Oh, the things that can befall a business: The Sands Regent, the Reno-based operator of The Sands Regency hotel casino and Gold Ranch near Verdi, last week reported that its net for its most recent fiscal year totaled $1.9 million compared with a loss of $189,000 a year earlier.
Ferenc Szony, president and chief executive officer, was pleased as could be when he chatted with analysts a few hours after the results were released.
He would have been a lot happier roughly 25 percent happier if the company hadn't encountered a tough break on its insurance.
Here's what happened: The Sands Regency faced a personal injury claim, and the legal and settlement costs totaled $547,000.
The claim was insured, but the company's insurance carrier is insolvent.
That means The Sands Regent, for the time being, had to eat the cost and that whacked the most recent earnings.
The company has filed suit against the insurance broker who sold it the coverage, and The Sands Regent said in a filing with the Securities and Exchange Commission that expects to the recoup the half million that it's out of pocket.
The insurance headache, however, was about the only shadow that crossed the company's financials.
Even the much ballyhooed opening of the Thunder Valley casino near Auburn, Calif., didn't faze Szony.
The California property operated by Stations Casinos may do a good job of attracting day-trippers that otherwise might come to Reno, he said, but the property won't provide any competition for folks looking for a two- or three-day getaway.
If nothing else, Szony said, Thunder Valley doesn't have any hotel rooms, and even a 200-room hotel in the neighborhood of the casino wouldn't amount to much.
By itself, The Sands Regency provides 850 hotel rooms.
And Szony questioned the value of the experience at Thunder Valley.
During a recent visit, Szony said he paid $6 for a beer that would have been half that at a property in Reno.
Slot players don't get free drinks at Thunder Valley, and the payout from its slots appears to be tighter than those in Reno, Szony said.
"It's a different kind of gaming experience," he said.
In fact, the executive team at The Sands Regent is confident enough in its ability to battle Indian casinos that they believe they can return the property to the gross margins of 16-18 percent that were common before the post-Sept.
11 recession.
At the same time, Szony said, the company continues to scout for an acquisition.
It wants to stay in Nevada the company wants to stay under one regulatory jurisdiction and Szony said it probably doesn't want another major downtown property such as The Sands Regency.
He said it's looked at possible acquisitions from Wendover to the Carson Valley.
The company's interest in an acquisition was whetted by the stellar performance of Gold Ranch, which it acquired in mid-2002.
Gold Ranch was a major contributor to the increase in the company's revenues to $55.7 million in the fiscal year ended June 30 compared with $34.1 million a year earlier and also played a big role in the sharp increase in earnings.
Szony said the company might add gaming, entertainment and food options but probably no lodging to Gold Ranch.
The other major factor in the stronger earnings, he said, was return of the women's bowling tournament to Reno this year.
