Two days ago, VegasTodayandTomorrow.com broke out the specifics of FX Real Estate & Entertainment‘s Elvis-themed resort, set for the southeast corner of Harmon Avenue and the Strip, gleaned from an SEC filing. Among the principals is Paul Kanavos, previously involved in a protracted, unsuccessful courtship of Riviera Holdings.
The Las Vegas Review-Journal weighs in today, though I doubt its coverage of the project will cause a run-up in FXRE stock (especially when the ‘expert analysis’ of the project comes not from, say, Bill Lerner of Deutsche Bank, but from an Elvis impersonator).
Despite aforesaid impersonator’s unbounded — and not completely disinterested — confidence in the project, the story waves a couple of red flags. For one, if a $3.1 billion price tag for a 2,269-room casino-hotel looks a mite optimistic, that’s because the costs of land and capital, plus “additional pre-opening costs” are not factored in.
Also, while you don’t get any more Middle America than Elvis Presley, FX says it will “compete within the upper strata of the luxury market” [emphasis added]. Even if the monied elite and Elvis Country intersect to form a perfect set, that upper stratum of the Strip is going to be pretty darn glutted with new product by late 2012, when “Graceland,” or whatever it’s going to be called, it scheduled to open.
As if the prospect of heavy borrowing wasn’t enough to puncture the balloon, we’re informed that “a series of leases held by various businesses occupying the land will have to be terminated or reworked with varying degrees of legal difficulty and additional costs.” Which means that somebody (or a whole bunch of somebodies) has FX over a barrel and that the final tally will be probably be considerably greater than the company is presently prepared to admit.
I’ll be “all shook up” if this project ever happens.
Gibbons gets one right. The governor who seems lucky to find the bathroom in the morning has somehow, defying all odds, managed to go 2-for-2 in filling vacancies on the state’s gaming regulatory boards. Either Jim Gibbons has a hitherto well-concealed perspicacity where the casino industry is concerned or he’s got at least one advisor who not only knows what they’re saying but manages to get through to Midnight Jim.
OK, so there wasn’t really a “vacancy” on the Gaming Control Board, unless you count the one that Gibbons created via some middle-of-the-night shenanigans. However, outgoing Gov. Kenny Guinn was in the bad habit of using the NGCB and the Gaming Commission as soft-landing spots for political allies who were either facing unemployment (Keith Munro) or had been booted by the voters (Ray Rawson).
Gibbons’ NGCB pick, Randall Sayre, has come up aces and his choice of a new commissioner, Tony Alamo Jr., is playing to rave reviews. Alamo did have a brush with controversy — over six years ago — when he was named to replace Elias Ghanem on the Nevada Athletic Commission, on account of his father’s then-status as a VP of Mandalay Resort Group. (The Athletic Commission oversaw boxing matches and Mandalay liked to put them on, ergo a potential conflict of interest.)
But with the elder Alamo out of the industry since MGM Mirage took over Mandalay, what caused a bit of a stir in 2001 is a moot point now. No, the real scandal is that — as one of the people holding ultimate responsibility for the probity of gambling in Nevada — Alamo Jr. stands to earn only $40K a year. That’s less than I make. And it’s inexcusable.
