Eric Birnbaum quickly dispelled one of the urban myths surrounding his company’s purchase of the Rio resort in the Las Vegas.
The Brazil-themed hotel-casino is not going to be demolished and replaced by a stadium for a Major League Baseball franchise.
“I love baseball,” the New York-based developer and life-long fan of the New York Mets told CDC Gaming Reports Thursday, “but this is a campus with a building and a location that has unbelievable potential.”
Birnbaum, through his Dreamscape Companies, closed the $516.3 million sale and leaseback of the off-Strip resort from Caesars Entertainment Thursday. The transaction was first announced on Sept. 23.
Eric Birnbaum/Photo via Dreamscape website
He said Dreamscape now has a minimum of two years to consider its plans for the 2,522-room property that sits on 89 acres along Flamingo Road, just west of Interstate 15 and 1.1 miles from the intersection of the Strip and Flamingo. The Rio was originally developed by Las Vegas builder Tony Marnell.
Caesars will continue to operate the Rio under a two-year lease agreement, paying Dreamscape $45 million in annual rent.
“We think the time and the location affords us the opportunity to consider our plans,” said Birnbaum. “We see the potential that we can ultimately create an oasis that is close to the heart of the Strip.”
Birnbaum said Dreamscape acquires, repositions and/or develops hospitality, residential, retail, gaming and entertainment assets.
Dreamscape has the option to pay Caesars $7 million to extend the lease under similar terms for a third year, but Birnbaum’s goal is for his company to operate the Rio, which would include hiring “seasoned gaming veterans” as part of the management team.
Caesars, which is merging with Eldorado Resorts in a $17.3 billion transaction, has long wanted to sell the Rio. The company, under its predecessor Harrah’s Entertainment, acquired the Rio in 1998 for $880 million in stock and assumed debt. The property opened in 1990.
In a statement Thursday, Caesars said the Rio will continue to be part of the Caesars Rewards network during the lease. The World Series of Poker will be hosted at the Rio inside the resort’s 60,000-square-foot convention center in 2020. The company said the hosting rights “will remain with Caesars Entertainment thereafter.”
Since 2004, the Rio has been home to the World Series of Poker, which runs for seven weeks from late May to the middle of July. This year’s tournament drew a record 187,298 entries. The World Series of Poker is credited with boosting the Rio’s visitation.
Caesars said the “transaction is not expected to result in any changes to the guest experience.”
Birnbaum is behind The Pod Hotel, the 700-room mixed-use ground-up development in New York’s Times Square, and is developing a hotel in South Beach, Miami. He also owns the Westin Las Vegas on West Flamingo across from Bally’s Las Vegas.
He said it was “too early” to offer any suggestions of what the Rio will look like in the future.
#exclusive – $516.3 million sale-leaseback of the Rio closes; buyer says Las Vegas resort ‘has unbelievable potential’. –@howardstutz, CDC Gaming Reports. https://t.co/GMmjcmeKyv @RioVegas @WSOP #CDCgaming
— CDC Gaming Reports (@CDCNewswire) December 6, 2019
“We have a long runway ahead of us and we’re not ready to give away all the secrets,” Birnbaum said. “Suffice to say, whatever we do, we will reimagine the property.”
The Rio’s employees will remain employees of Caesars while the company operates the resort.
Birnbaum said his company has been tracking an acquisition of the Rio “for a year-an-a-half.”
“You would be hard-pressed to find another asset that has the potential to produce if given the right attention, management and capital,” he said.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
