Two Way Hard Three | Las Vegas Casino & Design Blog

Perennial bridesmaid Penn National Gaming made a formal bid for the shut-down Fontainebleau project on the Las Vegas Strip today - the bid: $50 million. Bidding ends January 15th, 2010.

The project has incurred over $1.5 billion in construction costs and is estimated to require perhaps a similar amount to complete to original specification.

If Penn pulls this off, they'll have their first Las Vegas Strip presence - something they've toyed with for some time... If this does happen, Jeff Soffer is going to enter the gaming disaster hall of fame, right next to new-Aladdin developer Jack Sommer... Sommer? Soffer? Odd name similarity there... Anyway...

Update: Since this was written, Penn National has been outbid by a group lead by investor Carl Icahn:


Read archived comments (20 so far)
November 17, 2009 12:19 PM Posted by Brian Fey

I wondered if I read that right in the WSJ story that just broke. I guess I did. As unbelievable as this story is, this may be the only option. I'd think the land alone is worth that much. So just to be clear, they get the whole thing now, as it sits for $50 million? Even if they do have to spend another 1-1.5B, it might not be too bad of a deal. I realize it might only be worth X number of dollars, but the bottom line is, you couldn't build it today for anywhere near what they will have in it. This would give them a major strip property that they've been wanting. The biggest downfall it has, will be its location. Curious to see if other bidders show up before this deal closes.

November 17, 2009 12:41 PM Posted by Tim W

Mark my words. Steve Wynn or Phil Ruffin will make a bid on that building before it goes for $50 million. That is too good of a deal for a strip property completed or not. Let alone strip land!

November 17, 2009 1:40 PM Posted by Jeff in OKC

20 years ago I had a chance to buy a 12,000 square foot house in one of Oklahoma City's most historic neighborhoods for $40,000; 5 years ago I had a chance at a 5000 sf house in a mid-century neighborhood for $150,000. They were both screaming good deals, the buy of a lifetime! Then I got to figuring out how much the (minor) updates and renovations were gonna cost, and the utilities, and the insurance. Soon, I reaized that those costs were going to be more than I made, and I moved on. This is a disaster waiting to happen for Penn, and probably for Las Vegas. I see this becoming the classically described "World's largest dorm hall for the World's largest slot shack". The Excalibur at 5 times the size; are we ready for it?

November 17, 2009 3:32 PM Posted by parchedearth

I agree with Jeff, Penn is biting off more than it can chew and this will end badly for everyone if they get the FB. Penn should target a starter property like Riviera or Sahara. There is also a big potential gotcha since the retail/convention space is not included in this bid.

I think Boyd (and hopefully a partner e.g. Marnell) is the best hope for this property (assuming they give up on the Stations bid). Boyd has the desire, the expertise and the money to make it work. Wynn won't be able to get over the rooms.

November 17, 2009 7:20 PM Posted by GregoryZephyr

I vote Fountainebleau for a Vegas Trippie award for "Casino that generates the most rumor, speculation, and wild prognostications" because I have read everything from it should be torn down to it should be the next Stardust. I think FB edges out Cosmo in this category mainly because Cosmo at least is mostly done on the outside.

November 18, 2009 11:35 AM Posted by mike_ch

I don't know what the chances are, but I keep holding out blind hope that whoever buys it arranges a flashy (and at that height, it will be flashy) implosion and then starts over.

Not just because it'll end a run of broken dreams and I really enjoy schadenfreude, though that's great too. But also because it's a blight in a city where the whole skyline is a collection of blights, whose very existence in the middle of a desert is just a bit of a blight in and of itself. F-Bleau is F-Ugly.

Though I suppose it's an appropriate successor to the heap that used to occupy it's space: the corpse of the El Rancho, soon to be Countryland USA.

November 18, 2009 11:41 AM Posted by Brian Fey

Some most stories are hitting today. Looks like the bid is actually 102 million. They are paying 50 Million, and another 52 million in bankruptcy fees. Still a smoking great deal for the land. We'll see if it in fact happens.

