Carl Icahn may dismantle Fontainebleu

Mar 22, 2011 6:07 AM

Las Vegas Fontainebleau owner Carl Icahn, who knows more than most businessmen about the art of a profitable deal, may have decided to disassemble the unfinished structure and sell the steel for much more than the $156 million or so he paid for the project.

Besides, people are not standing in line to buy the place. Las Vegas does not need another 3,800-room casino resort in the near future. The project was described as 70 percent complete when it was formally shut down in April 2009, although there was little activity on the site for months before that.

It remains to be seen whether this is an accurate summary of Icahn’s thinking, representing, as it does, a unique possible solution to a unique problem. Spokesmen in the Icahn empire could not be reached for comment.

A senior gaming executive whose people toured the Fontainebleau explained, "I don’t know what Carl has in mind, but there is a lot of steel, a lot of tonnage since it is so vertical."

A second executive chuckled, "That kind of thing is consistent with what he’s done to the interior. He’s gutted the place. I’ve seen no sign he ever intended to finish it. I believe he bought it thinking he was going to turn a quick profit, but nobody wanted it considering the billion dollars or so it might have taken to finish the place."

A third executive with experience in design and construction confided, "It makes sense, all things considered, if you can figure out how to deal with steel that has already been covered in so many different ways. It’s not like the (unfinished) Echelon on the other side of the Strip where everything is still pretty much exposed."

Interior finishings such as furniture and carpets were sold to two or three different hotel and casino operations months ago.

Icahn has had little to say about his hopes for the Fontainebleau since he bid for it in a Miami, Fla., bankruptcy court in November 2009. He conceded then that Las Vegas was experiencing some difficult times and there were no immediate plans for completing the resort that had been announced for the Strip in May 2005.

The thing to do, Icahn said, in so many words at the time of the purchase, is to hold a project like the north Strip resort "until the sun comes out and somebody wants it," the phrase attributed to him in one news story.

Perhaps his patience wore thin, or, perhaps the rising price of steel caused him to realize there is more than one way to make a profit.

"I-gaming here 10 years ago!

"Let’s get one thing clear," my friend the respected expert on what Nevada can and cannot legally do with Internet gaming, was telling me last week.

"Nevada is already there. It’s got Internet legislation. It got it 10 years ago. All this talk about what state is going to be first fails to recognize that Nevada got there first."

Nevada is the first state to create the legislation that allows the operation of an intrastate version of Internet poker. Second place, my friend may have been implying, is a story for another day.

The only thing that’s necessary in Nevada now is the writing of regulations and their approval by the Gaming Commission. Playing poker on the Internet within the borders of Nevada does not violate any federal law.

But the action of a decade ago failed to recognize how much the world has changed. It is the nature of those changes that are keeping lawmakers and various interested forces focused on the work still to be done.

A lot of companies want a piece of the action now and they want the rules written with their respective interests in mind. The companies include those based in Nevada and those headquartered on distant shores.

Companies running Internet wagering operations in countries where it has been legal for years are positioning themselves for a piece of the action that may be just around the corner, so to speak.

This week’s Assembly Judiciary Committee hearing in Carson City may offer the clearest signals about the direction to be taken as Nevada lawmakers wrestle with the possibilities for modifying the Interactive Gaming Act of 2001.

The Assembly committee has scheduled hearings on AB 258, which is strongly supported by Internet giants PokerStars and Full Tilt who will probably be big winners whatever direction the final decision takes. They could be "service providers" to existing companies, or, and this is less likely, they may be allowed through the door to run their own operations.

It should come as no surprise that MGM Resorts and Caesars Entertainment are said to be opposed to the Assembly measure for which former Gaming Control Board member Randy Sayre is lobbying on behalf of the Internet operators.

Nevada Resort Association President Virginia Valentine is expected to speak on behalf of both large and small companies, making it clear they oppose opening the door to non-U.S. companies who have no prior economic investment in Nevada.