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The M Resort is shown near the Interstate 15 and St. Rose Parkway interchange.
Published Friday, Oct. 8, 2010 | 6:32 a.m.
Updated Friday, Oct. 8, 2010 | 4:11 p.m.
Anthony Marnell III
Map of M Resort
M Resort
12300 S. Las Vegas Boulevard, Henderson
Sun Coverage
It's been rough sledding for the M Resort, which opened in March 2009 at a time of precipitous decline for the Las Vegas economy.
After only four months in operation, the casino could no longer afford to make interest payments on its $700 million loan. M Resort secured the financing in September 2007, before the credit crisis hit and when Las Vegas tourism was flying high.
Which is why, after less than two years at the helm of his self-named resort, CEO Anthony Marnell III may well lose the property he and his family built.
On Friday, Penn National Gaming announced it had acquired $860 million in outstanding debt on the $1 billion resort for a meager $230.5 million -- a deal that gives Penn the right to take over ownership of the resort, which is worth less than the debt owed on it.
Marnell isn't counting himself out just yet.
"I've had two conversations with (Penn National Gaming CEO) Peter Carlino in the last 24 hours and they've been very positive, open and professional," Marnell said Friday.
Marnell said he is meeting with Carlino on Monday to discuss what Penn has in mind for the resort -- and what, if any, Marnell's role at the resort might be.
Penn spokesman Joe Jaffoni said the company is expected to discuss a plan to exchange the debt for equity in the resort. The plan requires regulatory approval in Nevada.
It's unclear what the transition means for employees, though the casino is in no danger of closing and will continue to operate in the interim, Marnell said.
"I have no idea what they have in mind. But I do know this: Penn is a very financially stable company with an enormous desire to get into Las Vegas. I think they'll do the right thing."
Marnell said he's optimistic about the future of his property, which generates a positive cash flow that would mean a profit if not for its unwieldy interest payments. The resort, he said, has improved EBITDA from last year and is on track to generate "tens of millions" this year.
EBITDA, a widely used performance measure in the casino industry, represents earnings before interest payments and certain other expenses, like taxes and depreciation.
Marnell declined to specify how much the resort earns or the extent of its earnings increase, and would only say that it is in line with what comparable properties in Las Vegas are earning in spite of the M's location at the southern end of the Las Vegas Valley, far from the Strip.
"I failed in the capital structure of this company but I feel we've succeeded in growing a healthy and viable brand," he said. "We're competing fiercely in this market and a lot of customers like us. We're just not generating enough cash flow" to make loan payments.
In fact, the loan was troubled from Day One.
Lender Bank of Scotland -- one of several victims of the U.S. mortgage crisis that spread to Europe -- nearly went under before M Resort opened. The bank was bailed out by the UK government and merged with Lloyds Banking Group -- another bailout recipient.
"We've been discussing the terms of the original loan since before we opened," Marnell said.
As a family-run startup, the M Resort wasn't strong enough financially to refinance its debt, like casino giants in Las Vegas have done to stay afloat in the recession.
Pre-opening discussions to reduce the resort's interest rate were ultimately rejected in London, where the bank is based, Marnell said.
The bank also contemplated a plan to ride out the recovery by acquiring company warrants, or options to own the resort at a future date, he said.
The bank's outlook changed as the economy worsened, however. It began soliciting buyers for its debt in January.
"I don't have any ill will toward the bank," Marnell said. "They did what they had to do. Over time, their desire for equity diminished and the desire for cash grew."
A representative with Lloyds Banking Group declined comment.
MGM Resorts International, which had a second-tier loan in the M Resort for $160 million, wrote down the value of the loan and walked away.
Marnell, who made an investor-backed bid for the resort that fell short of Penn's offer, said he's prepared to invest more of his own money into the M for a chance to continue running the property.
"My hope is that Penn maintains the four-star atmosphere and culture that keeps these great team members here and uses its 12 million customer database to grow the property."
"I want to be at the M because the M is me. We've grown from a hard 2009 into 2010 and into what looks to be a better 2011. But I don't know if they'll necessarily agree."
At M Resort, locals reign supreme. Anthony Marnell III opened this casino with value in mind. With affordable drinks and meals and lots of incentives to play, it's no wonder why M has been a hit since it opened its doors in March 2009.
The property is decorated with dark wood, rich colors and amber-like light fixtures. Gaming offerings include more than 1,800 slot machines and 60 table games, as well as a poker room and race and sports book.
The resort houses 390 guest rooms, including 39 luxury suites. Designed with a modern and contemporary feel, M’s rooms feature dark wood, chrome fixtures and white linens, and are accented by blue or burgundy throws and pillows. Rooms boast floor-to-ceiling windows with views of the mountains or the Strip.
