California management deal for Station Casinos to end in June

Courtesy photo

Station Casinos will end its management of the Thunder Valley casino near Sacramento beginning this summer.

By Steve Green (contact)

Published Tuesday, Jan. 19, 2010 | 2:02 p.m.

Updated Tuesday, Jan. 19, 2010 | 3:34 p.m.

Station Casinos Inc. of Las Vegas will no longer manage the Thunder Valley casino near Sacramento after Station’s management agreement expires as scheduled after seven years in June.

Station spokeswoman Lori Nelson today said the United Auburn Indian Community’s decision to manage its property on its own was not unexpected.

The parties have intended since the 2003 casino opening for Station to provide the tribe with the resources needed to run Thunder Valley on its own, she said.

“It has no relationship to our bankruptcy proceedings,” Nelson said of the decision.

Station had been receiving 24 percent of the property’s net income as a management fee. Nelson had no comment on the financial consequences of the decision not to extend or renew the contract.

Still, the expiration of the contract isn’t expected to have a significant affect on Station’s financial situation.

For the quarter ended Sept. 30, Station said management fees from various contracts generated operating income of $13.2 million, but didn’t break out results by contract. Those contracts include Thunder Valley as well as Green Valley Ranch in Henderson and Aliante Station in North Las Vegas – the latter two being joint ventures with affiliates of the Greenspun family, owner of the Las Vegas Sun.

The $13.2 million in operating income compares to $30.2 million in operating income from Station’s eight wholly-owned properties in Las Vegas and Henderson: Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Red Rock Resort, Fiesta Rancho and Fiesta Henderson.

By Las Vegas locals standards, Thunder Valley is a large property with some 2,400 gaming machines – about the same as Boulder Station – and about 100 table games. It has three restaurants, a 500-seat buffet, a food court and a center pit bar, Station has said in regulatory filings.

Additionally, a 400-room hotel, conference center, entertainment center and parking structure are due to open this spring.

Doug Elmets, a United Auburn spokesman, confirmed Station’s bankruptcy had nothing to do with the decision not to renew or extend the contract when it expires in early June. He reiterated that it has long been the intention of both parties that upon completion of Station’s seven-year contract, the tribe would manage the casino.

The tribe, as casino manager, will be accountable to state and federal gaming regulatory agencies.

Elmets said that over the years Station’s role has lessened at the property. In the early years, acting as both manager and consultant, he said Station helped the company find financing for the project, assisted in construction management and was instrumental in establishing financial systems, food and beverage operations and establishing the slot/table game mix in the casino.

“The relationship has been very positive and productive. Station Casinos certainly helped Thunder Valley become one of the most successful casinos in the country,” Elmets said.

Station, which sought bankruptcy protection to reorganize its debt last summer, has another deal to manage a casino under construction for the Gun Lake Tribe 25 miles from Kalamazoo, Mich.

Regulatory filings show Station continues to pursue other Indian casino deals involving the Federated Indians of Graton Rancheria for a casino planned in Sonoma County, Calif.; the Mechoopda Indian Tribe of Chico Rancheria, Calif., for a property near Chico and the North Fork Rancheria of Mono Indians near Fresno, Calif., for a casino near Madera, Calif.