Tuesday, Nov. 16, 2010 | 5:52 p.m.
Penn National Gaming Chief Financial Officer Bill Clifford said Tuesday his company over-anticipated CityCenter’s effect on the Las Vegas market when it backed out of bidding for the stalled Fontainebleau project on the Strip.
“I think we feared CityCenter more than we should have. We really thought it would be a much more appealing product to the tour and travel customer,” Clifford said during a panel at the annual Global Gaming Expo in Las Vegas.
Clifford said while the $8.5 billion resort metropolis has done a “remarkable job” in catering to high-end guests and convention travelers, it struggles with the tour and travel segment.
“We really did expect that it was going to have a much more devastating impact on the tour and travel segment and that it was going to bring prices down,” Clifford said. “Now, having seen the way it’s sorted itself out, I would say I’m actually more encouraged about how we would have done if we would have done the deal.”
Still, the main reason Penn National backed out of the bidding was the price, Clifford said. Investor Carl Ichan outbid Penn National’s offer of $145 million with a bid of $156 million last November.
“We hit a price in terms of what we were willing to pay and then we stopped,” Clifford said.
He said even if the company would have won the bidding for Fontainebleau, it would have been a stretch for the company to spend $1.5 billion to get it up and running.
Most recently, Penn National acquired $860 million in outstanding debt on the M Resort for $230.5 million last month.