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Thursday, Aug. 5, 2010 | 8:48 a.m.
Sun archives
Carl Icahn
Fontainebleau
Three pieces of news emerged today about the massive, unfinished Fontainebleau casino resort on the Las Vegas Strip:
--Investor Carl Icahn, who bought Fontainebleau out of bankruptcy in February, confirmed that there are no immediate plans to restart construction on the resort.
--Despite talk that he may sell the property, Icahn indicated he plans to hold on to the asset until business conditions improve.
--Icahn has already gained -- on paper -- a $52 million profit on the property.
Today's disclosures by one of Icahn's companies, Icahn Enterprises L.P. of New York, are significant because they are the first official word from Icahn since the Las Vegas Sun reported in June that a contractor, Taylor International Corp., had pulled $1.2 billion in construction permits for the resort.
Icahn and Taylor International at that time declined to address whether construction would resume anytime soon on the property on the northern stretch of the Las Vegas Strip, between the Riviera and the Sahara hotel-casinos.
Construction on Fontainebleau was halted last summer and its initial developer, Florida-based Turnberry Associates, sought bankruptcy protection for Fontainebleau Las Vegas after banks halted funding for what had been envisioned as a $2.9 billion, 3,815-room resort.
The project was hurt by declining revenue projections because of the recession, an associated lack of condominium sales and cost overruns. Costs to finish the project could reach $1.5 billion, bankruptcy court filings revealed.
"Our real estate segment intends to secure the former Fontainebleau property until market conditions improve," Icahn Enterprises said in a regulatory filing today regarding the unfinished building and 25 acres of land.
Icahn bought the property for $148 million after out-bidding Penn National Gaming to be the stalking horse bidder in the bankruptcy auction.
Icahn's company also disclosed today that in February it completed a "fair value study" on the Fontainebleau property.
"Fair value was determined using 'as is' cost and comparable market sales approaches. The total fair value of the former Fontainebleau property was valued at approximately $200 million, of which $91 million related to land," today's filing said.
Icahn separately controls Las Vegas-based Tropicana Entertainment Inc., which has hotel-casinos around the country including in Laughlin and Atlantic City.
The Tropicana Las Vegas hotel-casino, spun out of the Tropicana Entertainment bankruptcy, is owned by another group of investors and is not part of Tropicana Entertainment.
Time for a lot of construction workers to move out of town.
So if business conditions never get any better, does this mean it will sit empty forever?
schocking relevation
Could easily be years. There is a hotel in Korea that building halted on back in 1992. 18 years and it is still not finished.
Why didn't Harry Reid help Turnberry Associates secure bank loans to keep the construction and save the thousands of jobs the Fontainebleu could have brought to Las Vegas. There is something fishy about MGM/Mirage and Harry Reid, there was some kind of back door deal, possibly illegal. Harry Reid is not about helping unemployed in Las Vegas, he is about getting the best deal for Harry Reid. How he cannot say he saved jobs when at the same time he let 3,000 jobs go into the dust. Vote for Sharron Angles, she may not be the best choice, but she is the only choice. Angles cannot do anymore damage than Reid has already done, Angles can stop the Obama runaway train and we don't need to pad Harry Reid's retirement.
Once they stop building, not long after things begin to deteriorate. Wall board, exposed steel, rebar, electrical wiring...and on. Letting these buildings sit for years and years takes a toll on the structure. No maintenance, no cleaning...architecture becomes outdated. The way technology improves on a daily basis, letting these behemoths sit idle guarantees one thing. A crappy, outdated building that eventually should be torn down. No different than the Summerlin mall next to Red Rock. Take it down. Giant eyesore
"Could easily be years. There is a hotel in Korea that building halted on back in 1992. 18 years and it is still not finished."
Well duhhhh, you left something out....
The hotel in Korea is in NORTH Korea.
Sharon Angle. Not Sharron Angles.
