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Australia firm's big deal includes Meadows
Racetrack/casino purchaser isn't expected to make major changes
Thursday, December 13, 2007

The sale of The Meadows Racetrack & Casino in Washington County as part of a $1.75 billion deal with an Australian company will not change its day-to-day operations, officials said yesterday.

The sale, finalized late Monday night to Crown Ltd., ends the two-year ownership of The Meadows by Cannery Casino Resorts, the only time during the past 19 years that the site has been in American hands.

"We really had no intention of selling our casinos," said Bill Paulos, joint chief executive officer and part owner of Cannery Casino Resorts, which will have sunk $450 million into The Meadows by the time a new permanent casino building opens in March 2009. "People started talking to us.

"We felt like [Crown was] the best situated to take over our company and use our management and use our employees."

The cash deal, which will be closer to $1.8 billion after acquisition costs are added, took about 45 days to complete.

Since the casino opened June 11, it has averaged a daily gross of about $6 million. More than $62.2 million has been paid in state taxes; Cannery Casino has earned nearly $51 million during that time.

Mr. Paulos, who in 1996 was chief operational officer for Crown, estimated that the licensing and background investigation of the new owner could take 12 to 18 months. The Nevada Gaming Commission, the Pennsylvania Gaming Control Board and the Pennsylvania Harness Racing Commission must all grant approval.

Three Las Vegas casinos involved in the sale are The Cannery Hotel and Casino, Nevada Palace Casino and Rampart Casino in Summerlin. Nevada Palace is scheduled to be replaced by the East Side Cannery in September 2008.

Mr. Paulos has committed to remaining involved in the operation of the four casinos for at least six months past the final approval.

The Meadows' permanent casino will be a 125,000-square-foot building -- its temporary space is 45,000 square feet -- with 3,300 slot machines compared with its current 1,738 slots. Other construction, including a hotel and spa, is planned.

Once all of Cannery's construction projects are completed, the sale to Crown will include 8,400 slot machines, 75 gaming tables and more than 720 hotel rooms.

"Obviously, [Crown is] a company wanting to get a foothold in the United States," said Joe Weinert, senior vice president of Spectrum Gaming Group in Linwood, N.J., an independent research firm.

James Packer, the executive chairman of Crown, is reputed to be Australia's richest man. Last month he split his Publishing and Broadcasting Ltd. into two holdings: Consolidated Media Holdings and Crown. Mr. Packer is deputy chairman of Consolidated.

Crown owns Australia's largest casino, Melbourne's Crown Casino, as well as Perth's Burswood Casino and a 38 percent share of Melco PBL Entertainment, a joint venture to build casinos in Macau with a Hong Kong company. Crown also will own half of the British gaming group Aspinalls and stakes in other casino groups.

"The acquisition of [Cannery Casino Resorts] is strategically and financially compelling for Crown," Rowen Craigie, Crown's chief executive officer, said in a statement. "CCR provides Crown with an entry point into the U.S. locals casino industry via a well-managed and successful company."

Kennywood Park in West Mifflin was sold Tuesday to a Spanish company, but The Meadows' sale is not analogous.

The Meadows' first four owners were local, beginning with its opening in 1963 by the Washington Trotting Association. A decade later it was sold to four businessmen, including Joseph A. Hardy of 84 Lumber. In 1986, a Pittsburgh attorney purchased The Meadows for $5.9 million.

Thirty months later, it was sold to England-based Ladbroke Group for $17 million. The sale in 2001 for $53 million to Canada-based Magna Entertainment set the stage for Cannery's purchase in 2005 for $200 million.

Michael Graninger, The Meadows' general manager, said patrons wouldn't notice any changes from the new ownership.

"Everything's status quo here," he said yesterday afternoon, as customers walked by into the casino. "Nothing's changed. We're competing with Santa Claus and the snow; we're impressed with our numbers."

Steve Levin can be reached at slevin@post-gazette.com or 412-263-1919.
First published on December 13, 2007 at 12:00 am
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