At lunch today with a gaming executive, we started talking about the announcement of Icahn listing the Fontainebleau for sale. The rumored asking price is $650 Million.
"That's too much," said the gaming executive.
He continued, "the gaming industry has changed in the last 10 years. You used to be able to buy a $300 Million property and that resort would turn a profit in a year or so, but not anymore. The casino industry is in trouble with so many local casinos going in, in other states. Nowadays, forget it! Spending a billion eliminates any possibility at making any money."
He also added, "Look at Caesar's. They let their CEO acquire so much debt, that even in bankruptcy, they are going to get the short end of the deal."
He asked, "...and how much is it going to cost to finish it (the Fontainebleau)? At 50% completed (more accurate than what is being published) the new owner is going to be into a property that is not well located on the "Strip" for about $2 Billion. And, they are going to need a lot more foot traffic in that area before they turn a profit."
I had told him that I written an offer about two years ago for $450 Million and Icahn turned it down. He said, "That is more realistic but still too much," in his opinion.
All I can say now, is: Best of luck to whoever buys this for $650 Million. Whatever sucker pays that much will be going the way of other Las Vegas resorts in the short term.
Contacting David Howes is easy -- either by: davidATdavidhowesDOTnet OR call him at: 70 25 01 93 88 AND Follow David on Twitter: @DavidAHowes
"That's too much," said the gaming executive.
He continued, "the gaming industry has changed in the last 10 years. You used to be able to buy a $300 Million property and that resort would turn a profit in a year or so, but not anymore. The casino industry is in trouble with so many local casinos going in, in other states. Nowadays, forget it! Spending a billion eliminates any possibility at making any money."
He also added, "Look at Caesar's. They let their CEO acquire so much debt, that even in bankruptcy, they are going to get the short end of the deal."
He asked, "...and how much is it going to cost to finish it (the Fontainebleau)? At 50% completed (more accurate than what is being published) the new owner is going to be into a property that is not well located on the "Strip" for about $2 Billion. And, they are going to need a lot more foot traffic in that area before they turn a profit."
I had told him that I written an offer about two years ago for $450 Million and Icahn turned it down. He said, "That is more realistic but still too much," in his opinion.
All I can say now, is: Best of luck to whoever buys this for $650 Million. Whatever sucker pays that much will be going the way of other Las Vegas resorts in the short term.
Contacting David Howes is easy -- either by: davidATdavidhowesDOTnet OR call him at: 70 25 01 93 88 AND Follow David on Twitter: @DavidAHowes
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