George Maloof seems forever to be looking around, pacing through his own Palms resort and competing properties with his head on a swivel, checking out everything from a casino’s carpet patterns to the fixtures in the men’s room.
These days, gaming industry observers are doing their own eyeballing of what’s been happening at the Palms. It was reported June 19 that the Maloof family now owns just two percent of the resort it opened in November 2001. The Maloofs are restructuring $400 million in debt after an ownership shuffle that turns majority ownership of the hotel over to investment firms TPG Capital and Leonard Green and Partners.
Those firms own 49 percent of the Palms, each, in exchange for assuming that $400 million debt (the Maloofs are still responsible for the reported $20 million debt at Palms Place condo towers). Under the agreement, the Maloofs could increase their ownership to 20 percent of the hotel depending on the resort’s profitability.
The involvement of TPG Capital—a major investor in Caesars Entertainment—in the reorganization has raised speculation that the megaresort company might be positioning itself to take over operations at the Palms. But in an interview with VEGAS INC last week after the news broke, just before the NHL Awards show, Maloof beat back that contention and said the hotel is in strong financial condition.
Why is this ownership arrangement good for you and the Palms?
Basically we recapitalized the business, got rid of all the debt. It’s a positive thing. We’re in a strong partnership, and there’s no debt on the property, so it’s good for the hotel and the family. We still have ownership, and as time progresses, we’ll have more. The deal frees us up to do a few ideas, four or five things, that we haven’t done while we were working on this.
What ideas have you had? More expansion of the hotel or the casino?
Just expanding the brand, focusing on that. But we’re not building any new rooms.
What about all of the speculation that Caesars Entertainment is taking control of the Palms?
When TPG got involved (with Caesars Entertainment) a couple of years ago, speculation was now that they own part of Caesars Entertainment, Caesars would own part of the Palms. But that’s not true. It’s not at all true. It’s never been true.
Was there ever a moment, or an event, where you had a revelation that the economy was going into a downturn?
I think everybody felt that. The whole city got that same feeling, that there would be some bad times coming. I can’t remember anything specific in the context of just the Palms, but of the city as a whole. Probably three and a half years ago, we were starting to feel it. The rise in unemployment, the housing crisis, the halting of construction, those were all signs that we were in for tough times.
It seems that you’ve felt you’ve been singled out in Las Vegas when so many other Las Vegas-based resort operators have been fighting financial obstacles. Is that a fair observation?
It is, and I think it’s because it’s me—the face of the hotel is me. The story of the hotel is my relationship with the hotel, and it’s easy for people to focus on the Palms that way.
Do you still have full authority to run the Palms?
I’m in a management agreement, you could say, as chairman of the board of the Palms. I still have that authority.
How are you compensated, exactly? Do you get a regular paycheck?
Yes, but I’ve been working for free for four years, actually. I didn’t pay myself.
Whose idea was this? I’m thinking there have been millions of dollars left on the table here.
It was millions. I just didn’t want to take a salary or dividend, because of the economy. It was my choice, no banker told me to do it. Instead of taking checks, I sent them out, to Palms Place. In the first 18 months, it was not self-sufficient and I paid money that came out of my own pocket, absolutely, to keep it going. But now Palms Place is actually doing phenomenally.
And you’re getting paid again?
Yes (laughs), but more important than that, the employees got a raise in January for the first time in about two years. We’ve all fought through this thing, and I’m being as generous as I can possibly be. Our line employees are true family.
Your sister, Adrienne, is one of the stars of The Real Housewives of Beverly Hills, which has recorded at the Palms. Were any of these recent business negotiations part of the taping of that show?
No, I’ve been working on (the restructuring) for a year and a half and none of that was recorded.
Why haven’t you been the focus of a reality show? You seem like a fairly obvious candidate to star in one of those shows.
Actually, I’ve turned down every reality-type show you can imagine. The Casino was the first, with Tim Poster and Tom Breitling (at the Golden Nugget). They wanted me first, and I said no. But I’ve been approached by eight, at least, reality projects.
Why didn’t you accept? You star in television commercials for the Palms.
They just take too much time, and you can’t make decisions when you have a camera in the room. My schedule won’t allow it. And I don’t want cameras around me all the time.
What do you see yourself doing in five years, or even ten years?
I love Las Vegas. I love this industry. I love the Palms brand. That’s where I see myself. I want to do more with the brand, which has become an iconic, great brand, which is relevant even ten years after we opened. I just want to keep picking up more and more big events. I want to keep the momentum going. May was our best month in four years. We’re having a great, great year, and I stuck with it. I didn’t go to Tahiti. I didn’t go play golf every day. I kept working.
You don’t golf?
I hate it (laughs). I just hate it.