Station Casinos reports flat revenue, drop in profit

By Liz Benston

Thursday, March 6, 2008 | 7:02 p.m.

Station Casinos today reported fourth quarter revenue that was flat compared with last year and a 7 percent decline in operating profit – further evidence that the economic slowdown has customers spending less at locals casinos.

As the No. 1 locals operator in the Las Vegas Valley, Station will presumably feel the brunt of the slowdown, which is as much psychological as it is an actual decline in wealth triggered by the loss of jobs and homes.

But the company hints in its annual report that it is continuing to spend money on upcoming projects in spite of the economy.

Those include a planned casino resort at the site of Station's Wild Wild West motel, where the company has bought up 72 acres and is under contract to acquire a total of 106 acres. As of year-end, the company had spent $24.7 million acquiring land for a planned mixed-use resort development where Palace Station is located. Station and a partner have purchased 52 of the surrounding acres.

The company's $675 million Aliante Station in North Las Vegas is on track to open by year-end.

Station reported a net loss of $4.5 million, excluding nearly $470 million in expenses mostly attributable to $143 million in merger costs and $288 million in equity awards to executives.

In the fourth quarter, revenue at the company's eight largest casinos, excluding Green Valley Ranch, rose 2 percent but operating profit, which excludes interest, taxes and other expenses, fell 7 percent.

Excluding management fees, Green Valley Ranch generated operating profit of $28.8 million, a 4 percent decline from the fourth quarter of last year.

Station receives a management fee to operate the casino, which is half-owned by the Greenspun family, which also owns the Las Vegas Sun.

Analysts are hoping that locals operators like Station will benefit from new construction and employment on the Strip – though the biggest wave of workers won't arrive until 2009 and beyond.