Two Way Hard Three | Las Vegas Casino & Design Blog

June 20, 2009

Fontainebleau Buyout Possible?

Posted by Hunter

Fontainebleau is in trouble but maybe they can hook a high-profile sugar-daddy to bail them out.

Execs from Wynn Resorts and Harrah's have toured the property recently.

Personally, I can't imagine Wynn buying this place - the exterior is just so damn ugly and it's way too far along to change significantly. At bargain basement prices though, you just never know.


Read archived comments (21 so far)
June 20, 2009 10:27 AM Posted by detroit1051

I may be dreaming, but this might be good for Steve Wynn IF he gets a price he can't turn down. Here are some top of mind thoughts, and no, I haven't been smokin' anything funny:
1) Fontainebleau allegedly spared no expense in construction.
2) The North Strip desperately needs a few strong anchors. IF the economy recovers and MGM isn't forced to sell the CityCenter North land, WYNN and MGM could change the dynamic of the area.
3) Wynn could operate the hotel and casino, and IF condos ever regain their luster in Steve's lifetime, Wynn Resorts would have a high-end condo project ready to go.
4) I recall from Steve's presentation at the Milken Conference that he talked about his fond memories of Miami Beach when he was a teenager and young adult. He specifically mentioned how great the Fontainebleau was, and I'm not sure, but I believe he met Elaine at Fontainebleau when she was Miss Miami Beach.
5) IF Steve controlled FB, he could bring back Glenn Schaeffer to run it. He has a lot of ability and could do the job with an owner other than Soffer/Turnberry.
6) IF the price is right, Steve would have good convention facilities and could leave his golf course acreage undeveloped for the forseeable future.

June 20, 2009 7:50 PM Posted by BigRedDogATL

I would like to see Boyd Entertainment buy the Fontainebleu. They could change out some of the glass panels for the same colors they used in the old Stardust tower and then rename the place to the New Stardust. Then when things pickup again, they could finish construction of Echelon but in the meantime be earning some bucks.

June 21, 2009 1:42 AM Posted by Arthur

Wynn buying FB will be a great event for Las Vegas, as it will enable FB to continue construction and hire people for opening. And possibly bring back Schaeffer.

Mr. the

June 21, 2009 7:57 AM Posted by Larry

It sounds more like Wynn is considering becoming an investor, quite possibly for less than a controlling interest.

June 21, 2009 11:44 AM Posted by Andy

As much as I'd love Steve Wynn to invest in this project and give it some direction, I'm concerned about Encore. I was in Las Vegas for four days a couple weeks ago, and Encore was dead. Like ghost-town dead. There were two big conventions in town, too, and places like Venetian/Palazzo, Caesars, and Mirage were crowded.

In three pretty long gambling sessions at Encore, I didn't see any more than 20 people playing table games at any given time. And there were several $10 tables open.

This was my first time to see Encore, and I liked a lot about the casino. The service was great, and the dealers were friendly. The decor, obviously, is striking. However, the music is atrocious. It might have been the same song on continuous loop -- I tried to tune it out, but it's loud and incessant. It was some vaguely Eurotrash dance music that sounded like what old guys would imagine the hip rich kids listen to, I guess.

The question I kept asking myself (silently) was, "Who does Steve Wynn want gambling and staying here?" I think I remember him saying 30-35 year-olds with some disposable income and who wear blazers with jeans. Well, that's me, and in my opinion, he hasn't quite hit the mark yet. I say this as a guy who still loves Mirage and got married at Bellagio.

June 21, 2009 11:51 AM Posted by Hunter

I've noticed smaller crowds at Encore sometimes too.

I have a few theories:

* Given it's location, not a lot of people are walking in from The Strip.

* Some (many?) customers on the Wynn Las Vegas side don't even know Encore exists / is open.

The second one is probably a bigger problem but I heard this over and over when talking to random customers. Perhaps it's an issue of signage.

When you're standing in the Wynn theater lobby and look towards Encore, you see a bunch of shops... well, if you don't care about shopping or maybe think Wynn's retail is too upscale for your budget, you might not even walk down there.

Maybe Wynn needs some kind of vibrant dining outlet in that first part of the Encore esplanade - something with outdoor seating that makes it obvious that there's more to see down that hallway.

Now, none of this is a problem on nights when XS is open - at that point, those hallways are jammed packed and the restaurants at Encore also seem busy enough on most nights so it may just be a problem that fixes itself over time.

June 21, 2009 12:21 PM Posted by Andy

Maybe it is the signage, Hunter. Wynn tended to be busy while I was there. I like your suggestion about a vibrant dining outlet to draw the crowds.

