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Confirmed: Alon Isn't Dead

posted by Chuckmonster on Tuesday, 30th August 2016 8:43pm

Every two weeks, someone from the Internet's peanut gallery sends me a thinly researched story that contains some kind of variation on the theme that "Alon is dead." This week, one such story churned through the rumor mill at alarming rate. I first heard it last Wednesday, the day after I had talked to an Alon representative about visiting their offices in October. The next day I watched the rumor careen from wall to wall to wall inside the Vegas media echo chamber like a game of horseshit jai alai.

"Alon is dead in the water. Their architect is going bankrupt. Their executive team is quitting in droves. They've laid everybody off."

My favorite post of them all was by the stellar reporters at Las Vegas Advisor, who even went so far as to take a victory lap celebrating the accuracy of a vintage prediction Alon would fail while admitting that what they were reporting was unconfirmed. Unbelievable!

Imagine my surprise this afternoon, when my phone rang and on the other end is Andrew Pascal, CEO of Alon. It isn't like we're tennis buddies or anything. How'd he get my phone number?

Anyways, I've met Andrew on four occasions, once at Encore's media week eons ago, twice at the Alon office and once at #VZZZT. He's a super nice guy, wicked smart and has always been very cautious, frank and honest with me. Sometimes he talks out of school and tells me secrets he probably shouldn't. Don't we all?

Andrew proceeds to tell me that the Review-Journal is on the verge of writing a story about how James Packer's recent sale of Crown shares will affect Alon and wanted to talk to me too.

Andrew begins the conversation by saying that the rumors that Alon is dead are "absolutely not the case."

So.... he wants to shoot the shit? Obviously, something is wrong. Not very wrong, but a little wrong. It isn't every day that the CEO calls me to get something off their chest. Andrew proceeded to offer up a detailed explanation of Alon's financial situation, stating that raising pre-debt equity for Alon has been "challenging."

There is a reason why developments like this don't happen every day. It is not a cake walk.

Andrew believes that equity markets have the tendency to be cautious about investing in new projects, particularly ones (like Alon) that are built around a unique business model kernel.

Most casino investors want to hear how every single square inch of a parcel has been designed to grind out maximum profit per square foot. They jump for joy every time 10 more floors of keys have been added to the hotel tower. And the other hotel tower, tower that will be built over the parking garage, and the condotel tower out back. City Center.

Alon is different. I've studied the model, peeped the architectural drawings, and pressed my nose up to wall sized renderings oogling panoramic vistas and pixel perfect terraces and every cantilevered protruberance. I've listened to the pitch. I've met the employees. I've taked to the architect. I've questioned the boss. Their theoretical raison d'etre checkmates the competition before the first move is made.

Alon's differences extend not only to the type of guests they are trying to appeal to, but to the type of investor who can see through the keyhole. In structure, tone, scale and paradigm, Alon is the anti-City Center - a resort that is non-mega yet outrageously mega.

For those who have been following along with Alon, the plot line basically remains the same - they're trying to secure the last pieces of minority equity interest before securing debt financing. In response to this protracted financial process, the company communicated with partners their need to push the construction start date back and moderate the speed of design and development processes.

Kaput? No. They just turned down the burner.

Andrew says that Alon "has enough resources to carry us through the end of next year." The company has chosen to preserve those resources by tapering or suspending work with a number of external design firms and contractors. Pre-development work is still ongoing, including designing interiors and building out the operations team and processes.

There have been no layoffs and no executive departures. He also stated unequivocally that majority partner James Packer and Crown Resorts remain fully committed to the project.

It is worth noting that Alon has not held a groundbreaking or publicly announced much of anything other than land purchase and a few key hires.

Alon: coming soon(ish)... still.

Comments & Discussion:

Posted by rangerkeeper on Tuesday, 30th August 2016 9:00pm:

Alon Las Vegas to open by January 1, 2020
Yes +300
No -400

Looks about right to me...

Posted by MinVegas on Tuesday, 30th August 2016 11:54pm:

Future Home of Countryland USA

Posted by Rooster0620 on Wednesday, 31st August 2016 4:54am:

No offense, dawg, but lack of ability to get financing = dead project

Posted by Diablo on Wednesday, 31st August 2016 7:45am:

The lady doth protest too much, methinks.

Guaranteed dead in the water. Theyre just spewing bullshit so they wont seem desperate when they are negotiating to sell it.

Hopefully Wynn buys it and nixes his little Walley's World fiasco he's planning and builds one last proper hotel.