Why would Harry Reid help FB secure loans when the economy is crap. City Center secured financing since the company has revenues from Bellagio, MGM, Excalibur, Mandalay, Luxor, NyNy, and etc to fall back on. Turnberry didn't have squat.
I think Ms. Angle does spell her first name Sharron.
so construction will restart in 20 years then?
That's one fugly heap o' crap.
The hotel in North Korea is called The Ryugyong. Construction resumed in April 2008, under the supervision of the Orascom Group of Egypt. The Ryugyong Hotel would be completed by 2012.
Stupid.
Lawmakers should force him to finish the exterior of the building and remove the cranes - It's a complete eye sore.
@ express445:
Angle is a nut job...
http://www.lasvegassun.com/blogs/ralston...
maybe god will save the economy?! I think Harry has a better chance.
If the Fountain-Bleu remains idle, it also means the Echelon site will remain idle. Boyd probably is not interested to burn its fingers with more money exposed, and debt load.
Still, if it's clear that the Echelon site remains idle, how about building a super sized amusement park there? This would be a thing that's not so expensive to build and it would definetely pump up business in that neighborhood.
Greetings from Switzerland
Over here, there's a law that forces the owner of a building to finish it in time. You can't leave a construction site halfway finished and leave it for years. It's an ugly situation and not nice to look at.
Reid Reid Reid...blah blah...maybe Angle can pray for intervention...
R.I.P. FB!
This is very depressing news.
As a tiny gesture to Las Vegas, it would be at least something if Mr. Icahn tidied up the sidewalk area along the Fountainebleu.
It just seems so dangerous to walk by the long empty space on both sides of the street.
This hard-nosed business decision certainly isolates the Sahara, and doesn't do the Riviera any favour either.
I assume that only the top-level casino insiders know the true state of the current over-supply of rooms in Las Vegas. This depressing decision by Mr. Icahn does not bode well for Las Vegas over the next couple of years.
Tear it down already, it is garbage like the old stardust site and now the fountainebleau is the reason why I am more comfortable around downtown than that part of the strip.
Does Boyd and Icahn think people are idiots?
I am getting real sick and tired of having to defend the stalled Echelon site, and now this. At least place a patch of grass on that land until economics are favorable, which may even be a few years.
How many more tourists have to walk by there before they realize nothing is going to be done about it?
If the Democrats stay in control this project may never be finished.
Turn it into Red Light District and watch -- the economy will improve in this part of the Strip. :)
I agree with Unique. Allow a Red Light District in Vegas; allow multiple brothels to compete there to lower prices; mandate safe sex and health inspections and regular STD tests like the other brothels; and TAX it!!! Tourist revenue will take off like a rocket.
We'll hear some preaching from bible thumpers, but we already get that now so what's the difference?
Icahn is one of the sharpest guys in the business--when he starts working on this property--you know things are turning the corner. He won't spend a nickel until the time is right--or he will unload this on someone for a profit--Hope eventually he finishes this--the right person is in charge of this property.
@express 445
City Center was nearly completed. MGM Mirage was going to default on a loan payment and possibly loose funding from the bank. MGM Mirage is a large company and if it was about to default on a payment imagine the consequences it would have on it's other properties. It would have been a chain reaction. Not only did Harry Reid save jobs at City Center, he also might have saved thousands of jobs on the Las Vegas strip. My mom works at MGM and there was talk of layoffs at MGM due to City Center's possible failure. Fontainebleau failure did affect construction jobs and the crew who was working on the project however it's failure wouldn't have effected thousands of already existing jobs. I cannot say Harry Reid's involvement with MGM is suspicious or not suspicious but I can see how the failure of City Center could have effected more jobs on the strip than Fontainebleau's failure and maybe thats the reason why he was motivated to secure City Center's funding.
Hey..they could get with the times and invite the tattoo crowd and the sluts and the guys with the hats turned backwards to come to THE UNFINISHED JOINT..I can see them dancing on the steel girders and swilling down beer while some heavy metal band roars on the concrete floor below..This is what Vegas is coming to anyway..
