Caesars Entertainment may soon be handing out mass pink slips, including some to its executive suite, The Post has learned.
A looming sale of America’s largest casino chain is shaping up to result in mass layoffs as lead prospective bidder Eldorado Resorts gets busy investigating ways to slash at least half a billion in costs to wring a profit out of the debt-ridden business, The Post has learned.
Eldorado has been in talks with Caesars about a possible merger for months, but has not pulled the trigger on a bid in part because Chief Executive Tom Reeg has been determined to find $500 million in cost savings first, two sources with direct knowledge of the situation told The Post.
Reeg’s quest for cost savings comes as Caesars’ largest shareholder, activist investor Carl Icahn, has also complained of bloated expenses, including those at the executive level.
Icahn, who owns a 28.5 percent stake in Caesars including swaps, has griped that the company’s $332 million in 2018 corporate expenses — a category that includes executive salaries — needs to be reined in, according to people familiar with Icahn’s thinking.
If Reeg finds ways to slash the $500 million in costs, he plans to move forward with an offer to buy the owner of Harrah’s and Bally’s, which is worth $24 billion including debt and equity, sources said. If not, he is expected to walk away, sources said.
“My hunch is he’s not going to get there,” said a source who knows Reeg and thinks the cost-savings quest is part of a desperate bid to offset the risk of the acquisition.
Caesars has given Eldorado until the end of the month, or Memorial Day, to make a binding offer, two sources close to the situation told The Post.
Caesars has 66,000 workers and Eldorado has 18,700, for a total of 84,700. Thirty-eight percent of the combined workers are unionized.
Eldorado generates about one-quarter of Caesars’ net revenue, but its operating expenses are 86 percent less, at $47 million, according to public filings.
Houston Rockets Owner Tilman Fertitta is also trying to put together a rival bid for Caesars but is still struggling to secure the funding, sources said.
“Tilman is meeting with anyone who has deep pockets,” a gaming source said.
There would be considerable upside to a merger between Eldorado and Caesars, according to a recent analyst report by investment bank Jefferies. The combined company, if slimmed down, could generate $3.3 billion in earnings, Jefferies said.
Eldorado owns 26 properties across the country, including Circus Circus and Tropicana. Caesars owns 37 US casinos and 13 overseas properties.
Separately on Tuesday, Caesars announced it’s partnering with Disney’s ESPN to create sports betting content out of a studio to be built at one of Caesar’s Las Vegas properties.
Caesar’s shares closed up 2.4 percent on the news. to end the day at $9.09.
Both Caesars and Eldorado declined to comment.
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