Two Way Hard Three | Las Vegas Casino & Design Blog

May 29, 2009

Schaeffer Out at Fontainebleau Resorts

Posted by Hunter

Former Mandalay Resort Group executive Glenn Schaeffer is out as the top dog at Fontainebleau Resorts. This is another *major* blow for the company that is already struggling with financing problems related to its Strip resort.


Read archived comments (16 so far)
May 29, 2009 11:45 AM Posted by mike_ch


I think they're lucky if they open in the first half of 2010 now.

May 29, 2009 11:45 AM Posted by detroit1051

Wow! Will the Sofer family also be out and both Fontainebleau's taken over by Deutsche Bank, Packer and who knows who else?

May 29, 2009 2:28 PM Posted by Brian Fey

I have an idea, pay Wynn Resorts or MGM-Mirage a management fee to finish the place and run it.

May 29, 2009 5:18 PM Posted by mike_ch

Why bother at this point? Unless I'm mistaken, Schaeffer basically took this company from Miami and brought them out to Vegas because of his know-how. Without them, why stick around?

Must be nice to be Boyd, they have money but too many options to figure out what to do with it. They were allegedly saving money for Echelon, but with GGP's bankruptcy and other factors that project is so far gone that they use it for other purposes like battling with Station. If they can't talk MGM into selling a finished property (I thought Mandalay was a good fit for them if you remember), they ought to see what they can wrestle out of the FBleau because it's way more ahead than Echelon is and is still basically an empty shell at this point. If they could afford to finish it and open it sometime in 2010, it would make a nice Borgata West or whatever to generate income and get Echelon underway again. The condos, as doomed as they are in the short term, would kill the need for condos at Echelon.

Redo Echelon as just a hotel and a little bit of shopping and leave all that space left for partner hotels and malls for the future. It could take ten years, but Boyd could build build an entire piece of the street the way MGM and Harrah's did.

Of course, I'm just assuming that MGM doesn't come to Boyd and try to sell off 50% of Borgata in order to save their relationship with the Hos, but that story of Genting picking up MGM's share seems more likely. Which would you rather do, get 50% of the money for a top hotel where you basically do nothing, or be a runner up in a cut-throat market and do all the work yourself?

May 29, 2009 5:28 PM Posted by Hunter

If MGM sells half of MGM Grand Paradise (Macau), they will have nothing there and no potential Cotai operation in the future.

How can MGM afford to exit the largest gaming market in the world?

May 29, 2009 6:42 PM Posted by Dave

Mike--I don't think there was ever a condo component at Echelon--just the casino resort and the boutique hotels. I remember some folks from Boyd being very emphatic on that point when I was talking to them during the run-up to the Stardust closing. It didn't seem like a big deal at the time, but in retrospect it was pretty smart. Of course, it's not built anyway, so it's really a moot point.

As far as Macau, you've got to believe that even if the casino itself was a break-even proposition, the branding and customer development potential of being in Macau would justify staying in the market. If they could somehow get into Penghu (Taiwan) or Japan (assuming it opens), maybe you could let Macau go, but for now I'd say a foothold in the market is very important, particularly as the company has hitched its wagon to the high end of the Strip.

Fontainebleau, with a major convention component, seems to be a logical replacement for Echelon, which also had a big convention center.

May 29, 2009 9:39 PM Posted by mike_ch

Doctor Dave: Their take on condos was "we have the option of adding them later." Obviously if they had Fbleau, condos wouldn't even be considered for that huge Stardust footprint.

Hunter: I don't really have an answer to your question. I think the cost of getting into Macao was worth it for LVS (because of Sands and being there for so long with limited competition) and for Wynn (because they seem to be making money hand over fist there.) The value of right of ownership is so high that I really wonder if it's worth holding onto if you're a bit player.

If Macao becomes a freer market in the future, and the number of players suddenly isn't tightly regulated to a small club anymore, Adelson and Wynn can look back and say "well, the value of our assets took a hit, but we made so much in that time that it was worth it." I don't know how long MGM would need to say the same.

May 29, 2009 10:19 PM Posted by chuckmonster

If MGM sells their stake of MGMGP because of New Jersey, I'll shave Hunter's head and eat the hair (with his permission, of course.)

May 30, 2009 11:45 AM Posted by mike_ch

Chuck: I just think anything is possible. With the Nugget sale we saw all kinds of action going on, backroom dealings and even the suggestion (no evidence, mind) that the Station Fertittas were secretly placing bids to bump up the price on their feuding relative.

Everyone seems to be operating under this opinion that MGM will offer to sell their stake of Borgata to Boyd and they'll take it, what if they don't? Don't have a lot of reasons lined up for them not to, but the chief one is that if there's companies who want that MGM casino in Macao, it seems to me they'd be paying Boyd to not take the offer.

I mean really, if Boyd doesn't take it, MGM is in the pressure cooker. They'd have to give the stake to somebody else, but who has any money? Harrah's is in debt, Colony Capital has been tapped out with their mingling with Station, the Trump places are just getting by.

They could bring in somebody new, maybe Phil Ruffin has enough left over that he can buy afford half an AC property to sit back and collect the income the way MGM has until now, but then that person has to go under the NJ review.

May 30, 2009 12:15 PM Posted by Hunter

Don't forget that New Jersey hasn't done anything and they might not.

May 30, 2009 6:22 PM Posted by Jeff in OKC

If forced to choose, I don't see any way that MGM would stay in AC versus Macau. I don't think there would be a shortage of suitors for Borgata. The financing may be "creative" but MGM could have a deal by Monday night if they wanted.

June 1, 2009 11:04 AM Posted by Jeff in OKC

When does Bill Weidner become free from LVS? Maybe he could help James Packer get this through the rough seas they are in.
I recall hearing on the Strip Podcast that James Caan said he was good friends with the Sofers. I guess they could hire him as Ed Delile, he seemed to do a really good job at the Montecito.

June 1, 2009 2:10 PM Posted by detroit1051

Weidner has a one year non-compete, so he's not available until March, 2010.

June 1, 2009 2:53 PM Posted by Mark D

I thought Packer wrote off (or down) his Fontainebleau investment last February?

June 1, 2009 3:30 PM Posted by Jeff in OKC

I think you are right, Mark D. However, I think there are few people with the resources and desire to operate a property as massive as Fountainebleau, and Mr. Packer is someone who can, and would have a natural interest in restoring something he was involved in.

June 1, 2009 7:29 PM Posted by detroit1051

This story from The Australian talks about Packer.Crown's U.S. investments, including Fontainebleau and also City of Dreams.,28124,25557953-643,00.html