Carl Icahn has a problem. Sure, he got what looks like a great deal when he picked up the unfinished Fontainebleau at the north end of the Strip for a paltry $150 million. The Fontainebleau’s first owners, Florida-based Fontainebleau Resorts, had already sunk a couple billion into the property to get it 70 percent complete before they went belly-up and pulled the plug on construction. IT certification
By most estimates, it’ll cost Icahn—or whomever—another $1.5 billion to finish the place, which probably means $2 billion, what with all the usual cost overruns on big projects like this. But even at $2 billion, the gorgeous blue building looks like a steal. And it looks like a steal even though it’ll cost Icahn about $30 million a year in maintenance and other costs just to keep the building from falling apart while it sits there unfinished and unoccupied … but looking gorgeous.
And that’s Icahn’s real problem. The building is just too beautiful to make economic sense in this new era of diminished expectations. The building was designed by Carlos Zapata of New York City in what is now that long-gone era of easy money, soaring real estate values, and boundless—irrational—optimism. Zapata is one of that hip new generation of “international” architects whose work fits right in wherever big money chases international high style, whether it’s in Berlin, Singapore, Shanghai, Tokyo, Manhattan, Dubai (once upon a time) … or Las Vegas.
Zapata’s “assignment” was to continue in Las Vegas a “conversation” that had begun nearly 60 years ago in Miami Beach, when Morris Lapidus designed the original Fontainebleau. The design for that resort, Lapidus said at the time, was to “convey a feeling of delight, to provide a setting away from home, away from daily cares, just for the pleasure of a great experience.” Lapidus broke with the stark modernist conventions of the time to create what he called an “architecture of joy.” Its curving, sensuous exterior was an expression of its curvy, swanky interior. Of course, the critics and academic killjoys were outraged by what he’d done, but the public couldn’t get enough of the place—swanky was good business, it turned out. 640-822 dumps
The recent remodel of the Miami Beach Fontainebleau set out to preserve Lapidus’ original vision, but with Vegas production values and lots and lots of very classy art, including light installations by James Turrell and chandeliers by Ai Weiwei. And Zapata’s big blue building, then, was to take Lapidus’ original vision and the update of that vision, and do it again in Vegas, only more so. The question now is whether Icahn has the vocabulary—and the vision and the bucks—to be part of this ongoing conversation.
Icahn’s a predator. He buys things cheap and sells them for top dollar and pockets the difference. He’s a very smart guy when it comes to spotting value in undervalued assets. But Icahn doesn’t make anything. He doesn’t design anything. He doesn’t create anything.
Maybe he plans to sit on the property for a year or two and then flip it for a fat profit. But it’s going to be very tough to sell in this market. And it doesn’t look like this market it going to improve any time soon.
Or maybe Icahn plans to finish the place and open it and have himself a 4,000-room resort. But with CityCenter just opened and a glut of rooms in Las Vegas already, with room rates down 30 to 40 percent all along the Strip, Icahn will feel tremendous pressure to finish the place on the cheap, in hopes of turning a profit. Of course, Icahn knows from cheap. He’s bought and sold plenty of places like the Stratosphere and Arizona Charlie’s over the years. But if he goes for neo-grind joint for the big blue building, he could find himself in a world of hurt. The problem is wrapping cheap in a gorgeous exterior.
The disconnect could prove deadly when it comes to branding. The building itself sets a standard and raises expectations, and the public will expect the interior to match what they see on the outside. If there’s anything Lapidus has shown us, after all, it’s that customers know class when they see it. Conversely, they know no-class.
But beauty and class don’t have to cost more than schlock. The real issue here isn’t merely money, but also vision and a bit of courage. We know that Icahn has plenty of guts. But does he have the vision? Let’s hope so. Vegas could use some about now.