Rodio to helm Caesars Entertainment, but what will the company ultimately look like? By Howard Stutz, Executive Editor, CDC Gaming Reports April 16, 2019 at 7:36 pm One wonders if Tony Rodio just signed on for a very short tenure as CEO of Caesars Entertainment. Within the same breath that it announced Rodio’s hiring, the casino giant said it has created a “transaction committee” of the company’s board that will evaluate “ongoing efforts in creating additional shareholder value.” New Caesars CEO Tony Rodio The language downplayed previous wording from Carl Icahn, Caesars’ largest shareholder, who said in Securities and Exchange Commission filings that he wants to see the company sold or merged with another casino operator. Let’s be clear here: Icahn, the 83-year corporate raider who spent nearly $1 billion to control roughly 20 percent of Caesars, is calling the shots. Three of his representatives currently sit on the company’s 12-person board, and he unquestionably wanted Rodio – who will also join the board – to helm the operation going forward. Rodio, 60, is considered one of the casino industry’s top executives. He spent more than three decades in Atlantic City helping to lead the Boardwalk gaming community’s growth and subsequent resurgence after new competition sent the market into a prolonged nosedive. In the seven years Rodio spent overseeing Icahn’s seven-casino Tropicana Entertainment mini-empire, net revenue increased more than 50 percent. Rodio also led major capital improvement projects, including a complete remodel of Tropicana Atlantic City. Tropicana Entertainment was sold last fall to regional casino operator Eldorado Resorts and real estate investment trust Gaming and Leisure Properties for $1.85 billion. Rodio joined the Las Vegas-based regional casino operator Affinity Gaming as CEO in October, but the position was basically a placeholder until a non-compete clause in his contract expired. The talks between Icahn and James Zenni, owner of the privately-held Affinity, to break Rodio’s agreement were probably pretty entertaining. Now, Rodio has a seat at the table as Caesars – which has almost 40 casinos in 13 states and owns the World Series of Poker – figures out its next chapter. An outright sale of the company, which primarily operates casinos under the Caesars, Harrah’s and Horseshoe brands and includes nine resorts on or near the Las Vegas Strip, will be challenging. “While the company acknowledges there is no timetable for any transactions or results, we believe this is to evaluate takeover bids,” Macquarie Securities gaming analyst Chad Beynon said of the transaction committee’s scope. Caesars emerged from a 30-month bankruptcy reorganization in October 2017 which shed close to $16 billion of debt from the company’s book, but its ownership in nearly 20 casinos was transferred to VICI Properties, a real estate investment trust carved out of the process. Caesars continues to manage the resorts under a lease agreement. During Macquarie’s consumer conference last month, Beynon said company leadership was “tight-lipped” regarding various strategic alternatives. However, they noted that, outside of a total company sale, selling additional Las Vegas casinos to a REIT wouldn’t deleverage the company’s balance sheet, which currently lists $8.8 billion in long-term debt. “Caesars would consider selling an outright asset (at the right price), which would be more of a deleveraging event,” Beynon said in a note to investors. In the statement announcing Rodio’s hiring, Caesars said the independent directors and the investment bank assisting in the process will consider several paths, including “continuing to operate as an independent public company.” A timetable wasn’t set. Two options, however, could already be sitting on the table. The offer made last fall by Tilman Fertitta’s privately-held Landry’s Inc. – which was summarily rejected – could be revived. Reno-based Eldorado Resorts, which has a history with Icahn, has also reportedly expressed an interest. “Top shareholders in the name have come out in support of a sale of (Caesars) in the past several months, but now this power is in the hands of the committee and the board,” Beynon said. Two of Icahn’s board delegates – Icahn Enterprises CEO Keith Cozza and Icahn Capital fund manager Courtney Mather – are two of the committee’s four members And then there is Rodio, who replaces Mark Frissora in the Caesars CEO board seat. SunTrust gaming analyst Barry Jonas noted that Rodio has extensive gaming industry experience but has never run a company with the size and scope as Caesars. “We believe the key question here is whether Mr. Rodio is being appointed to run the company for the long run or more to help prepare for a potential sale,” Jonas told investors. “We could see either scenario, given his past experience.” Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.