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M Resort CEO open to a role at casino after Penn National sale


The M Resort is shown near the Interstate 15 and St. Rose Parkway interchange.

Updated Friday, Oct. 8, 2010 | 4:11 p.m.

Click to enlarge photo

Anthony Marnell III

Map of M Resort

M Resort

12300 S. Las Vegas Boulevard, Henderson

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."

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  1. 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.

  2. 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.

  3. Penn National Gaming Inc. has been looking to buy a Casino in Las Vegas for several years.


    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.

  4. 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.

  5. 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".

  6. The M is a real beautiful resort. Penn got an amazing bargain here.

  7. They took out the free soda machines, place is too far away to be a success.

  8. 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.

  9. They only took out one of the soda machines.

  10. @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.

  11. 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.

  12. 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

  13. 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.

  14. 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 ! )

  15. 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

  16. 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.

  17. 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.

  18. 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.

  19. 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!

  20. 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 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