As with Duolingo, Kuehne+Nagel or Pernod Ricard - albeit in each case in very different registers - the famed casino operator Caesars Entertainment is also feeling the backlash from the massive distortion caused by the pandemic.
The speculative boom at the time had pushed Caesars' valuation to a $25bn market capitalization. That figure has since been divided by five, felled both by investors' return to sobriety and by falling footfall in Las Vegas.
The rumor in recent days is that would-be buyers are circling the group, in particular Texas magnate Tilman Fertitta, a close ally of Donald Trump, whom he named U.S. ambassador to Italy.
On paper, Caesars has the look of an LBO structure, with $25bn in long-term debt against equity now valued at a little over $5bn by the market.
$14 billion of that debt is in fact leases and rent commitments owed to the Vici trust, owner of the fifty casinos operated by Caesars since 2017. The operator, which once owned the real estate outright, had gone bankrupt two years earlier.
Floating around in the press - including in the venerable Financial Times - is the idea that Caesars generated more than $3bn in free cash flow last year. But that is operating free cash flow, which therefore does not take into account a very substantial interest expense, as it reaches $2.3bn.
That changes the picture. By our calculations, Caesars actually generates free cash flow of around $1bn. Even then, the group trimmed its capital expenditure in 2025 to boost that cash generation, perhaps in anticipation of a sale.
Moreover, its capital structure largely prevents it from channeling that profit to shareholders. In 2024 and 2025, it was only able to return $208m and $246m to them through share buybacks.
A potential buyer will have to do the groundwork to ensure that Vici and the group's creditors do not take the lion's share - which is still the case today. It will also have to bet on a shift in trend in Las Vegas, where visitor numbers have been flat for ten years.
In light of these factors, absent a major strategic reorganization among the various entities, it will be difficult to justify an enterprise value materially higher than the current $30bn.
