Not a big surprise given the funding problems they ran into when the banks pulled their last $800 million but it's still worth noting that this is bad news.
Thanks to reader 'G' for sending this to me.
Categories: Business of Gaming, Fontainebleau, Las Vegas Strip
Tags: fontainebleau, lasvegas, vegas
I see this is a balls-out f-you (not to be confused with the name F-Bleau) move.
Sometimes in business, when you say that you are going to pull the rip-cord and put things into an "interesting" situation and you can't get cooperation, you have to simply do it. Pull the rip-cord.
NOW... everyone knows that they are serious. Either things get worked out. Or... banking companies who couldn't run a Vegas Strip resort to save their lives (let alone finish construction) take it over. AND... try to finish it up.
This is no different than someone who is upside down on a Jumbo Mortgage house (home that is upwards of 7 figures or more) telling the bank... "Take It Over... Good Luck selling it... or... Come back to the table and work with me."
My guess about Glenn Schaefer?
He spent months and months and months telling/suggesting to them how to handle things. Pulled on everything he knew. No one wants to be associated with a failure. It finally looked like he was not relevant anymore, and got the hell out.
What intrigues me is F'bleau's admission that the project was only "70 percent complete" with just four months to go before opening. We were hearing at LVA that F'bleau was really on pace for a March 2010 debut but Sofer & Co. never budged (publicly) off their October deadline.
Throw in the fact that F'bleau spent precious dough to build a preview center for its condos that served no purpose -- as no condos were put on the market -- and I'm beginning to have some sympathy for the banks, who previously looked like the black-hearted villains of the piece.
Packer is out.
Ok, boys....We don't seem to have many or even any girls around here... But anyway....Who comes to the rescue? Will Boyd steal this, will Wynn? How about Penn? Somebody might pick up this thing for a song! It won't be sitting there unfinished a few years from now, somebody will do something with it.
Penn has a weak trigger finger -- and has made it clear it wants a finished property -- and Boyd must hoard capital at least until it knows that A) its Station Casinos offer won't go through and B) it won't need to exercise its option on the half of Borgata that MGM currently owns. If this were a betting proposition, I'd actually pick the Cosmo to find a rescuer sooner than F'bleau, not least because it's in a much better "neighborhood."
Maybe they could sell this white elephant to Stanley Ho. (Just kidding.)
It seems almost impossible to imagine, but this may be a situation where it is simply too expensive to complete and operate it. Everyone writes off their investments and the building stays unfinished for a couple years.
I am shocked by how quickly Packer wrote off his investment. If he walked away from that much, its got to be a hopeless situation.
Sounds like another $1B is going to be needed to finish. I'm guessing any buyer will need another $1B to buy out or join with the secured creditors. The condos will have to be run as hotel rooms for several years before they can be sold.
Yeah I know not going happen, but it would be funny, it is his neighborhood after all....
So what now? Is construction stopping? Opening delayed?
Arthur - Yeah, I'd say that's a very safe bet.
No huge surprises here.
I dont really know who would buy it/want it, dont think Wynn would.
I agree with parchedearth that it could be too costy to complete and operate for a few years.
Jeffrey Soffer is sweating now.
Is it too early for the retro-80s look Soffer is sporting? I'm thinking yes.
On a less shallow note: IMO the problem with FB is that it's a monolith. Either the whole thing gets done or it doesn't. In *theory*, the multi-piece developments City Center and Echelon avoided that by being carved into pieces that could develop at their own pace. In particular if E had kept at least part of the Stardust as a core, it could have been a sequential development and therefore kept going (and generated revenue as it grew). Although they really aren't sequential, at least the separate buildings of CC allows MGM the option of "partially done" vs all-or-nothing.
Some time back Mariott Corporation had applied for zoning and licensing to build a casino/hotel on the property it owns along Casino Center Drive. They had put those plans on hold, due to economic conditions, etc. Maybe if they could pickup the F'Bleu for the right price, they might finish it off and have their Casino on the Strip. After all, who can run a hotel better than an International hotel corporation.
Is Steve Wynn seriously looking at Fontainebleau? I suppose it all depends on the price. That's one way for Wynn to strengthen the North Strip.
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