Awaiting demolition, Tropicana stuck in holding pattern until A’s stadium plans finalize
Like many Tropicana Las Vegas employees, Paul Stefani spent the past year tuning out the noise over the 67-year-old Rat Pack-era Strip resort’s future.
That approach was suggested by management.
“They let us know that there were going to be a lot of rumors flying around and we should just take those in stride,” said Stefani, a cook in Robert Irvine’s Public House restaurant who has been with the Tropicana for 11 years.
“We have a lot of established workers including some that have been here close to 50 years,” Stefani said. “I always felt it was a nice family atmosphere and camaraderie. We banded together to kind of ride this storm out and see where we go.”
In June, the future became clearer.
Nevada lawmakers that month approved SB1, which created a public funding package worth up to $380 million to help construct a $1.5 billion Major League Baseball stadium for the relocated Oakland Athletics. The legislation specifically designated the Tropicana as the site for the future ballpark. Developers said the 1,500-room hotel-casino, which sits on 9 acres of the 35-acre south Strip location, needs to be closed and demolished by the end of the year to allow construction on the 33,000-seat ballpark to begin by April 2025.
Executives of Rhode Island-based Bally’s Corp., which has operated the Tropicana since September 2022, say they plan to build another hotel-casino on the site once the stadium is completed in 2028. However, the company has offered little clarity on the future development.
Even after the hotel-casino is demolished, Bally’s will continue to pay $10.5 million in annual rent to Gaming and Leisure Properties, the Pennsylvania-based real estate investment trust that owns the 35 acres.
Truist Securities gaming analyst Barry Jonas wrote in a December research note to investors that Bally’s “would consider a wide range of options [to replace the Tropicana] including leading the development of the project, bringing in major financial partners, taking a diminished financial role … or even outright sale of the development rights.”
The A’s will spend much of 2024 finalizing numerous development plans and contractual agreements with the Las Vegas Stadium Authority and Clark County before the team can touch the legislatively approved public financing. In November, Major League Baseball owners unanimously approved the team’s relocation to Las Vegas.
But until a closing date is announced, Tropicana employees said they’re taking a business-as-usual attitude.
The property is gearing up for Super Bowl LVIII, which will be played on Feb. 11 at nearby Allegiant Stadium. Stefani expects to see large crowds in Public House.
“Our biggest weekend outside of New Year's here has always been the Super Bowl,” he said. “I can only imagine what it's going to be like with the Super Bowl actually in Las Vegas.”
Guest room attendant Marie Fredette, who will celebrate her 30th work anniversary at the resort in July, said she is happy the aging Tropicana will be busy throughout Super Bowl week.
“There’s some wear and tear, but considering how old we are, it’s in OK shape,” Fredette said.
Business is diminishing
Deterioration is visibly evident on the outside of the resort’s two hotel towers, where cracks in the plaster and missing window treatments can be easily seen from street level.
It’s been more than a decade since a previous ownership group that included former MGM Resorts executive Alex Yemenidjian invested more than $200 million to upgrade the resort with a South Beach, Miami, theme. The renovations were property wide and included the 100,000-square-foot convention center and 1,470 hotel rooms and suites. It’s one of the last casinos on the Strip with motel-style low-rise lodging.
“They put a lot of money into the building,” Fredette said.
Still, the property is drawing guests to the south end of the Strip. The location serves as a credential check-in and pick-up site for volunteers and media for the Super Bowl. The casino is selling tickets for a “Big Game Party” on Super Bowl Sunday in Trago Lounge.
On a quiet Tuesday afternoon, North Carolina resident Steve Houston was settling in front of a slot machine in the nearly empty casino but considered himself lucky. As a rated player at Bally’s Twin Rivers in Rhode Island, a sister property to the Tropicana, he and his wife had earned a free three-night stay with $200 in food credit and $300 per day in slot machine credit.
“All we had to pay for is the airfare,” he said.
Houston said the double-queen hotel room was “clean and comfortable” and he was impressed by the resort’s amenities. He gave the Tropicana high marks as a Las Vegas visitor, saying the property was more comfortable than Treasure Island, the last place he and his wife stayed at.
“It’s too bad they want to tear it down,” said Houston, who was aware the resort was scheduled to be replaced by a baseball stadium. “We’re on the first day of our trip. Hopefully, we’ll have a chance to come back.”
Upstate New York resident Dina Markoff said she and her husband were in town for the World of Concrete trade show at the Las Vegas Convention Center. They were staying at the Tropicana because her husband’s company, which was participating in the convention, selected the resort as the preferred hotel for attendees.
“I wasn’t impressed with the room,” Markoff said. “I think next year, we’ll pick a different place.”
She said she knew Tropicana was on the chopping block because “all the employees told me.”
The Tropicana’s website shows “No Availability” for hotel rooms after Oct. 19, 2024, except for Nov. 21-23, the dates of the Formula One Las Vegas Grand Prix. The rooms on those dates are listed starting at $999 per night.
Management from the Tropicana did not return calls seeking comment about the resort. Bally’s representatives referred to past comments made about the Las Vegas property during the company’s third-quarter earnings conference call on Nov. 2.
Bally’s, which has 16 casinos in 10 states, is focused on developing a $1.7 billion casino in Chicago expected to open in 2026. However, the project suffered an infrastructure-related setback two weeks ago.
