Fertitta, after hard ’20, set to flex buying muscle
Tilman Fertitta is hot, but he’s bracing for a cold, dark winter.
The billionaire owner of Landry’s Inc., the Golden Nugget casino empire and the Houston Rockets — all enterprises that rely on happy, healthy, flush consumers — said businesses like his will continue to suffer if the nation’s leaders don’t loosen pandemic restrictions and do more tosupport struggling businesses.
In a wide-ranging conversation on the heels of amerger that took his Golden Nugget Online Gaming company public, Fertitta talked tough pandemic choices, railed against bureaucrats and foreshadowed newopportunities in the months ahead.
Striking a familiar chord, he argued that politicians get paid whether businesses are open or not, and so are not affected by the rules they lay down.
“Everybody thatmakes a decision to shut down a business is still getting their paycheck every week,” he said. “That’smy greatest disappointment in politicians during this pandemic.”
The government hasn’t done enough to help small businesses — “the PPP was a disaster” — and as smaller businesses fold and shed assets, companies like his with access to capital will prevail.
Shortly after the pandemic took hold in the spring, Fertitta
said Landry’s had enough cash going into the crisis to last through the end of the summer if the shutdown continued. It did. He also raised $300 million in debt through longtime banking partner Jefferies Financial Group, the New York investment bank.
The cash was essentially an extra insurance policy should Fertitta’s properties remain closed through the end of the year. He has also partnered with Jefferies on a third special purpose acquisition company, raising $500 million to invest in another business.
Road to recovery
Fertitta said he took heat early in the pandemic for being one of the first major employers to furlough staff. He furloughed 45,000 employees when the first shutdowns hit, nearly 75 percent of his workforce. He said he spends about $50 million per week on payroll alone, so when the first wave came he knew furloughs would need to follow.
He’s since returned staffing levels to about 85 percent of pre-pandemic levels, he said, even as his overall revenues are down about 50 percent.
He lauded leaders in Texas, who he said have cultivated an environment that’s friendly to business, balancing pandemic risks and economic pitfalls. Their actions have played a part in stoking competition between Texas and California, which has seen Tesla and Hewlett Packard Enterprise announce their intention to pull up stakes and headed east in recent weeks.
“We don’t panic in Texas,” he said, giving kudos to Houston Mayor Sylvester Turner and Gov. Greg Abbott. “Believe me there’s a reason everyone is moving here.”
Not panicking was part of the plan when he and Jefferies loaded up on $500 million through the public offering of a “blank check” company called Landcadia Holdings III in October.
In announcing the new venture, the partners said, “While the company may pursue an initial business combination target in any industry, the company intends to focus its search on investment opportunities in the consumer, dining, hospitality, entertainment and gaming industries, including technology companies operating in these industries.”
Gaming will survive
It is a decision that may have been informed by how Fertitta said the market “went crazy” for all things tech once the pandemic took hold. The helped Landcadia Holdings II join with his Golden Nugget Online Gaming to take that venture public.
While the craze is a bubble that will burst, he said, the gaming market is doing well and that will sustain his newly public company for the long term.
And so he continues to look for potential restaurant and casino acquisitions across the country as others shed assets.
“It’s a shame that the strong survive and these become opportunistic times,” he said. “The strong are going to get stronger.”
And as 2021 begins, Fertitta is ready to flex his muscle.