Banking on the pH factor

October 16, 2007 2:15 AM
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Even though it’s been more than two years since Planet Hollywood took over the Aladdin hotel-casino on the Las Vegas Strip, its official opening isn’t until the weekend of November 16.

That will be a critical date for Robert Earl, founder of Planet Hollywood, who is hoping for some type of redemption for all the financial and cultural perils that have plagued the Planet Hollywood brand over the past 10 years.

"I can’t abide by failure," Earl told the New York Times in an interview last week.

For now, Earl is overseeing final renovations that include, among the 2,500 rooms, penthouses named after celebrities who will occupy their namesake lairs while in town, but which the rest of us can inhabit for as little as $599 a night.

Earl also plans to announce a new roster of celebrities, including Pete Sampras and Roger Clemens, who will be affiliated with the casino and hotel and serve as its ambassadors.

The idea is similar to one used in the original Planet Hollywood, where a lineup of 32 celebrities received stakes in the project, but this time, he said, only Bruce Willis and Sylvester Stallone are co-investors.

"I’ve been strongly trying to communicate to everyone that ”˜this is not your old Planet,’ " Earl said.

Earl’s comeback, like all things Vegas, comes with risks. After all, outsiders have had a sorry history of investing in Las Vegas gambling. Despite its prime location on 35 acres at the heart of the Strip, the Aladdin site has been a white elephant for reasons that include architecture, marketing and karma.

"Even with the revamping that has been done on behalf of Planet Hollywood, I don’t know how survivable it is," William R. Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, said. "It certainly is a better looking facility than it was before."

The complex includes a 7,000-seat theater where Earl wants to hold movie premieres (it already serves as the set for the NBC TV show "America’s Got Talent"), a studio for the celebrity news program "Extra," and new nightclubs operated by Miami impresarios.

All would be intended to give guests a constant whiff of proximity to camera lights and those bathed in them.

Part of Earl’s plan is to try to attract events that will draw celebrities and hence a crowd.

"He knows how to look after people," Bruce Willis said in an interview. "He’s just a really generous guy."

Earl began the first Planet Hollywood in New York in 1991 in partnership with Keith Barish, a film producer and entrepreneur who left the company after it went public.

Planet Hollywood went public in 1996 at $18 a share, representing an enormous multiple of earnings. It rose to $32, giving the company a paper value of $3.4 billion before the air went out of the soufflé. The stock was de-listed just before its first bankruptcy in 1999. Most of its outlets were closed, and Earl’s reputation took a pounding.

He takes the blame for much of the plunge, saying he opened too many outlets too quickly and should have avoided bankruptcy altogether. He eventually put together a reorganization plan with creditors under which he retained 51 percent of the brand, predicated on his zeal for redemption. One of the bondholders who backed his reorganization, a fund run by Bay Harbour Management, is now his partner in the casino company.

After a $650 million re-capitalization and renovation of what was the bankrupt Aladdin, Earl, flanked by Willis, replaced the old name with a Planet Hollywood sign this spring. For the last two years, much of the site had been swaddled in some form of scaffolding; Earl and his partners have kept the casino running day and night to retain the property’s gambling license.

Earl declines to say how much he has personally put into the casino business, but together he and Bay Harbour own 51 percent after they and other investors pumped around $100 million in new equity into the casino in 2003.

A third partner, Starwood Hotels, was brought in to affiliate the project with the Sheraton brand and tie it into Starwood’s vast reservations network. The size of Starwood’s stake has not been disclosed either.

Sylvester Stallone said Earl had been obsessive about every detail in the buildup to the casino opening. "He just has an insatiable desire to perform, to be around people, and he’s incredibly competitive," Stallone said. "Las Vegas appeals to every instinct that he has ”” and it couldn’t be a better match between man, machine and environment."

But the question remains whether Planet Hollywood can resonate with crowds in the same way it did when it soared a decade or so ago. Celebrity as a marketing element is much more pervasive than it was even a decade ago, because of the Internet, reality TV, endless awards shows and celebrity magazines.

In Las Vegas, big casinos like the Bellagio, the MGM Grand and the Wynn (which rose on the site of the earlier Planet Hollywood project) draw their share of entertainment celebrities, and the small Hard Rock and the Palms casinos have become popular destinations for the young Hollywood crowd.

However, as far as Earl is concerned, his creation has always been aimed at the middle-America market, rather than the Paris and Britney party set. And, as it happens, his planned resurgence comes as the core of middle-age stars originally aligned with Planet Hollywood have enjoyed bounces in their careers: Stallone and Willis recently starred in new installments of their "Rocky" and "Die Hard" franchises.

Douglas Teitelbaum, a partner with Bay Harbour who has worked closely with Earl since the chain’s bankruptcy, said that if Planet Hollywood succeeds as a gambling brand, the partners will look at expanding to Atlantic City and elsewhere.

One example of how Earl and his partners are being more careful this time is a huge time-share development being built on the property that could double the number of rooms at the hotel and casino complex.

Rather than invest cash in the project, their group contributed 4 of its 35 acres to a large time-share development in exchange for a share of sales, Teitelbaum said.

He added that another Planet Hollywood stock offering could even be in the cards if all goes well in Vegas, something Earl said he would be happy to avoid. Just by opening the Las Vegas location, he said, "I will feel that I have done what I had to do."