Question of the Day - 03 May 2020

In the dystopian TV series "Dominion," The Drew has been converted to a giant hydroponic farm. That yet may happen. After all, marijuana is the new cash crop of Nevada.

As for the real-life Drew, it evidently never had financing in the first place, which came out last week as part of a reveal that the project has been "discontinued." 

This building has had a long and unpropitious history. It started, of course, as the Fontainebleau and Turnberry Associates were stopped out by the recession in 2008; the project went bankrupt a year later. 

Carl Icahn picked up the hulk for $115 million and promptly sat on it, waiting for the economy to catch up. Developer Steven Witkoff eventually bought the place from Icahn for $600 million in August 2017 and renamed it The Drew after his late son Andrew, an opioid victim.

Witkoff’s challenges didn’t merely include finishing what Turnberry had left undone (at least 30% of the original plans). He also had to replace infrastructure that included carpeting and escalators that Icahn stripped from the property and sold to other local casinos, along with furniture rumored to go to the Plaza for a renovation of hotel rooms. A former Fontainebleau escalator now graces the lobby of the Downtown Grand.

For Witkoff to finish the megaresort would have entailed a $2.5 billion investment. The completion date was pushed back to 2019, then the second quarter of 2022, then November 2022.

That was as close to finished as The Drew would ever get. Although Witkoff dangled the prospect of a $2 billion construction loan in front of the media, there is no indication that money ever materialized. The market niche for The Drew wasn’t immediately clear, other than that it would be next door to the Las Vegas Convention Center when the latter finished building out over the old Riviera site, to which The Drew would be connected by a skyway.

Although Las Vegas visitation was running high in 2019, there was no evidence that the Strip (and a resurgent downtown) couldn’t handle the capacity. Also, $2.5 billion was a lot to throw at the economically blighted North Strip. Sam Nazarian had gone belly-up at the once and future Sahara and Resorts World Las Vegas was postponed time and time again (and will be the most expensive casino in Las Vegas history by the time it opens next year). 

The pandemic undoubtedly sealed The Drew’s fate. With Strip room rates plummeting, uncertain demand, and the likelihood that economic normality wouldn’t return for as long as two years, it was an inopportune time to be shopping a multi-billion-dollar megaresort to Wall Street. 

Up to the end, Witkoff put a brave face on matters. Last November, he plucked former CityCenter President Bobby Baldwin from retirement to be Drew CEO, even though there was little activity over which Baldwin could preside. 

Late last January, Witkoff told a local TV reporter, “We just finished the model rooms, so we’re gonna build out all the rooms, 4,000 rooms that are gonna begin, plus the pool deck, plus the podium where the casino is, in the next 90 days.”

By the time of his conversation with News 3, Witkoff’s completion cost had crept north of $3 billion, which should have been cause for modified alarm. "Cost creep" had undone Fontainebleau and, apparently, did in The Drew.