Loveman, a Wellesley resident who did indeed teach at Harvard Business School, was no random selection as the event’s speaker. His company wants to build a new gambling resort with Suffolk Downs in East Boston, and they are widely seen as favorites to win the state casino license reserved for Eastern Massachusetts. If casino gambling finally comes to Boston, Gary Loveman is probably the person who will bring it here.
Caesars itself brings lots of experience and enormous scale to any casino development proposal. But the company also lugs around a mountain of debt that should make anyone pause.
How big is the business? Caesars operates 52 casinos in a dozen US states and seven countries. Those facilities operate about 3 million square feet of gambling space (nearly double the number of rentable square feet in the John Hancock Tower) and 42,000 hotel rooms. That operation generates roughly $9 billion in annual revenue, an average of about $1 million for every single hour of every day in a year.
Here’s something the company’s vast gambling empire finds it difficult to produce: a profit.
Caesars earns lots of money from its operations but spends nearly every penny of it - sometimes more - on interest payments. That’s the biggest reason why the company has reported an annual profit only once over the last four years.
In an industry crammed with companies that borrow lots of money, Caesars is an especially indebted competitor. The company’s assets amount to nearly $29 billion but the pile of debts approaches $20 billion.
Caesars reported earnings before interest, taxes, depreciation, and amortization - roughly the cash income generated by its business - totaling nearly $1.4 billion through the first nine months of last year. But the company interest payments for that period were $57 million more.
Caesars was taken private in 2006 near the peak of the previous bull market. Private equity investors Apollo Global Management and TCP bought the company for $17 billion in a highly leveraged transactions.
