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Analyst: Aladdin Team Failed Before they Began

31 January 2003

LAS VEGAS – As reported by the National Posts: "On a Saturday night in early January, the tables at the Aladdin Hotel & Casino are bustling. It's almost enough to make you forget this place is one of the biggest casino failures of all time.

"…With a prime location, across the street from Bellagio, the most profitable casino in the city, Aladdin was expected to be a big success. But instead, the US$1.4-billion property filed for bankruptcy protection just 13 months after it opened in August, 2000.

"According to seasoned industry veterans, the Aladdin is a case study in what happens when all the details are wrong.

"`With the Aladdin you had an operator who'd never run a property in Las Vegas before, teamed with a builder who'd never built a casino in Las Vegas,' said Mike Scerbo, an analyst with Standard & Poor's who rates the debt of major gaming companies.

"…Building a strong casino is both an art and a science, industry insiders say.

"…And it was clear, almost from the beginning, that those running the Aladdin had no grasp of the finer points of the business

"…The casino's garish decor and whimsical theme discouraged business clients from leaving the more elegant surroundings of Bellagio, Mandalay Bay and The Venetian. At the same time, the property didn't offer many of the family-friendly side attractions that draw them to Excalibur or the lower-priced Circus Circus.

"And while other gaming companies can market new properties to previous guests, Aladdin had no established customer base to rely on, and no sister properties to help generate interest.

"…The financial damage from the failure is still being calculated. Trizec Properties took a US$75-million in charges last year to write down the value of the Desert Passage. London Clubs International Plc., which began as a minority partner in the venture, eventually bought control and has seen its shares fall 87% since 2000, due largely to losses incurred at the Aladdin…"

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