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Arnold M. Knightly

Fontainebleau's top executive leaves company

1 June 2009

LAS VEGAS, Nevada -- The former Mandalay Resort Group executive who was brought in to oversee development and bring executive gaming experience to the Fontainebleau Las Vegas project has left the company.

Glenn Schaeffer, Fontainebleau Resorts' co-founder and its top executive, recently departed the company, a Fontainebleau spokesman confirmed Friday.

"Glenn Schaeffer left Fontainebleau Resorts as chief executive officer, president and member of its board of managers as the company continues to explore its financing alternatives," spokesman Dave Satterfield said.

The company would not say if Schaeffer's position will be filled in the near future.

Fontainebleau Resorts, the parent company of the financially troubled Fontainebleau Las Vegas project, is focusing on negotiations with banks for funding to complete the $3.1 billion mixed-use project.

Schaeffer's departure comes a week after the company began layoffs in the corporate offices and a month after construction work on the 24-acre site was slowed.

Approximately 250 workers remain on the site, down from the 3,300 workers who were working on the project about a month ago, according to a project official who requested anonymity.

Someone familiar with the situation said Schaeffer's departure had been rumored for the past few weeks. Attempts to reach Schaeffer for comment failed.

Bill Lerner, a principal analyst with Union Gaming Group, said Schaeffer's exit could be an ominous sign for the project's future.

"Glenn is a talented guy and Fontainebleau (Las Vegas), his concept, is a beautiful project," Lerner said. "If his departure is a precursor to them stopping the project, it would be a function of timing and difficult capital markets."

Schaeffer was a chief financial officer in the gaming industry from 1984 until Mandalay Resort Group was sold to MGM Mirage in April 2005.

Schaeffer, who was also president and board member of Mandalay Resort Group, was instrumental in structuring the buyout.

He cashed out nearly $13 million in company stock after the buyout but it is not known how much he invested in Fontainebleau Resorts.

Schaeffer co-founded Fontainebleau Resorts in May 2005 with Miami-based developer Jeffrey Soffer. Soffer is majority owner of the company and a principal with condominium developer Turnberry Associates.

Schaeffer was brought in by Soffer to spearhead development of the Fontainebleau Las Vegas on Las Vegas Boulevard across the street from Circus Circus.

"Glenn is well-respected on Wall Street and in the financial communities, so he will play a tremendous role in this company," Soffer told the Review-Journal when Schaeffer joined the company in 2005.

The project was designed as a 3,815-room hotel-condominium-casino project with a large retail center, restaurants, spa and other amenities.

Fontainebleau's attorneys filed a lawsuit April 23 against a group of banks after the banks pulled $770 million in financing. The banks said Fontainebleau had defaulted on a loan.

The developer has also accused Deutsche Bank, which controls $80 million of the loan, of a conflict of interest because of the bank's ownership of the competing Cosmopolitan project.