"Once they stop building, not long after things begin to deteriorate. Wall board, exposed steel, rebar, electrical wiring...and on. "
Ha? Nothing is going to happen to the steel except surface rust. Rebar in concrete would be no different that if the building was in use. As long as it's kept away from water leaks drywall will be fine. The copper electrical will be fine as copper is almost totally impervious to corrosion.
What is not said is how many of the workers on that job were from out of state.
Las Vegas has definitely come down many notches from the old days.
I was in town a week ago at the Mirage, and walking outside was an eye opener.
Where do all these freaks come from? Between the water sellers, beggars, and teenagers it was depressing.
Seriously I'm not sure I want to come back and if I do I will ensconce quietly at Wynn, Encore or the Four Seasons.
BTW, how is the Sahara staying in business?
Notims is the man..This individual speaks the truth.
I feel the need to make a few comments in regards to this article but more about the other commentators on this article. First off all, I am from Toronto, Canada and I visit your fabulous city twice a year religiously.
1.As I said, I visit twice a year. I stay at either Harrah's, Imperial Palace, MGM Grand or the Luxor. I am a gambler, I play poker, video poker and blackjack. I dont play high limits but I play everyday and for hours at a time. Where I stay depends on how low of a rate I can get or comped based on my play. I always hear cries on this site how Harrah's and MGM are ruining Vegas by offering tight machines, 6-5 black jack etc. Well its a bunch of bull! My win-loss ratio on video-poker is the same as it has been for the last 10 years Ive been coming to Vegas. As for the 6-5 blackjack tables, as an experienced gambler I choose not to play on them. I still love Vegas and so does the rest of the world that has ever visited it!!! I would come more often but I agree with many here that Vegas has become extremely expensive! Im not looking for the $1.99 all-you-can-eat buffet that some of you reminisce about the old Vegas. What I would like to see is just normally priced products. Why is it so hard to find a quality meal on the strip for 2 including a couple of drinks for $40 or $50. Why is it that when I go to the cocktail lounge of these hotels, drinks are $12 or $13, what is wrong with $5-$7. I can guarantee you that myself and many others would come more often if this was the case.
2. As a tourist I could care less whether the FB and Echelon site is empty, I never go beyond Encore when I visit Vegas because quite frankly the Sahara, Riviera and Circus Circus are dumps and should be demolished. I would never go to them even if the Echelon and FB hotels were complete. I would go to the FB and Echelon but not the one's mentioned above because they are gross. So stop crying about empty lots distracting tourists and discouraging tourism, we don't care, what we do care about is staying at a decent hotel in a good location on the strip!
Continued.....
3. All of your economic problems have nothing to do with Republicans or Democrats!! Both have been in power and both have screwed up!!! What has hurt America is GREED! From the banks offering mortgages to people that should have never qualified for them in 1st place to the people who leveraged themselves into living a lifestyle they couldnt afford in the 1st place! These are the problems that has gotten Nevada where it is today!!!
4. Im sick of reading the Anti-Obama rhetoric on here! Im not a supporter of either party! However, Obama didnt get you into these problems. Ultimately its up to each individual person to make economic decisions on their own, many American citizens made some bad choices which have led to these problems.
I love Las Vegas and I love the great hospitality I receive from all the Las Vegans working at the hotels and casinos, see you all in 2 months!! May god bless and good luck!
