The Aladdin tale, on the surface, seems like a million other Sin City stories: Outsiders arrive, flush; outsiders leave, broke.
And that plot is a big part of the Aladdin story, but two years to the day after the property opened, and nine months after it filed for bankruptcy protection from its creditors, casino industry insiders still talk about what went wrong with the $1.3 billion megaresort.
The owners? Inexperienced, the insiders say. The money? Highly leveraged, with no margin for error. The design? Countless problems.
Many casino executives and Wall Street-types were happy to riff on the property’s shortcomings as long as they were not identified by name, but Deutsche Banc Securities analyst Andrew Zarnett made his analysis on the record.
“The Aladdin is poorly designed and poorly executed,” Zarnett said Wednesday. “There were too many cooks in the kitchen, and they weren’t good cooks. The design is flawed, operations were flawed and its financial structure was too leveraged.”
Not surprisingly, veteran casino executives blamed the inexperience of the UFABet Aladdin owners.
“People that begin this kind of a project with no experience are asking for trouble, and that’s what they got,” said one Las Vegas casino executive, who like most of his peers, was willing to critique the project on condition of anonymity. “When people with no experience begin a project of this size, they make mistakes on everything they try to do. They make a 15 percent mistake on every decision, and if they have to make 1 million decisions a year for four years, and make a mistake on all 4 million decisions, they end up with the Aladdin.”
One casino company’s top boss noted the Aladdin’s total cost, including Desert Passage, was about as expensive as the $1.6 billion Bellagio.
“Yet the Bellagio throws off more than five times as much (cash flow),” the executive said. “The Aladdin’s a colossal black hole.”
At the center of the web of the Aladdin’s ownership interests is Jack Sommer, trustee of the Sommer Family Trust.
Sommer did not return several phone messages.
When the family trust sold a major New York property in 1994, Sommer needed to find a real estate investment to park the proceeds to avoid capital-gains taxes.
The Aladdin was on the market at the same time, and Sommer’s reported $80 million sealed …