Borgata Planning 500,000-SF Expansion

What's prompting the proposed expansion are fourth quarter results that showed $33.9 million in cash flow on net revenue of $142 million, according to Boyd's CFO Ellis Landau. The fourth quarter, which was only the property's second quarter of operation, also showed the Borgata as already second in this gaming mecca in both cash flow and revenue. It trailed Harrah's by only $400,000 in the former category, and Bally's by only $9 million in the latter category.

"We've improved nicely from our opening quarter, and the third quarter is traditionally and seasonally a stronger quarter," Landau said during the conference call.

"Many of the revenue trends experienced during Borgata's opening quarter continued and even strengthened in the fourth quarter, while our operating expenses have decreased as we fine-tune our operations," according to William S. Boyd, the company's chairman/CEO. "Our non-gaming revenue increased in the fourth quarter over the seasonally stronger third quarter. Our goal was to offer more than just gaming, and we are already achieving that goal."

Non-gaming revenue is that derived from things like hotel rooms, restaurants, the 50,000-sf spa, shows, and utilization of the 70,000 sf of meeting room space. And that's where much of the expansion will occur. Company officials are short on specifics in terms of costs and timeline, outlining only general plans.

Those plans don't currently call for expanding the hotel room component, which has been running at a 90% occupancy rate. The 500,000 sf would include additions to the restaurant, bar and retail space, as well as to the existing 135,000-sf casino space and the 7,000-car parking garage."With continuously strong demand and high-quality revenues and improving margins, we feel good about increasing our supply to meet future demand," Borgata CEO Robert Boughner said during the conference call. Noting surveys indicating that the Borgata has been drawing new players to Atlantic City, he added that "we're achieving one of our goals, which is to expand the Atlantic City gaming market."