Honestly, I wish Steve Wynn would have tried to bid for the Fountainbleu. He would then implode the dying, outdated Riviera and Sahara hotels. This would allow him to revitalize the north end of the Strip. Nobody can achieve this better than Wynn. If Wynn were to operate the Fountainbleu even as a joint venture with Icahn, it would be profitable...without a doubt!
canguy37...... You can stay at my house and drinks are free. Transportation to the strip and local casino's ( RED ROCK, TEXAS STATION, FIESTA, Rampart) are also included. Just drop me a note . Good luck. As for being ripped off on meals and drinks don't eat or drink at the strip. If u gamble u get FREE drinks. Their are plenty of great restaurants at half the price off the strip. Rent a car and please don't stay at IP. I would suggest u stay at Luxor , Venetian , Palazzo . I would request a COMP especially since u gamble
I have lived in Las Vegas for just over one year. Even though it has it's problems, like every city does, it still has a lot to offer it's residents and visitors. There is so much variety available for shopping, dining, gambling and in leisure/recreation. Very few cities can match Las Vegas for the "fun" factor. I like it here and plan to stay for many years!
I totally agree with you canguy. But I will say you can find $5-$7 drinks at the Hard Rock Circle Bar and Palms....I go to both places multiple times a week. The only places right now that have expensive drinks in the $12-$15 range are the clubs and ultra lounges such as Ghostbar or Tabu...I know, I go to these places a lot. I can get a $8 drink even at a lounge in the Wynn.
But canguy, what do you think of Wynn trying to buyout the land where Riviera sits on? I know he can do good with it!
LasVeagas9 I agree with you. Steve Wynn is one of the best resort operators in the business when it comes to fabulous service and hospitality. However, I think he has all his future plans of expansion in Macau. So sad!
I wonder what kind of rules there are as far as leaving something like this unfinished? I'm sure if I had a junker w/o plates in my driveway I'd get fined.
They should at least tidy up the property and remove the unused construction cranes.
tear the place down and bring wet n wild back!
No one does more.
Thanks Harry!!!!
Chuckles is a funny guy since it was Governor Bush and his Republican ilk that drove this country over the cliff.
And yet again the highly intelligent bring the topic of a hotel not being completed to the realm of Bush vs Obama...seriously, get a life. Oh, and tear the building down. Vegas needs more brown space on the strip.
I still don't care how you slice it, that's one ugly building.
weinberg has always been an horrible operator--the service consistently stinks at his properties unless you are a big player losing a bunch of money. As a regular person who doesn't play a ton of money I've had several bad experiences at different weinberg properties over the years and refuse to go to either of the new properties--he can rot in hell before he gets any of my money! go to china--good riddance-cockroach.
Icahn needs to donate a little more money to harry Reid's slush fund and than you will see red tape vanish and other investors willing to help finish the project.
See MGM/City Center articles for reference on how to "save" a project by supporting Harry Reid...
It's the only way things get done...
During the week, Mr. Lucky is a motivational speaker: Power of positive
thinking
Are you kidding me?
The above poster measures quality of life based on dining,gambling,and shopping!
ROFL
there are malls,food joints,and leisure activities in every Fing city
Another thing,The construction guys I know are not sitting around waiting for the Fing FB,or echelon to start up,some may be less intelligent than others,but i doubt they are staying here hoping they wake up next monday,and their union agent is calling
The reason anyone is still in this RATHOLE is real simple,stay here,or lose about 100,000 on your house,and your credit rating
doesnt take rocket science to figure that one out
And until that unemployment account is tapped out with no hope of a 34th extension,they wont leave either
lol
peace out
and because im ranting,that little weather dude on the unnamed channel is ANNOYING
real tough job to forecast in the desert,105-110 for the next 3 months,and sunny,and no rain,WOW
i guess i better study my stratified layer of clouds to determine weather for my ride
i agree with some of the comments, but not all. we have stayed at different hotels, resorts etc. from wynn to caesars and freemont street establishments , they are all unique in their own ways. but the sahara and riviera are far from dumps as one writer wrote, the sahara with its old time charm and the riviera is a grand dame with its unique layout and exceptional architecure. there may be no volcano or spectacular water show, but it is an anchor for that end of the strip. i do agree however with the comment on circus circus. constructon will start up again so everybody should just relax and enjoy it and have fun.