Confirmed: Alon Isn't Dead
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.
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