When your hopelessly over-budget resort project is bankrupt, stuck in the mud, mired in lawsuits and is basically a total writeoff, there’s only one thing to do. Award year-end bonuses, that’s what. Fontainebleau Chief Restructuring Officer Howard Karawan wants to play Santa Claus, lavishing $1 million in bonuses on what’s left of the F-bleau staff. Karawan would cross his own palm with silver to the tune of $300K (pushing his annual F-bleau compensation past the $1 million mark). It makes you wonder what kind of freaking dream world Karawan is inhabiting that he would demand such largesse.
Creditors are understandably less than enthusiastic about Kris Kringle Karawan’s proposed munificence — nor is his offer to waive his own bonus all that impressive when one considers that he also draws a salary from F-bleau’s corporate parent, Turnberry Associates. Mrs. Karawan and the kiddies aren’t going to lack for Christmas presents this year. As for other F-bleau staffers, if they pitch a tantrum and leave because they didn’t get Santa Karawan’s promised bonus, there’s no shortage of unemployed casino professionals from whom he could find replacements with the necessary skill set, although a Las Vegas Sun reader summed it up best:
“‘I can’t get this job done without these people,’ Karawan said.”
“Apparently you couldn’t get the job done WITH them either.”
Lastly, I’m calling B.S. on Karawan’s claim of 17-20 prospective buyers. There aren’t many casino or resort investors with serious scratch right now and the big two — Penn National Gaming and Carl Icahn — have already shown their hands. Unless Genting Bhd has taken a sudden interest in F-bleau, these attempts to chum the waters will continue to lack credibility.
Today CityCenter, tomorrow Bangalore? An “advanced stage of talks” is where MGM Mirage says it’s at for expanding its hotel brands into India. It’s promising that, in a few months time, Bellagio– and MGM Grand-branded hotels (what, no Vdara?) will be announced. However, with eight cities still in the running, it looks like there’s a lot of whittling down left to do. Also, MGM Mirage Hospitality veep Rishi Kapoor‘s oh-so-very-casual mention of Goa — the one city in India where casinos are permitted — raises the question of whether this is really a hotel-only play after all. MGM wouldn’t be performing its fiduciary duty if it didn’t at least kick around the prospect of an Indian casino.
Two weeks ago F-bleau said there was 40 companies interested in acquiring F-bleau; today the number has dropped to 17-20. Karawan and the gang at F-bleau are obviously lying. I think there are three companies/people bidding for F-bleau: Carl Icahn and Penn National Gaming are the front runners. Then the third is a long shot but might be interested:
Neil Bluhm. A couple of years ago himself and a couple of other investors tried to get their hands on the Riviera but they got launched out of there by the shareholders and other factors I can’t recall. Mr. Bluhm owns some casinos throughout the United States and according to Forbes Magazine his net worth is $1.5 billion dollars. For the right price he might throw his hat on the ring.
Bonuses –
Hmmm… Where have I heard this before?
Oh, yeah!
We taxpayers bailout banks & investment companies to the tune of billions of dollars, then those same institutions’ executives propose to pay themselves millions of our dollars in “retention bonuses” because they (who drove the companies into near-bankruptcy) are the only ones smart enough to save the companies.
Riiight!
Dave, does this mean an all-you-can-eat curry buffet? 🙂
Thanks for the laugh, EDC. I really needed it.
Re Neil Bluhm, yes, he was part of a consortium that also included the former CEO of Starwood and one or two others. Their mistake was trying to buy RIV at a discount (roughly 25%) to what it was trading on the market. As you can imagine, that went over like a lead balloon with the shareholders.
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