M dining options include Studio B, a show kitchen buffet; "twisted farm food" at Hash House a Go Go; Baby Cakes bakery; Anthony’s Burgers & Brews, serving gourmet burgers and fries; Vig Deli; Anthony’s Prime Steak & Seafood; Marinelli’s Authentic Italian Dishes; and the Hostile Grape Wine Cellar, where guests can taste more than 160 types of wine. Plus, 32° Draft has one of the largest beer selections in the valley, with 96 different beers on tap.
The four-star awarded, 23,000-square-foot Spa Mio offers a variety of treatments and services with saunas, Jacuzzis, 16 massage and facial rooms and a full-service salon and barbershop complete with built-in ESPN in the mirrors. Locals also receive 25 percent off all regular price services.
DayDream Pool Club heads up M's adult pool party scene offering the only locals pool party in the Valley.
this is good news, this may very well bring back horse racing back to vegas as penn national is a key player in the thoroughbred racing industry
Sad to see a schlocky company in a position to take over the M. The last thing in the world customers from Anthem and Southern Highlands is to see the place over run with tourists waiving coupons and wearing Bermuda shorts in February.
I'm so sorry the snobs in Anthem and Southern Highlands may have to put up with tourists waving coupons. Maybe,just maybe, they should have not moved to a TOURIST RESORT!
This is just the boost the Silverton needs right now. Once Penn comes in and destroys the buffet they will drive the locals back to Silverton, which by the way has the best crab legs in town.
lampshade-You must be an out of work comedy writer?
Just hilarious that one of your 4 reasons that the M failed was that they gave out too much FREE SODA!
That is funny material. Thanks for the laugh!
Where do you live lampshade? Are you saying Anthem, Seven Hills and Southern Highlands are ghetto?
Penn National Gaming Inc. has been looking to buy a Casino in Las Vegas for several years.
CynicalObserve
Would the locals that live in Anthem and Southern Highlands that frequent the M Resort prefer to see a vacant building with the doors closed and more Las Vegan casino personel unemployed.
This should work out well for the area and Penn.
Much easier to run a place when you have about 25% of the debt load then what the previous owners carried.
Will be good to see another place building up and supplying jobs to the local market.
lampshade-Well, I guess that we will agree that the M, for whatever reason is not in a good location. I like it but there's not enough reason for me to drive 10 miles each way.
Myself and probably most locals thought that Marnell would recreate the type of property that once was the Rio. Had he been able to do that, maybe the M would have gotten by until the economy improved.
Penn National, due to the much lower debt should be able to pay the bills. Hopefully they will be "local friendly".
You're right lampshade, it's about 2 miles away from those neighborhoods though, with no other casino around... hmm.... where do you think those people go???
I have some debt that is for sale.
The M is a real beautiful resort. Penn got an amazing bargain here.
They took out the free soda machines, place is too far away to be a success.
too bad they were bailed out--we need less casinos and not more opening. This boom overbuilt like never before and the marginal casinos are still open hurting all the rest. blow up the circus circus, riviera, hooters, ip, and the rest of the dump casinos. time for dynamite, not bailouts!
To all the posters who complain about the "value" factor. Do you guys ever gamble in these places ( by gamble I mean more than $20 or $40 dollar buy-ins on a $5 game) or are you just typical local fleas who are looking for cheap meals and free drinks? For your information, these Casinos offer these deals so that you will GAMBLE in their establishment. Comps and free drinks are for GAMBLERS only. Your $20 buy-ins and $5 minumum play is not going to keep these places in business.
Aw, they took away the soda machines?
:(
Maybe they should consider a shuttle to/from the south end of The Strip, perhaps by the Vegas sign, Town Square, or Mandalay?
Just a thought. I do like the place.
They only took out one of the soda machines.
If incompetent department VPs like Raquelle would get replaced, then maybe this place has a chance.
@lampshade:
The visual of people filling up Big Gulp cups with free soda made me chuckle
:)
Hash House just opened, I'm guessing they're the first and only external restaurant operating there.
Bottom line is M is very expensive to stay at. They want Aria prices for an off strip location. It is a great looking property but not a place to spend the whole weekend. Locals may love it, but as a destination, it is lacking.
A great place to visit, great poker room, even walking to the casino from the parking zone was fun that it doesn't bother me. And once again a new owner will be taking advantage of the lower debt load, just like years ago the new owners of the Rampart Casino in Summerlin.