I feel as though I was a little harsh in my assessment of Encore -- I really did like most everything about it. It may be that the lack of people led me to think, Why aren't more people here, and how much money is Steve Wynn losing on this place? Hopefully the crowds spilling over from XS are driving enough business that there's no real reason for concern.

June 21, 2009 3:57 PM Posted by mike_ch

I was in Encore today and noticed that it was pretty dead. Not being near anything and basically having no Strip access walking clear across Wynn hurts it for walk-through traffic. People staying there and at Wynn will play there and will notice the placae simply because the restaurants and offerings are being mentioned, but there's no doubt that Wynn is where people staying at other hotels are spending their time.

I myself have barely ever gambled at Encore because I don't enjoy it. I've never been the biggest WLV fan (though I mostly chalk that up to not having any money, WLV is much more of a coin-operated show than Steve's previous hotels) but Encore has smaller spaces, rows of machines more tightly packed together, and the minimums are often higher (at Wynn I can find Double Diamond for 25 cents, at Encore you can't.) And some of Encore's machines are bizarrely old (I saw one slot theme that was nearly three years old and I know for a matter of fact has been unpopular.)

I plan to stop in again for Society, but until they rework the floor I wouldn't seriously play there over Wynn.

June 21, 2009 7:46 PM Posted by Mike P.

Steve's insistence on maintaining high room rates can't be helping. So far this year my wife has attended 3 continuing education courses at Encore totaling about 10 days of meetings. We were tempted to stay there for at least the first one but couldn't justify paying Encore's room rates even with expenses partially reimbursed.

Except for having to get up at 530AM I actually prefer staying down the strip a ways. I get about 9 miles of walking in per day with 3 round trips on foot between our mid-strip hotel and Encore, and I really need the extra exercise to work off the extra calories I consume.

Encore has one bank of video poker machines that are the best low denomination play left at either Wynn property. That's the only reason I've had to gamble there.

Andy, Wynn and Encore play the same casino background music and it's pretty much unchanged since Wynn opened. It's not just one song -- they just all sound the same. I had the lyrics to one song stuck so firmly in my head that I was able to Google them and found out it was by some British chantoosie who calls herself Dido. They play a couple of her songs, and she's actually pretty talented.

June 21, 2009 8:01 PM Posted by Hunter

The rates for Encore must be all over the place because we're there for three nights for just about $90/night, plus a dining credit.

I believe Dido was featured in an iPod commercial, which introduced her to a lot of Americans that hadn't heard of her before.

June 21, 2009 9:42 PM Posted by Arthur

I had family over one time and I took them to Wynn and said to them that a new casino opened next to it called Encore and that we should go see it.

When we walked pass the hallway at the Encore Esplanade, the line at the entrance to XS was very jam-packed that most people going from Wynn to Encore can't even get through...and even into the Encore shops...even though security detail was trying very hard to keep the lines away from the shop doors so customers can walk in..but, all in all, it was very diffcult to get to Encore via the Esplande when XS is at its peak.

When my family sees this, they wondered it is worth the scramble through all those crowds just to get to Encore? In the end, I persuaded them to go and it took us a considerable amount of time to get to Encore, walking past all those crowds.

Once we were at Encore, I showed them around the red casino and all the restaurants and such. When we get to the atrium, my family said, "So, where's Encore?". I said, "This is Encore, this is the end of it.". They said, "Really? I thought we were still at Wynn...whats the difference?" and "Wynn has more offerings, the casino is the same and everything is the same. The only difference is that jam-packed line that we had to get to."

So, that's my Encore episode. Couple of things I noticed. One, people think that Encore is the same as Wynn. Two, people don't want to go through the XS crowds just to get to Encore (as Encore relies on Wynn traffic rather than Strip traffic). And three, people don't know what the heck Encore is (ask a couple of my friends, "Hey, wanna go to Encore?", they said, "What's that?")

Dunno how to solve these problems, but, just a report to show that problems do exist at Encore that may explain why people aren't going to Encore, and remain solely at Wynn.

June 21, 2009 10:24 PM Posted by mike_ch

Dido was actually peaked in the US music scene around 2000-2003. She's mostly known for this number which Eminem remixed with his song Stan since he was in peak media at about the same time. I remember Craig Kilborn was in love with her at that time when he had the spot after Letterman.

Music at Wynn is like riding on a train. The "clop, ca-clop" of the steel wheels rolling along the tracks is the "bum ba-dah bum ba-dah bum" of Wynn.