November 18, 2009 2:21 PM Posted by LeoNYC

Aria commercial is running on TV. I saw it today on MSNBC here in NYC. Check it out:

November 18, 2009 8:37 PM Posted by derek marlowe

That is the longest most boring ad for Aria.

November 18, 2009 11:25 PM Posted by Andy in MSP

I agree with mike_ch. I'm writing this as the F-bleu is behind me through my room window at Encore. Man is it a monstrosity!

Also, a bit off subject: The Beach Club at Encore is definitely underway! The front atrium is completely walled off. Only one wall at Switch actually switches now. They have also installed some temporary emergency exits out of Encore between it and the Wynn garage. A great view of the construction can be seen from the top floor of the Wynn parking garage.

November 19, 2009 4:59 AM Posted by detroit1051

I heard the ad at least three times on CNBC but only saw it here thanks to LeoNYC's link. The TV was on in the background, but the music didn't make me look up at the screen. When I did see it, I liked the closing few seconds of images of Aria, but the beginning, with lots of water and the sailboat, was lost on me. How does that entice viewers to think about Aria and CityCenter?

November 19, 2009 2:24 PM Posted by parchedearth

One of the reasons the FB has such a boring flat surface is that the entire south face of the FB was planned to be a video display board. I recall they were comparing it with the Nasdaq building in NYC. I actually think that it would be pretty cool having a 60 story video playing on the entire side of the building. You might even be able to see it when flying into the airport. I suspect this feature will never be finished unless the hardware was already installed.

November 23, 2009 11:04 AM Posted by detroit1051

Carl Icahn wants Fontainebleau:

November 23, 2009 8:06 PM Posted by Brian Fey

So I guess the question is...Who would you rather see get the FB? Who has more to offer when it comes to completing the property and running it? And would these bidders finish it to the same specs as the original designers intended?

November 24, 2009 4:58 AM Posted by Jeff in OKC

I don't think either will finish it out like it was intended. The Strat still has over 100,000 ft of unfinished space walled off in there, so I think it's a lock Icahn won't finish it out until the market demands it. I find the Strat to be "nice enough" and the Aquarius in Laughlin to be the nicest in town, which is nothing special. Kinda like a Holiday Inn.

November 24, 2009 10:02 AM Posted by parchedearth

Does anyone know whether the bankruptcy court will/can consider whether the project will be finished and opened when approving the sale? It is entirely possible that Icahn would just mothball the FB until the economy improves and then sell it to someone who can finish construction. I would like to see the judge extract commitments from all bidders to actually open and run the property.

November 24, 2009 11:26 AM Posted by mike_ch

Jeff, I'm not sure where that 100,000 ft of walled off space is that you're talking about, but I'm all ears.

i do know the area that was Polly Esther's has been walled off with some vases hanging around and nothing other than a change in the floor denoting that there was ever anything there.

Considering the regulatory hurdles, I don't think they'll do what parchedearth suggests requiring a buyer actually run it. My guess is it gets passed around for a few years.

I can't tell you when I think something will be there, because (a) I'd rather see it go away than open up and begin operations since it's so ugly, and (b) any timeframe would begin with "the (condo/tourism/whatever) market recovers" and I'm Mister Vegas Doomsday.

November 25, 2009 10:11 AM Posted by Jeff in OKC

my 100,000 ft number is based on a story about The Stratosphere I read in about 2005 . I think it was in the R-J, and it told about how much space the Ichan team had not developed yet, because it didn't fit into the immediate plans for the property. It's very possible the nightclub space that has opened in the last 2-3 years was part of it. It seems like it was designed to be used for meeting or convention space, but my recollections could be off.

December 7, 2009 4:12 AM Posted by detroit1051

Carl Icahn vs PENN's Peter Carlino. How will this play out?

December 7, 2009 12:33 PM Posted by mike_ch

That article is interesting in that it shows where the original $50m number mocked in our headline came from.

Icahn doesn't have shareholders. That's really what it's going to all come down to. Penn can only chase FB until it leads to a shareholder revolt. And if I was one of their big shots, I'd probably start reaching for the torches once the bid exceeds $200m or so.

Nice to know, though, that the selling party has so little money that they aren't even doing anything to keep the hotel furnishings from falling apart inside.