SLS: House of Pain

Former Revel President Scott Kreeger, now running SLS Las Vegas, must feel like he’s gone from the frying pan into the fire. An unusually trenchant Howard Stutz column lays out the problems facing the new casino, a hipster joint sitting all by its lonesome in a bad neighborhood. (If this was Sam Nazarian‘s “vision,” the people who bought into it must have been snorting his leftover cocaine.) Kreeger tells Stutz that it will take as long as two years for SLS to become viable. It may not have that much time. Resorts World Las Vegas still hasn’t started work that will take three years and next-door neighbor All-Debt, er, I mean All-Net Arena probably never will. (Even Stutz calls it a “pipe dream.”) Majority owner Stockbridge Capital Partners expects to have to subsidize the casino-hotel to the tune of $40 million this year and God knows how much next year — for a property that’s generating negative ROI. As Nazarian’s EB-5 visa investors learn English, they should practice the phrase “unsecured creditors.” Chances are they’ll be saying it a lot.

Stutz calls incredible hulk Fontainebleau “a line of demarcation” cutting SLS from pedestrian traffic, which is described as “virtually nonexistent.” He then throws in this zinger: “Maybe the convention authority’s demolition crew can toss a few sticks of dynamite over the fence when the Riviera is imploded, saving [Carl] Icahn the trouble” of demolishing F-blew.

Don’t look to Nazarian for help: His sbe entertainment empire is too busy collapsing around him. He’s liquidating the Katsuya and Cleo chains, and just offloaded SLS Beverly Hills (for $195 million) and SLS South Beach (for $125 million). Could his 1o% stake in SLS Las Vegas be next? (And if it is, does the giant, abstract statue of Nazarian out front go into storage?)

Meanwhile, he’s restructuring the debt on his New York City SLS project. He’s also flipping two mansions for an aggregate $51 million, perhaps to cover cash calls like the one he missed last April (Stockbridge stepped in to save the day). Nazarian made a big bet with other people’s money and, for now, the dice have turned up snake eyes.

* MGM Resorts International continues to sell down non-core assets. Now it’s Circus Circus Reno and its half of the Silver Legacy (where I’ve stayed and would recommend to anyone). Legacy co-owner Eldorado Resorts is the buyer, as it continues to raise its profile in the casino industry. How much bigger does Eldorado have to get before we can call it a major player? It’s a timely deal for MGM, which has nearly $13 billion in long-term debt and needs to chip away at that leverage.

* Bad news, casino customers: The Federal Trade Commission has just screwed you, decreeing that hotels can continue to sandbag you with resort fees and the sometimes hidden fees don’t constitute a deceptive business practice. This is quite a different stance from the government’s position that airlines must include all add-ons in the price of an airfare (though you’d better investigate beforehand lest you’re hit with an unanticipated charge for checking a bag … or for not checking a bag.) “At this time, we don’t have evidence to prove that not including the resort fee in the room rate is deceptive if a hotel prominently discloses the resort fee upfront and includes it in the total price,” said FTC attorney Annette Soberats. Yeah, well between the FTC’s definition of “prominently” and ours there’s a world of difference.