Chief Financial Officer Marcus Glover said during the company’s earnings call that it was “very difficult to put any more investment into operational changes” at the Tropicana ”until we get more clarity on what the A's are going to do.”
Bally’s Chairman Soo Kim said during the call that the casino’s diminishing business is causing a hit to the company’s cash flow because hotel room bookings “are harder to manage” given uncertainty about when the resort will close.
“Our employees are starting to leave as new properties [are] opening in the area, and they don't know when we're going to redevelop,” Kim said. Despite the uncertainty, “we believe that the [Tropicana land] value has gone up a reasonable amount.”
Meanwhile, normal operations continue. The Tropicana was one of the first individual resorts to negotiate a new five-year labor agreement with Culinary Workers Union Local 226 following settlements the union reached in November with MGM Resorts International, Caesars Entertainment and Wynn Resorts.
Stefani and Fredette, both members of the union’s negotiating committee, said gaining “redevelopment” language, which covers severance payments when the Tropicana closes, was one of the most important parts of the contract. In line with the other recently negotiated contract agreements, Tropicana workers will also see a 32 percent salary increase.
Culinary Secretary-Treasurer Ted Pappageorge said the Tropicana’s severance agreement will provide the 300 union workers with $2,000 for every year they were employed at the resort.
“A majority of those folks are the most senior people on the property and they have been there a long time, like 20 or 30 years,” Pappageorge said. “It’s a significant severance package.”
Stefani said that even though the contract “might be short-lived” given the stadium plans, he was happy with the settlement.
“There's some language in there that covers the future no matter what they end up putting here,” he said.
Fredette said she was happy the negotiations with Tropicana management didn’t drag out. She added that she will always have fond memories of the resort, given that her job “put me through college” and noted she survived breast cancer because of her union-negotiated health care plan.
The A’s hold the key
The Tropicana can’t set a closing date until the A’s have all their stadium agreements and financing in place.
No team-related items were on the agenda for the Jan. 18 Las Vegas Stadium Authority Board meeting since negotiations for development plans, a community benefits agreement and a lease agreement have not been finalized.
Meanwhile, the team canceled a scheduled unveiling of new renderings for the ballpark in December and has not rescheduled the event. A’s President Dave Kaval, who attended the ribbon-cutting ceremony for the opening of the Fontainebleau Las Vegas on Dec. 13, told The Nevada Independent the team might wait until the weekend of March 8-9 to unveil the renderings. The A’s will play the Milwaukee Brewers in two spring training games at Las Vegas Ballpark in Summerlin that weekend.
Following a 15-minute talk at last week’s Preview Las Vegas 2024, A’s owner John Fisher said the team wants Bally’s and Gaming and Leisure to offer conceptual designs for how a new resort would fit with the stadium.
“We think that will give everyone a better picture of what the redeveloped location would resemble,” Fisher said.
From mob control to corporate ownership
The Tropicana opened in 1957 and was run by people with organized crime connections. The resort has seen seven ownership groups over the years, with the site now owned by Gaming and Leisure.
Tropicana was operated by Penn Entertainment up until last year. The regional casino operator acquired the resort in 2015 for $360 million from the Yemenidjian partnership. Then-Penn CEO Tim Wilmott said the transaction “fulfilled an important long-term strategic objective” for the company to own a Strip resort.
Four years later, Penn moved to sell the Tropicana and focus on its regional markets.
In April 2020, when casinos nationwide were closed due to the pandemic, Gaming and Leisure bought the Tropicana for $307.5 million in rent credits that covered six months of lease payments for Penn’s 30 existing leases with the REIT. Penn also signed a lease agreement to continue operating the Tropicana.
Bally’s, which also owns Bally’s Lake Tahoe, acquired the Tropicana operations from Gaming and Leisure in September 2022 as part of a $148 million deal that involved Penn.
When the deal was approved by Nevada gaming regulators, Bally’s President George Papanier, said the company viewed Tropicana Las Vegas “as an opportunity for a flagship property for our western region.”
In May 2023, a month after the A’s backed out of a purchase agreement for a separate 49-acre site for the stadium, the team and Gaming and Leisure announced a “binding agreement” to set aside the 9 acres housing the Tropicana for the ballpark.
The REIT, which will continue to own the entire site and receive rent revenue, is providing $175 million in financing toward the demolition of the Tropicana. The company hinted in October it might be willing to invest beyond that initial commitment.
In a Jan. 18 research note to investors, JMP Securities real estate analyst Mitch Germain wrote that Gaming and Leisure stands to benefit financially from the stadium and whatever Bally’s builds to replace Tropicana.
“Demolition of the Tropicana would kickstart the project,” Germain wrote. “We suspect the Tropicana site renovation will be completed in lockstep with the stadium, offering Gaming and Leisure [a] potential to upsize its financial commitment.”
Stefani said he believes the next project on the site would be successful, given that MGM Resorts International operates more than 13,000 hotel rooms surrounding the Tropicana, which would provide lodging for out-of-town baseball fans and parking for locals attending games at the stadium.
“No matter what we put here — a property, a ballpark or whatever, this corner is one of the best in America given the hotel rooms,” he said.