Alon, the strip project made to directly compete with Steve Wynn’s projects, seems failing to launch at all. Despite being backed by Australian Billionaire James Packer’s Crown Resorts, the project has not raised additional funds to actually ever start, making it look like it might never get off the ground.
Crown Resorts CFO Ken Barton has revealed in earning calls of the company this quarter, that their debt-to-cash ratio court hurt them and their US investments, and worse they haven’t found a way to fix this problem.
Credit Suisse reported last year that Crown Resorts was trying to raise money by selling its stake, leading much of the investment world seeing Alon (Pronounced like A-Hole) as an investment dud. Crown Resorts was trying to sell $425 million of the project to new investors, but no investors have materialized, and there has been zero positive buzz in the investment world.
The very fact that the “owner” of this project no longer wants to be involved and doesn’t see it as a safe investment anymore doesn’t make anyone want to be involved with the project. Plus, with Crown already losing hundreds of millions on the similarly placed eye sore Fountain Blue project, who would want to make the same mistake, twice? That building is almost built, yet no one wants to touch that toxic investment.
Why is this project on its death bed?
First of all, the resort was being made in order to capitalize on the growing interest of China’s elite in the gambling and Las Vegas. However, with China’s economy slowing and the government putting more and more restrictions on cash leaving the Country in a crack-down on corruption, there is a lot less Chinese cash coming into Vegas.
Also, don’t forget Crown Resorts and Oaktree Capital’s huge losses in the American casino world, which included them doing a mass liquidation of casino properties in the last month. On top of that, Crown Resorts was fined $362 million by the Australian Tax Authorities this year for unpaid taxes related to some of its investments – taking a good chunk of investment cash from the company.
Crown Resorts has also made it clear that they are focusing more and more on Australian Investments moving forward, having spent almost $4 billion on apartment on hotel projects in Sydney and Melbourne in the last 24 months.
Even if the project does materialize, which looks more and more unlikely as time goes by, the key players that have been hired to help launch the project will more than likely not stick around.
Scott Roeben of VitalVegas points out in his article yesterday, that many of the key players in the project are already talking about bouncing.
Alon has recruited a powerhouse team of operations and nightlife executives, but rumblings are a couple of key players will quietly depart the project as reality sinks in that Alon is years away, and that’s the optimistic scenario.
Alon’s executives include former Wynn Resorts executive Andrew Pascal, former SLS president Rob Oseland, Danielle Babilino (former Senior Vice President of Hotel Sales at Wynn Las Vegas) and Las Vegas nightlife “czar” Jesse Waits.