Posted by Drake on Wednesday, 31st August 2016 12:53pm:

To the non-nuanced eye, this project looks like a spare-no-expense Cosmo 2.0 or even a Revel 2.0 — only catering to a smaller, more exclusive crowd — so I can understand the jitters among would-be investors. I wish them luck, but this may not be the right time for a project of this magnitude.

Posted by vespajet on Wednesday, 31st August 2016 3:36pm:

Maybe they're pining for the fjords......

Posted by jucifers on Friday, 2nd September 2016 9:58am:

Is there any chance that Steve and Elaine mend fences to build Alon as a joint venture? There's a whole lot of top flight talent sitting on the sidelines right now. This could be a Wynn-Wynn deal, if they can only bury the hatchet.

Posted by Chuckmonster on Friday, 2nd September 2016 1:20pm:

@jucifers - Elaine has nothing to do with Alon. Elaine and Steve will never mend fences. The top flight talent isn't sitting on the sidelines, they're actually working to build a hatchet whose name is Alon.

There is no way that Steve Wynn will be involved in this project. Zero. Zip. Nada.

@drake - Alon isn't really a magnitude. It is a microtude. The projected cost of the project is tidy, but value is really in the smarts and engineering that are going into it.

Not sure if any of y'all are familiar with the concept of "lean manufacturing" or "lean software development" but the point is to produce small batches and repeat, eliminating bottle necks, increasing efficiency and reducing costs. Slowing down D&D to achieve better parity with the finance process is straight from the lean playbook. However when you tell your contractors that you're doing this, they run from the job site with their hands in the air.

This is where technology truly hits the road in Las Vegas resort platform... and not as a marketing check box or other buzzword bolt on. In addition to being a protege of The Steve, Andrew is a seasoned and successful tech entrepreneur who contains everything in Steve's brain plus all of his too.

Posted by jucifers on Friday, 2nd September 2016 4:39pm:

Chuckmonster, you're probably right. Most likely, the Wynns will never mend fences, but they should seriously consider it.

Why can't Steve and Elaine settle their lawsuit now instead of wasting the golden years of their lives fighting with each other? Why can't a deal be worked out?

Alon could get the capital infusion it needs from Wynn Resorts, and Steve could ensure his control of Wynn Resorts for life. If Alon is as good as you say it is, Andrew Pascal would be in the catbird seat to succeed Steve Wynn. A win for all parties concerned, and a big win for the Institutional Investors who could take a formula perfected at Alon and apply it to all of Wynn's resorts.

Posted by Chuckmonster on Friday, 2nd September 2016 4:50pm:

Jucifers - I'm not probably right, I'm definitely right. Steve Wynn has pretty much disrespected Elaine personally and professionally. Elaine has nothing to do with Alon, other than being Andrew's aunt. The Steve/Elaine thing isn't a simple lawsuit. It is the culmination of 30 years of a fucked up relationship between a visionary megalomaniac and his long suffering creative/relationship partner.

Steve will NOT be involved in Alon, at all, never, ever. Alon won't have him and Steve won't be a partner to any vision that isn't his own.

Posted by stevecovington on Sunday, 4th September 2016 4:57pm:

After being able to view a detailed site plan and some renderings, I am very optimistic for this project. The attention to detail in terms of architecture, the layout of the public spaces and how they relate to the building itself, is a real game changer for Las Vegas. In actuality, the scale, layout and execution of the property will harken back to the days when properties like Flamingo, Tropicana, Hacienda and Rivieria were originally constructed. The intimate, split level casino, with natural light coming in both ends, will surely make this boutique gaming space unique. Laying out the property into districts is brilliant. There is a nice flow and synergy to the property, with the energy from the centralized pool and social club radiating out line a fan through the property.

I also think this is a brilliant move in terms of overhead. Running a resort a quarter of the size of the competition will mean less staffing, while being able to afford to pay a little higher wages than the competition to ensure top notch service.

To me, alon feels more like an actual architectural marvel versus a big warehouse with a facade attached and a tower rising out of it.

It should be no surprise that the scale and layout evoke that of a standalone, more intimate version of Encore. I really think itll give the competition a run for the money.

Posted by stevecovington on Sunday, 4th September 2016 4:59pm:

...and if Paradise Park and Hotel are Steve's response to Alon, he must not have seen what we have.

Posted by Drake on Monday, 5th September 2016 3:15am:

Sounds fabulous, chuckmonster and stevecovington, it really does. Hope it comes to pass as envisioned. Time will tell.

Posted by HillBilly on Monday, 5th September 2016 7:22pm:

You had me at horseshit jai alai. Added to my professional vocabulary.

Posted by wpsteel66 on Saturday, 1st October 2016 7:06pm:

Good to hear this project still has life...am eager to see how this place turns out once built...good to see some more competitive on the strip.