You're referring to Alon (pronounced AY-lahn), Australian billionaire James Packer's $2 billion casino project. It's slated for a 2019 opening – already delayed from the original, 2018 timeframe – but no official groundbreaking has been held (although some dirt has been moved around on the site), in part due to financial complications.
Packer's Crown Resorts owns a 74 percent stake in the property, which it is trying to sell down in order raise construction capital. However, it is finding few takers and fewer willing lenders, credit for casino construction having tightened up considerably. (The dismal performance of SLS Las Vegas cannot be improving Wall Street's outlook on the Strip, while trouble in China is affecting lending markets considerably.) Packer has also been selling down his 53 percent ownership position in Crown as a means of raising money for Alon.
Basically, even that 2019 deadline will be hard to meet. Signs of trouble surfaced last December when Credit Suisse gaming analyst Larry Gandler told the Las Vegas Review-Journal that the desired Chinese investment was becoming hard to obtain. Packer's Las Vegas company, Alon Leisure Management, had pulled construction permits the previous July, as well as releasing a sketchy pair of renderings. (No, really: They were just sketches.) At the time, project CEO Andrew Pascal told the
Crown was trying to raise an additional $425 million for Alon by selling its ownership stake down to 45 percent. While the project was budgeted at $1.9 billion at year's end, Gandler said "additional working capital" might be required. "They kept repeating there is no deadline for a deal especially given the high yield credit market is pretty much closed at the moment," a Crown-related source told the Sydney Morning Herald. "We have the right team, the right idea, the right timing and the right location," Packer told the media. In other words, he had everything -- except the money.
Packer's been rattling his cup to buyout firms and sovereign wealth funds, without avail. Last January, it looked like he had a deal in place with Cosmopolitan of Las Vegas owner Blackstone Real Estate, which had already outbid Packer for the Cosmo (and turned it into a profitable establishment). In the proposed agreement, Blackstone would have gotten Packer's 20 percent stake in Nobu, 34 percent of Packer's share of Melco Crown Entertainment, and pieces of three Australian casinos. However, the deal vanished almost as soon as it was proposed.
Speaking of money, Packer has a financial hangover from his previous foray into the Vegas market, in the form of $362 million in taxes and penalties that the Australian government says Packer owes it. At the apex of the casino bubble, in the mid-2000s, Packer threw money at virtually everything that moved, buying stakes of Harrah's Entertainment, Station Casinos, Cannery Casino Resorts, Fontainebleau, and a tower proposed for the Wet 'n Wild site (eventually titled Crown Las Vegas). That project never broke ground, Fontainebleau was never finished, and the other companies in which Packer invested went south with the Great Recession. In other words, as a Vegas investor he was a bust. Alon is his attempt to come back and do it his way, from the ground up.
However, Packer has been in the newspapers of late more due to his engagement to Mariah Carey than for construction (or the lack of same) at Alon. Given its proximity to Encore, Fashion Show Mall, and Trump International, one would not think that financing would create so much difficulty, but Resorts World Las Vegas and Lucky Dragon Casino, further to the north, have also been slowed by monetary difficulties. (Lucky Dragon even went to the City of Las Vegas, demanding a public subsidy in the form of tax-increment financing, but that was a non-starter.)
Until the gaming markets in Macao come back, investor interest in Alon is likely to remain cool. Also, Packer has casino projects is Sydney and Melbourne on the front burner, which may explain his lack of hurry to put shovels into the ground at Alon, even with only partial financing in place. At the moment, he's going to have to sink $712 million in personal equity into the project, whose $2 billion budget isn't going to give him much bang for the buck: Only 600 slots, plus 150 table games (VIP Chinese players appear to be the customer of choice).
Consider also a 47 percent increase in debt at Crown and a 20 percent drop in its stock price last year, and Alon's future looks cloudy indeed. Anyway, if Packer finds the money and is able to build Alon, he can perhaps put the future Mrs. Packer (perhaps?) to work in the showroom to keep the customers happy.