Sad to hear that they took out the free soda machines. Wasn't it enough to take out the Optimum Play videopoker machines months ago? (!!!) Next thing will be then to lower the food quality of the buffet but keep the prices high. This will then put it to the test with the last loyal locals that probably then will opt to go and eat at the Southpoint again, or Green Valley Ranch.
Greetings from Switzerland
Isn't Hash House the place where they serve 1800 calories breakfasts?...just what the country needs, more obese people with health problems eating 6 egg omelets with a side of waffles, pancakes, 2 lbs. Bacon and a 24 oz. Soda.
Buffets should probably be outlawed as well. This country is already generating too many fat people. Have some toast, half a grapefruit. Your doctor will love you. Insurance company too ;-)
M is a nice place, just too far out. It should never have been built because they simply could not service the debt. 3 inch marble countertops are nice...not when you can't afford them.
Whoever holds the note got beat up...badly.
The "M" was upscale strip resort, and also appealed to locals; but soon I fear it will be just be another local's place. I saw the Monte Lago Casino suffer a painful death, and thought the beautiful M Resort would be our next place to "hang out". I hope they can keep their staff and not change too many of the good things... ( yeah, and bring back the free soda machines ! )
The first impression I had when I endered the M for the first time was ....."WOW". I usually park my car at the parking between St.Rose Parkway and the casino. The little extra walk is usually worth the experience. Then, you take this escalator that brings you up to the casino level, this little extra walk in the hotel lobby hallway, to the casino.
Then, after a few visits, I noticed that these super high end bars seem to be empty most of the times unless I visit at the wrong days and wrong hours. The casino floor is quite busy but since they took out the full pay videopoker machines and now that they took out the soda fountains, I think the M will no longer be what it once used to be. Unfortunately the economy didn't help much building a new neighborhood around the casino so it sits alone in the middle of nowhere, just a few miles away from this little airport. I am not sure if the business will pull up in the future once construction business is to start again. However, the latter is very questinoable as it looks like Vegas has enough empty homes for the next 50 years of additional citizens moving to Vegas. Until these homes are sold and in use it's unlikely that there will be many new homes to be built nearby the M Resort. This is how I see things.
From Switzerland
I was just there last week. The place was a ghost town. They shut down their pharmacy (as of April 14, 2010), and were having a giveaway of a free bottle of wine and a pie (blueberry, apple, cherry, I believe). Was funny - folks would get their wine and pie and make a beeline for the exit.
As for viability - my goodness, they were charging nearly $200 a night...and for being 10 miles off the Strip? I noticed they have since lowered their weekday rates to $125, which is more reasonable, but still too much given the state of the place. You need to GET people in the doors and keep them there as long as possible (that's the goal of all casinos - the longer they play, the better change the suits have at their money).
Anyway, what a sad sad excuse for a resort. I remember how confident this guy was a little over a year ago...and now, well now he's basically begging for a job.
We're there almost every other weekend and spent most of the summer there. We even had a stay-cation weekend there. Never had a bad experience there and I hate to see things change under new owners.
I have loved the M since it opened, was there on the 2nd day - It is a beautiful property - BUT there were problems from the start - The Red Cup Coffee shop was anything but a Coffee Shop - was more like a wannabe high end restaurant with very bad service and mediocre food, Over priced Buffet, VERY over priced steak house that pushed beef from the family ranch, which mind you is more expensive than the other beef on the menu and with out the flavor, and the italian resturant with high prices and small servings and where the wait staff seem to think that when you charge the ticket to your room they can add to the tip if they don't think it is enough.
And then you have the players club. Not being a Local, it offends me to no end to receive thier monthly offers of the bottle of wine, the 6 pack of beer, the 6 pack of soft drinks, and the latest and greatest - the box of Girl Scout Cookies, which by the way are being given out when it is not even cookie season for the Girl Scouts. When I asked if these offers were being sent out in error since they seem to be the ones for locals - was told that they send them out to everyone - what a insult to the out of town players - Why in the world would anyone want to drive over 120+ miles to get these offers.
In the past 6 months, both of my Host's have gone to other properties and it seems that the current hosts don't know what is going on. Such a pitty for such a great property. Maybe Penn can take the property to the greatness it has strived for.
I hate to see this place change hands, these Marnell guys have such good eye for attracting hot staff, (especially those eastern European waitresses)they were making such good $$ in tips, but I'm not worried, I will see these cuties working on the strip very soon, they got used to the big $$ they were making, just not sure which place they will choose, spearmint or sapphire? either way, i will be there to welcome you babies....)
Comment with open airs, everywhere nothing bothers more than width of main streets and sideways. Start a route from north and heading to south with collected picks; suppress the exceptional cycle of elevating mind with occasional cafeterian (coffeehouse) or restaurant stops.
