No sooner had I confidently predicted that Zappos.com CEO Tony Hsieh (whoops, wrong Tony) would not be making any gaming related purchased when the shoe mogul pounced on the financially troubled Gold Spike. Showing the acumen that’s made him the most-admired magnate in town (yes, even more than Steve Wynn), Hsieh snapped up the note on the property, making him the landlord of Siegel Group, which itself is one of the area’s biggest — you guessed it — landlords. (Some might say “slumlords.”) Siegel bought the Spike and an adjoining hotel at a substantial markup from a real estate speculator, who made out like a bandit: $26 million for a couple of acres of rundown property is the generally accepted figure. Tamares Group, not so canny, had sold for considerably less.
Yesterday, Hsieh (left)and sidekick Andrew Donner pounced. Hsieh is conferring title of the property upon Resort Gaming Group (of which Donner) is CEO, which is like saying I transferred my toothbrush from my right hand to my left. While the Las Vegas Sun is all gloom and doom about the future of the Spike’s casino, I remain optimistic. “Hsieh [said] he would not be going into the casino business.” Translation: “That’s why I’m turning this over to my good buddy Andy Donner.” However, he’s being careful to put an arm’s length between himself and that icky-poo casino business that built this town. Most employees will be kept on, and the remainder “will get the chance to interview to interview with the Downtown Project,” read one chilling phrase. OK, so the Gold Spike is a break-in joint but it still seems highly unlikely that dealers and slot-floor personnel would be reassigned to pushing brooms at Zappos HQ. Besides, cash flow from the casino could help Donner finance completion of the Downtown Grand, whose efforts to raise offshore capital appear to be sucking wind. Donner’s been beating the EB-5 visa drum longer than has Sam Nazarian and yet The Naz has more to show for it.
Anyway, the return from the casino floor has to be far better than from the motel: In Vegas, a motel that does better than 50% occupancy is a smash hit. Let’s just say that closing the casino permanently would be counter-intuitive to the point of stupidity, especially considering some of the airy-fairy ideas that are being tossed around (hip nightclub, boutique retail, etc.) for this ragged edge of Downtown‘s casino corridor. Siegel, however, keeps the Gold Spike name, so expect some rebranding elsewhere in the Valley. Its low-end history certainly isn’t in keeping with what Hsieh’s trying to achieve. And I’d rein in sniffy pronouncements about casinos being counterproductive to “trying to help build a community.” They may be an eroding bedrock of Las Vegas but woe betide Sin City (and the State of Nevada) without them.
There is no rhyme or reason to Tony’s purchases. He pays $2.7 million for a .32 acre property (that is essentially a tear-down). Then, he only offers $650,000 for the .25 acres right next door. His henchmen tell me it’s ROI. But then Tony tells the media he is NOT looking for an ROI until 2030. I do NOT believe it.
When I was marketing Ferguson’s Motel, I also was marketing the .17 acres adjacent to the north. Back in July, 2012, Tony’s henchmen said $200,000 was too much for the parcel. Wasn’t it just a week or so ago, they acquire that same lot for $700,000!?
And, don’t get me started on their contracts. What type of seller would ever give power of attorney to a buyer during escrow?
As a downtown resident, I was originally thrilled with Hsieh. Now, not so much.
He wants to transform it, but not to the benefit of those of us who are/were here…it’s for hipster nation.
When Joe Schoenman had a Weekly article asking if [Downtown Project] is too insular I responded “yes” … only to get snark from Cornthwaite how there was no community here and Hsieh is famous for his outreach. Come see the Henderson-like wall he built across the street here on 8th around his new dorm for outsiders. He wants us gone and a new world of hipsters and Zappotistas.
Zappotistas! Good one, Bruce! I am going steal it without shame. As for Michael Cornthwaite, I too have felt the backlash from questioning one of his idols (I believe it was former Amway salesman and Smith Center CEO Myron Martin in this case). Just you wait: Already Smith Center subscriptions are vaulting past the point where the average Las Vegas — even a mid-level manager at Circus Circus — can afford them.