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Most mergers are driven by the notion, sometimes wildly mistaken, that the combination will bring both a competitive advantage. Some pairs of companies, however, seem so intuitively right for one another, no bottom-line considerations should be allowed to interfere with their matrimony. Like a presidential candidate and a lobbyist's pocket, these two belong together.
I read recently that the average Las Vegas visitor leaves behind around $200 in gambling losses. However, in my flights back from Vegas I've noticed that many passengers still have their diamond rings, fine luggage and iPods, which tells me they haven't been wrung completely dry.
For companies such as Harrah's Entertainments (NYSE: HET), that's just opportunity lost, so I have a suggestion for how Harrah's could improve its take. Simply merge with EZCorp (NASDAQ: EZPW), operator of a chain of 82 EZPAWN pawn shops, which offer short-term credit to needy individuals based on personal property collateral, as well as 334 EZMoney stores offering pay advances.
Imagine how pleased those punters just one throw away from hitting the jackpot would be to find a pawn shop or pay advance joint placed discreetly near the back exit of every Harrah's casino. And while the casino business operates on a small but predictable margin, I'd guess the short-term credit business does considerably better.
Since the casinos already have crack security forces, 24/7 staffing, and a ready supply of cash, how could it help but be a win/win for Harrah's and EZCorp?
For the gambler, of course, it would be lose/lose, but what is life without a few risks? There are worse things than living in a refrigerator box.
Since the casinos already have crack security forces, 24/7 staffing, and a ready supply of cash, how could it help but be a win/win for Harrah's and EZCorp?
For the gambler, of course, it would be lose/lose, but what is life without a few risks? There are worse things than living in a refrigerator box.
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Reader Comments (Page 1 of 1)
10-29-2007 @ 11:51AM
Blake said...
Why would they expend the effort to merge companies? Could the same thing not be accomplished by joining in a strategic partnership, with much less hassle? It would seem to also make more sense for EZ Corp, making it easier for them to form partnerships with other casinos, instead of having a much tighter and/or exclusive tie to Harrah's casinos.
All-in-all, this would probably end up being a PR nightmare for EZ Corp, who already has to deal with all the negative publicity relating to being a pawnshop/payday loan company. Having pawnshops in Las Vegas that are open 24/7 and offer drive through services already gets enough negative reactions...
11-04-2007 @ 10:49AM
Jim Goding said...
Well, as any old-time new york or chicago resident can tell you, this is not a new idea. The illegal bookies in NY and Chi have long been merged with the friendly neighborhood loan sharks. They all operated under the same "corporate umbrella," known to the rest of us as the Mob. I would hope that the state gaming regulatory agencies would keep their red pens handy for approvals on this type of merger.