Every time you pick up on cycling things and notice no city was planned for active sport.
Mixed feelings about the M. Love the design and feel, but wish it was a Strip casino. Then again, if it was on the Strip it wouldn't have the design and feel.
I have been a resident of Seven Hills for 7 years I love M Resort- I live 5 minutes away and have stayed there 2 times. Its great! I like that the Marnell family has an upscale vision for the resort and it has been top notch from day 1. I hope Anthony is involved in the future, whatever it may be. He has done a great job with the property, and hes hot! Hash House is so yummy! I will be going there a.s.a.p. for the Chicken and Waffles.
poor little rich boy looking for job after summer project didn't work out? Maybe one of the other families in town will create a new job title for him at one of the other $hit holes. This place was run worse than stations, south pointe and palms put together!
It simply comes down to they cannot service the debt. I can build my self a 2 million coffee shop, put in gold leaf wallpaper, 3 inch marble, copper ceilings, $3,000 coffee machine. If I cannot pay back the loan, what good is it?
It's simple math. The M may be cash flow positive, but not enough to service the debt. The most incompetent businessesman can replicate this scenario.
You cannot borrow what you cannot payback. You are not cash flow positive if you cannot pay the debt. The business is a failure if you cannot pay the debt. Any moron can borrow millions and claim later the issue is the interest rate, not the business. No one forced 10% interest payments on you. Most likely it was the ONLY way you could get financing to begin with.
A great place, A lousy name. What could me more generic than a one letter name. I think "Marnell's" would have been a far better (and memorable) name for it. Penn finally found a way in the door on the cheap, a far better deal than the other blue (bleau?) building on the other end of the strip they were looking at.
On a positive note: It may be 10 miles off the strip (actually 10 miles South, on the strip), But that makes it 10 miles closer to my house than the rest!
I can only imagne the depth of the revenues the people who are upset about the free soda machines were spending at the M!
are you kidding me? this guy needs to go far away from gaming as possible! penn will never let this idiot be in control of their new purchase. this guy let the m go down internally, and never knew what the hell was going on in the first place. what? are you telling me these guys did what to my casino? the m sucks, and hopefully penn will get someone in there who knows what the hell is going on, and hire some new people from the outside to run ALL aspects of the joint!
Now here's an proposal: why not let management work pro bono for the next six or even twelve months, I mean just in case Penn keeps them running. Reinstall the free machines and the good service for the customers. Just let management work two or three other jobs to pay their private bills and keep running the casino on pro bono working contracts to cut back the personnel costs. I mean, it's just a suggestion, nothing personal. For management it should be an honor to be the chosen ones to run such a nice place.
At my new martial arts school I offer fourteen days of free training to new customers, which means a lot of pro bono work for me and the guys to keep our place running. But guess what: it works out better than expected, because the lucky customers come back to book some further months of paid training lessons.
Just in case management declines on such pro bono offers, I recently heard about existing job openings at some shuttle bus services using overaged transport vehicles without any air condition. I mean, we all know the call: "Next stop, the M resort, my former place of work. When stepping out please pay attention to snakes on the ground. Thanks for riding this bus."
Seriously, I do not consider it to be the management's fault.
It's just about a way to cut back personnel costs effectively.
Attention Penn Gaming: Do what you want with the joint, just don't fire any of those beautiful waitresses! Nadia from Romania -- she works in the poker room, good lord!
http://jimmyhoofa-lv.blogspot.com/
Considering the M has a positive cash flow, it seems to be a very smart investment for Penn National.
I'm confused with Cynical Observers initial comment about not wanting tourists. That seems incredibly short sighted. Tourists are the lifeblood of our casino industry. As a local, I enjoy meeting and interacting with tourists. It sure beats the silver haired old bitty camped out at the penny slots chain smoking and powering down baileys and coffees all afternoon.
Las Vegas Sun Staff,
Do you have contact information?
I have a revitalization plan that I would like to propose for M Station or Lake Las Vegas (Dolce?).
It would PERMANENTLY employ several thousand people and offer something completely new for the Las Vegas Valley.
I have been working on this, since 2002, when I saw where Las Vegas was going.
I am willing to give THE LV Sun the scoop, behind-the-scenes information and updates on the sly...in exchange for helping to restore Las Vegas.
Think about it. The mayor of Mesquite is, but she's moving too slow.
I'm serious and I know what I'm doing. You WILL be amazed.
And tell Mike Smith that I want to see more cheerful puppies and maybe some cute kittens in his cartoons, okay? LOL