Austerity. That may be the new watchword at Harrah’s Entertainment if an $81-a-share LBO goes through. Among the scenarios envisioned are a cut-and-run strategy overseas (where Harrah’s has already jettisoned its Singapore aspirations) and a decimation of the company’s regional American properties. Which, in the case of Harrah’s, would be like severing the roots to preserve the tree. The company was built to its current eminence by the steady accretion of middle-market players, who are then incentivized into staying and playing at Harrah’s growing portfolio of Strip casino resorts.

Wall Street seems to look down its nose at this strategy, as do many in the business-journalism community. So while I can understand the snob appeal of reinventing Harrah’s as a high-end-resort company I question its sanity. After all, how does Wall Street imagine Harrah’s will fill all those hotel rooms on the Strip if it has quitted its feeder markets, whether they be tribal casinos or Midwestern riverboats?

What would Harrah’s look like if the bid by Texas Pacific Group succeeds? Well, we can look at what Texas Pacific proposed to do to Portland General Electric when it was pursuing that utility in the wake of the Enron debacle. In that instance, Texas Pacific planned to:

• run the company for five years, then flip it;

• reduce the number of corporate officers and senior-level management;

• slash customer-service staff by over 25 percent;

• cut the maintenance budget by 8 percent; and

• jack up prices, thereby doubling or tripling the company’s profit margin.

If translated to Harrah’s, that formula would equate to thinly staffed, shabbier casino-hotels and probably to a curbing of comps and other loss leaders. But don’t just take my word for it: top gaming analyst Joe Greff is already predicting “minimal investments” in Harrah’s Las Vegas holdings.

In response to the Willamettte Week exposé, one reader wrote back, representing himself as an employee of Texas Genco, another Texas Pacific turnaround project. According to “Ed”:

We here at Texas Genco know now to well how these guys operate. To them it is only how much money they can make within a year buy [sic] selling off assets, staff reductions and no maintenance unless it is a total break down of equipment.

Since this group took control of Texas Genco one year ago we have no stocks, under funded retirement plan, no parts in warehouses, vacation time taken away, lunch meal pay taken away when you work 24 hours straight or more, overtime pay stopped for salary employees, no IT support, lost benefits and no union contract for almost a year.

If that’s true, then Texas Pacific’s style isn’t going to go over real well on the Strip (and to think that players and dealers feared that Harrah’s was going to turn Caesars Palace into a grind joint). At least Harrah’s upper management can take comfort in vague assurances by stock analysts that they’ll retain their sinecures. I wonder how they’ll feel once they start having to answer to bean-counters with scant experience of Las Vegas, save perhaps as tourists.