I ate at Stratta today (review forthcoming) and was seated right near the casino as the dining room was not used for lunch. Not my preferred location normally due to the drifting cigarette smoke, which wasn't a problem here but instead I got to eat to the "bum ba-dah bum ba-dah bum ba-dah bum" of the Wynncore soundtrack.

I guess that rhythmic baseline gets the players thinking "max bet, max bet, max bet, max bet" or something.

June 22, 2009 4:46 AM Posted by detroit1051

Arthur's report shows the importance of multiple resorts feeding off each other. Encore would be a much stronger property if Echelon were built on the other side of the Strip. Although not as close, Fontainebleau would also strengthen Encore.
I hadn't realized how much Wynn's parking structure slices the Wynn/Encore properties in two until I looked at the map linked below. It is not a seamless resort for people on the Strip. I bet Steve has wished many times that he had placed the original Wynn garage in a different place.

June 22, 2009 7:08 AM Posted by Andy

Wow, I do remember Dido. Thanks, Mike P.

I like mike_ch's suggestion that maybe the driving beat encourages "max bet, max bet, max bet." I do know I lost track of time at Encore, because I subconciously keep track of time by the number of songs I hear. I just have a silly, superstitious tendency to up my bets when a song I really like comes on, so I noticed how much more cautious I was with my bet-sizing at Encore.

June 22, 2009 1:54 PM Posted by Jeff in OKC

Back to Fountainebleau: I am convinced that Steve Wynn is the saviour. In fact, I am convinced that the is the only saviour possible now, or in the forseeable future. I think he has the mojo to sooth the lenders and other creditors. He has the design department looking for something of size to do. He'll show that he learned from losing Mirage that cost control is critical, especially in today's climate. I think the lenders will see him as the best chance of getting the most money back for them, and the condos, and other sections, will be sealed off in their current states for at least 10 years.

June 22, 2009 2:39 PM Posted by Brian Fey

I know Wynn & Company looked at the property, but I'd be pretty shocked if they bought it. I could see them running the property for a bank, for a fee or something, but I don't see them laying out the kind of cash that property would take to purchase. But this is Vegas, anything can happen.

June 22, 2009 8:03 PM Posted by Arthur

Dido is best known for her songs, "Thank You" (which was remixed with Eminem as stated by Mike) and "White Flag".

June 23, 2009 8:38 AM Posted by Mike P.

Hunter, you're right about Encore's rates being all over the place. I looked again at the flyer for one of the courses my wife attended at Encore, and they were advertising "special group room rates" of $299 a night. I doubt they got many takers at those rates.

She had checked rates for suites, but they were pricing them at 2007 levels a couple months out. Either demand for higher end room product is holding up better at Wynn properties than elsewhere on the strip, or they're just trying not to book them to paying customers. I'm guessing it's the latter, which probably makes now a great time to get a comped suite if you still have a gambling bankroll.

Maybe Steve should talk to Dido about becoming a headliner for him. My wife could drag me to see her a little less reluctantly than the one time we saw Celine.

June 28, 2009 5:49 AM Posted by detroit1051

The Las Vegas Sun has an interesting behind-the-scenes report on the way casino resorts are constructed in Las Vegas. Often, construction proceeds before architectural and engineering plans are finalized which causes defects and cost overruns. Developers and lenders seemed content with this dangerous practice when times were good and money was rolling in.

June 28, 2009 6:42 AM Posted by Brian Fey

This article is pretty amazing, really. I knew about some of this, I know about cost overruns, etc, and I realize projects are started, and then designs are changed, and all, but I had no idea to the extent. Its no wonder, Wynn Resorts takes twice as long as others to design projects. Its also might explain the reason, his budgets are so over the top to begin with. I realize even my beloved Wynn also, tends to place budgets in place, and then blows through them, but I think they at least have a good idea of most of their designs and wall placements before they get half way into the project.

July 5, 2009 7:41 PM Posted by detroit1051

The Miami Herald has a lengthy article on the Soffer family, Turnberry and both Fontainebleau's. I don't see how this can have a happy ending:
"But Soffer must still find hundreds of millions in new funding to complete the
project. If it doesn't come together, he risks losing the property to lenders or
a vulture waiting to take the property at a rock-bottom price. Lenders probably
cut off funding in order to take control from Soffer's team or win major
concessions, said Thomas Lehman, a veteran Miami bankruptcy attorney."

"...Bubeck, of S&P, has estimated a sale of the property would generate just over
$700 million and creditors can hope to recoup no more than 10 cents on the