Home > International Directory of Company Histories > Aztar Corporation - Mid- to Late 1990s Expansion of Existing Casinos and into Riverboat Casinos

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Mid- to Late 1990s Expansion of Existing Casinos
and into Riverboat Casinos

Having cleaned up its finances and showing improved results, Aztar in the mid-1990s turned its attention to expansion, while continuing to vigilantly protect its solid trio of original casinos. With the Tropicana in the weakest position in the increasingly competitive Las Vegas market, the company undertook a minor renovation project in 1993. Where it once stood alone on the southern end of the Strip, the Tropicana now shared a corner with both the 4,000-room Excalibur and the newly opened 5,000-room MGM Grand, with another new neighbor, the 2,500-room Luxor, nearby. While this boom in what became known as "The New Four Corners of Las Vegas" promised to bring increasing numbers of people to the vicinity of the Tropicana, company officials felt they needed to redesign the casino's front entrance and facade to entice additional walk-in business from the surrounding resorts. With a "Caribbean Island" theme highlighting the design, the renovations were completed in early 1994. These included new stores accessible from the street, a "Wildlife Walk" connecting the casino's two towers and featuring natural displays of live birds and other tropical wildlife, and other improvements. At about the same time, the state of Nevada completed construction of a skywalk system connecting "The New Four Corners of Las Vegas," an improvement that promised to increase traffic among the Tropicana and its neighboring casinos.

Aztar was beginning to feel the effects of competition from outside the cities in which its casinos operated, and decided that its first new developments should occur in these nascent gambling areas. By 1993, 14 states had legalized casino gambling and additional states had approved or were considering legalized gambling on riverboats or Indian reservations. The company's first target would be riverboat gambling operations in the Midwest. The riverboat strategy followed closely Aztar's increasing emphasis on slot machine players, since this type of gambling venue is typically dominated by slot machines. In early 1995 the Indiana Gaming Commission approved Aztar's plan for a riverboat casino in downtown Evansville. The $100 million project included a 310-foot, 2,500-passenger riverboat, a casino onboard with 1,250 slot machines and 70 gaming tables, a hotel with 250 rooms, a pavilion entertainment complex, and parking for 1,600 vehicles. The company estimated that the casino, which commenced operations in late 1995, becoming the first casino property in Indiana, could draw 2.3 million visitors each year, provided competition did not arise within nearby Louisville.

Meanwhile, a smaller $55 million riverboat project opened in the spring of 1995 in Caruthersville, Missouri, a town in southeastern Missouri on the Mississippi River about 90 miles north of Memphis, Tennessee. This facility featured a 600-passenger riverboat with a casino of 500 slot machines and 30 gaming tables, an entertainment and ticketing pavilion, parking for 1,000 vehicles, and a recreational vehicle (RV) park. At the same time, Aztar was also pursuing several other riverboat facilities. In early 1995 Newport News, Virginia, selected the company to develop a riverboat casino, but Aztar had to await legislative consideration of the legalization of gambling in the state before proceeding. For these and future operations, Aztar decided to use a brand-name marketing strategy to connect the riverboat casinos. "Casino Aztar" was tied to the particular site, as in "Casino Aztar Caruthersville."

The company also undertook a major addition to the TropWorld casino in Atlantic City, including a new hotel tower with 604 rooms (including six large penthouse suites), additional restaurants, a large poker room with an expanded baccarat and Asian game room, and other new facilities. The $75 million expansion, completed in the summer of 1996, gave the casino more than 1,600 hotel rooms, making it the largest hotel in New Jersey. Upon completion, the casino reassumed the Tropicana Casino and Resort name.

In order to finance the TropWorld addition and the new riverboat casinos, Aztar secured a financing package from a group of ten banks late in 1994. The package totaled $280 million, the fourth largest such package ever made within the gambling industry, with $73 million to refinance debt on the Tropicana and $207 million in revolving credit secured by the TropWorld and Ramada Express properties. Further financing was provided in 1996 by the issuance of an additional 6.3 million shares of common stock through two secondary offerings, raising net proceeds of $55.8 million.

These funds were also earmarked for enhancements to the Casino Aztar in Evansville. Late in 1996 the riverboat casino gained a 44,000-square-foot passenger pavilion featuring passenger ticketing facilities, three restaurants, a sidewalk cafe, an entertainment lounge, and a gift shop. Also added to the site were a 1,600-space parking garage and a 250-room hotel.

Aztar's biggest long-term capital project involved the Tropicana Resort in Las Vegas. The Tropicana had on the one hand benefited from its New Four Corners location as two more megaresorts opened nearby, the Monte Carlo and New York-New York. On the other hand, the aging casino, which opened in 1957, was at a serious competitive disadvantage compared to its glittering new, "hot" casino resort neighbors. Ultimately, Aztar aimed to completely overhaul the casino or even raze it to make room for an entirely modern, "must-see" destination. Financially, Aztar was in no position to undertake such a project in the late 1990s, and the management also wanted to wait and see how well the market absorbed all the new properties sprouting up on or near the Strip. Another issue was the ownership of the site. Although Aztar managed the casino and its various operations, the land and buildings themselves were owned by a 50-50 partnership between Aztar and the Jaffe family (the latter's interest dating back to when the casino first opened). Before undertaking any large-scale renovation or the building of a new property on the site, Aztar wanted to have full ownership. In February 1998 the company purchased an option to buy out the Jaffe family for $120 million. A year later, this 18-month option was then extended to 2002.

1. Introduction
2. The Late 1980s Restructuring of Ramada
3. Aztar at Its 1989 Birth
4. Early 1990s Struggles
5. Company Perspectives:
6. Mid- to Late 1990s Expansion of Existing Casinos and into Riverboat Casinos
7. Key Dates:
8. Early 2000s and Beyond
9. Principal Subsidiaries
10. Principal Operating Units
11. Principal Competitors
12. Further Reading
13. Copyright Page
14. About Page