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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Nazarian gets temporary OK to sell stake in SLS Las Vegas

5 November 2015

Nevada gaming regulators granted temporary approval Wednesday for SLS Las Vegas visionary Sam Nazarian to sell his company's 10% stake in the Strip resort to majority owner Stockbridge Capital Partners.

Nazarian, who was granted a one-year limited gaming license last December for the SLS but wasn't allowed to have any involvement in the resort's operations, appeared at the Gaming Control Board hearing in Las Vegas, flanked by his attorney, former Gaming Commission Chairman Peter Bernhard.

Nazarian, CEO of Los Angeles-based SBE Entertainment, made just a few brief remarks to the gaming regulators, thanking the panel "for giving me a chance" last year after two contentious regulatory hearings.

"More importantly, I heard your message," Nazarian said.

The panel also allowed Nazarian to withdraw his application for a key employee gaming license he had filed for the SLS Las Vegas.

Control Board Chairman A.G. Burnett said Nazarian met with all nine conditions regulators placed on his limited gaming license, including passing five different drug tests administered by the agency in the past year.

During the licensing investigation last year, Nazarian acknowledged he used cocaine and struggled with alcohol abuse. It was also learned he was the victim of an extortion scheme.

Approval of the sale effectively ended Nazarian's eight-year association with the SLS, formerly known as the Sahara.

Nazarian led the purchase of the Sahara in 2007 and oversaw the redesign $415 million renovation of the resort after it was closed in 2011. The SLS Las Vegas opened in August 2014. He was viewed as a cheerleader for the Strip's northern end, making charitable contributions to the neighborhood and was the property's public face.

"Sam takes great pride in what he accomplished," Bernhard told the Control Board. "He dedicated his life to the property. It was a dream of his."

Under terms of the sales agreement announced in October, San Francisco-based Stockbridge will pay a licensing fee to Nazarian's SBE Entertainment for the SLS name and the property's restaurant brands that are owned by the Los Angeles-based company.

Stockbridge attorney Mark Clayton told the Control Board a licensing agreement was more efficient from a cost and operational standpoint and the transaction benefited all parties involved.

Stockbridge owns the other 90% of the SLS Las Vegas. Stockbridge managing partner Terry Fancher attended the Control Board meeting but didn't address the panel.

Financial figures for the transaction were not disclosed.

The Nevada Gaming Commission will make a final ruling on the matter Nov. 19.

The Control Board also recommended SLS Las Vegas President Scott Kreeger for a gaming license.

The 1,600-room SLS Las Vegas has struggled financially. According to securities filings, the property lost more than $89.3 million in the first six months of 2015 and Stockbridge made $28.1 million in capital contributions to the resort through June 30. After the second quarter ended, the company made additional contributions totaling $13 million.

The deal allows Nazarian to pursue other nongaming projects in Las Vegas. SBE operates the Hyde Lounge at Bellagio, and the Double Barrel Roadhouse and 800 Degrees Pizza at Monte Carlo Las Vegas Resort & Casino.