Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Joe Greff – J.P. Morgan.
Joe Greff – J.P. Morgan
Can you just comment Dan, on your expectations for the ramp up at Lumiere Place, maybe before how you saw things were going before Proposition A passed and maybe you can help quantify what you think the benefit is of that passing from kind of a revenue and EBITDA perspective.
Dan Lee
Well, to give you some background, I remind everybody that at L'Auberge, we didn't make any money in the first seven months. Now, there was a big hurricane kind of in the middle of that, but it's just a belief from my experience at Mirage Resorts and elsewhere that when you open a property, the employees don't know the jobs all that well yet and everybody comes to see the new property and you want them to have a good experience and so you overstaff intentionally to make sure people have a good experience.
You also spend heavily on the marketing as you build up a reputation in the market and attract people. And then gradually over time, the employees get more efficient at their jobs and through attrition, the size of the payroll comes down. And then the marketing you keep up until you're pretty sure you've kind of locked into the market and then you start backing away from media like newspapers and television where you're paying for a lot of eyeballs of people who may not gamble. You just start going more and more towards direct mail to the mailing list you've developed. So, your profitability comes to light.
That has been basically what's been going on at Lumiere Place since opening masked somewhat by, as we've said the increases and losses of the presidents. If the president is moved to the Chain of Rocks Bridge and let's assume the referendum had not passed I think we still would have been making first quarter something like $5, $6, $7 million of EBITDA and growing from there in the second and third quarters and ending up the year something in the 30's.
Now with the lost limits gone we will be hiring player development people and stepping up the marketing effort. I think we'll see our revenues pop but we're also going to have increased expense. Again, it's almost like a new opening because we have to market to people in Memphis and Chicago and so on. I think there's a pretty good chance we'll end up with kind of the same bottom line in the first quarter and then better bottom lines in subsequent quarters where the additional spending that we'll do in the first quarter will offset the additional revenues.
- To read the full transcript on Seeking Alpha, click here »
