Sam Nazarian Decides To Sell His Stake In SLS Las Vegas
The Las Vegas strip has proven to be the downfall of many an entrepreneur as the competition and pressure is extremely fierce. Nightclub tycoon Sam Nazarian owned a 10% stake in the SLS Las Vegas and had big plans for his Las Vegas venture. The SLS Las Vegas casino and hotel is estimated to be around $800 million and has 1,600 hotel rooms. Nazarian launched this venture around 14 months ago after teaming up with Stockbridge Capital Partners who own the remaining 90% of the casino.
Nazarian has built a reputation for owning and operating some of the hottest nightclubs in Los Angeles. He decided to venture into Las Vegas in 2014 as he said his hero was billionaire Steve Wynn and Nazarian wanted to take a shot at making it big in Las Vegas.
His goal was to attract thousands of his LA nightclub fans and bring them over to the strip to party Vegas style.
It looks like Nazarian decided to drop his dream of running a successful Las Vegas casino as he faced mounting pressure from authorities who were investigating his activities at the SLS.
The Nevada gaming board had decided to investigation Nazarian as he was suspected of dealing with drugs and being a target of an expensive extortion plan. The nightclub tycoon decided that it was in his best interests to sell his 10% stake and give up management of the casino.
Stockbridge Capital Partners which is based in San Francisco is expected to buy out Nazarian’s 10% stake and will then take over all management and operational responsibility from Nazarian’s company SBE Entertainment. Both Nazarian and Stockbridge Capital Partners described the acquisition as a strategic move that will be beneficial for the SLS Las Vegas casino.
In a statement, Terry Fancher, Stockbridge’s executive managing director said
Converting SBE’s current management agreement into a license agreement benefits all parties involved — our valued guests and employees, SBE and Stockbridge. It is more efficient from a cost and operational standpoint, and will give the SLS Las Vegas flexibility to introduce new brands or restaurants from time to time to further improve guest experience and strengthen financial performance.
While its appears that Nazarian has decided to drop his Las Vegas dream, it might not be a bad decision after all. A recent filling with the Securities and Exchange Commission revealed that SBU and Stockbridge has incurred a $84 million losing during the first half of 2015.
