maximum convenience for customers and featuring a valet; a 10,000-square-foot "Kids Quest" childcare facility; a new bar and lounge similar in nature to the popular Gaudi Bar at Sunset Station, only featuring a Texas motif; a food court with several brand-name tenants; an expanded arcade; and a 21,000-square-foot expansion of the casino.
In July of that year, the company announced that it had received approval from the Nevada Gaming Control Board to lease and operate a property known as the King 8 Hotel & Gambling Hall, located on Tropicana Avenue and Industrial Road, just west of Interstate 15 in Las Vegas. Following a five-day closing from July 1 through July 5, the property was reopened on July 6 and renamed the Wild Wild West Gambling Hall & Hotel. Also in July, the company announced that the proposed merger with Crescent Real Estate had been stalled but was still pending.
By early August, however, the proposed merger through which Crescent Real Estate was to acquire Station Casinos in a $1.7 billion deal, had been canceled and both parties had filed lawsuits. In the face of the inherent uncertainty of litigation proceedings, Station Casinos sought to build on its aggressive acquisition pace by renewing focus on debt reduction and improving operations at its existing properties. Performance at the company's four casinos in Nevada and two in Missouri remained steady, with each generating healthy cash flow. Profitability at the company's two casinos in Missouri was on the upswing after increased competition in the area cut into cash flow for fiscal year 1998.
In December, Station Casinos' motion for dismissal of the suit brought against it by Crescent Real Estate Equities was granted by the Texas federal court. Litigation of the company's claims against Crescent was still pending in Nevada state court. In April 1999 settlement of the case was announced. Crescent agreed to pay Station Casinos $15 million and the parties released each other from any further claims. Free to focus completely on its operations and on moving forward, Station Casinos also announced that during 1998 its Las Vegas properties had generated $434.8 million in gaming revenue, representing a 25 percent growth rate over the previous year.
In an effort to expand its presence in the Kansas City market, in the fall of 1999 the company sought to add to its Missouri holdings by agreeing to purchase, for $22.5 million (considered a bargain), assets of the Flamingo Hilton Riverboat Casino in Kansas City from a subsidiary of Hilton Hotel Corporation. Subject to regulatory approval, the assets acquired would include a casino riverboat, parking garage, and related gaming equipment and would allow the company to combine resources with those of Station Casino Kansas City, achieving economies of scale. The proposed purchase also would augment the company's solid position in Missouri's gaming marketplace, where it continued to vie with Harrah's Entertainment Inc. In December, however, the company terminated the deal, asserting that an investigation into an outside attorney working for the company delayed the gaming commission's vote on the license transfer and caused the deadline for completion of the deal to be missed.
DEVELOPMENTS AT THE START OF THE 21ST CENTURY
In the first years of the new century, back in Las Vegas, Station Casinos purchased two additional properties. First, in October 2000, the company acquired the Santa Fe Hotel & Casino from Santa Fe Hotel, Inc., a subsidiary of Santa Fe Gaming Corporation, for $205 million. Located approximately five miles northwest of the Texas Station Gambling Hall & Hotel, the Santa Fe Hotel & Casino stood on 38 acres and included about 85,000 square feet of casino space, with 1,675 gaming devices and 27 table games, 200 guest rooms, four full-service restaurants, a buffet, several fast-food outlets, a 60-lane bowling center, a full-scale ice skating arena, and 10,000 square feet of meeting and banquet facilities. The property, the company's sixth in Nevada, was renamed Santa Fe Station. The seventh Nevada property became part of the company holdings with the January 2001 purchase of the Fiesta Casino Hotel in North Las Vegas from Fiesta Hotel Corporation, a subsidiary of Joe G. Maloof & Company, Inc., for $185 million. Also situated near the Texas Station Gambling Hall & Hotel, on 25 acres, the Fiesta (which retained its name) featured about 70,000 square feet of casino space, including 1,900 gaming devices and 30 table games, 100 guest rooms, four full-service restaurants, a buffet, several fast-food outlets, and a bingo facility.
Meanwhile, in late 2000, Station Casinos sold its Missouri properties, Station Casino St. Charles and Station Casino Kansas City (which had been the subject of an investigation by the Missouri Gaming Commission, resulting in a settlement whereby the company agreed to pay an administrative penalty of $1 million in spite of its denial of any wrongdoing), to Ameristar Casinos Inc. for $475 million. Ameristar then sold the Reserve Hotel & Casino in Henderson, Nevada, to Station Casinos for $70 million in January 2001. In the fall of 2001 Station Casinos finalized the sale of subsidiary Southwest Gaming Services, Inc., to Blake L. Sartini, a cofounder of this slot route management business subsidiary and longtime member of the management team of Station Casinos. As part of the deal Sartini stepped down as executive vice-president and chief operating officer of the company, but continued to serve on the board of directors. The company also had become involved in a joint venture with American Nevada Corporation in Henderson and by the end of the year the company had succeeded in obtaining Nevada Gaming Control Board approval to operate the venture as the Green Valley Ranch Station Casino. In an effort to shore up management for its Las Vegas-based holdings, the company placed Lorenzo J. Fertitta, cofounder, principal shareholder, and member of the board of directors, in the full-time position of president. He reported to Frank J. Fertitta III, who continued to serve as chairman and CEO.
With new management in place, Station Casinos continued to develop its marketing emphasis on the local population of the Las Vegas area, purported to be among the fastest-growing communities in the United States in the early years of the 21st century. In association with the Greenspun Corporation, the company embarked on a number of new hotel and casino development projects, notably the Red Rock Station resort and casino (the first billion-dollar casino situated off the Strip) opened in April 2006, and expansion of existing properties, such as the Green Valley Ranch Station Casino, in and around Las Vegas.
In February 2007, Station Casinos agreed to be acquired in a management-led $8.8 billion buyout (revised from an earlier bid of about $5.4 billion). The private equity investor group, Fertitta Colony Partners LLC, was formed by Chairman and CEO Frank Fertitta III, Vice-Chairman and President Lorenzo J. Fertitta, and Colony Capital Acquisitions LLC (affiliate of Colony Capital LLC), a Los Angeles-based real estate investment firm, to achieve the buyout.
With the population of Nevada expected to grow faster than any other state over the course of at least the next two decades, according to the U.S. Census Bureau, and Station Casinos' ongoing commitment to catering to that key burgeoning community of local residents rather than adopting the tourist trade focus of its major competitors, strong future growth for the company seemed assured. The new ownership and management of Station Casinos planned to move forward confidently into the unfolding 21st century.
Daryl F. Mallett
Updated, Robynn Montgomery
Harrah's Entertainment Inc.; MGM MIRAGE.
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"Station Casinos, Inc.." International Directory of Company Histories. . Encyclopedia.com. (August 13, 2018). http://www.encyclopedia.com/books/politics-and-business-magazines/station-casinos-inc
"Station Casinos, Inc.." International Directory of Company Histories. . Retrieved August 13, 2018 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/station-casinos-inc
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