Echelon shutdown getting rave reviews

Boyd Gaming Corp. continues to receive accolades from Wall Street for putting the brakes on its $4.8 billion Echelon project. The company hopes to resume construction on the Strip development sometime next year.

Deutsche Bank gaming analyst Andrew Zarnett told investors what was behind Boyd management’s decision beyond the collapsing credit markets. Boyd Gaming had already spent $500 million on Echelon, which has been under construction for more than a year.

"While a great amount of money had been spent, the importance of stopping the project is that management has illustrated they are not willing to risk the company," Zarnett said. "This was the right decision but a hard one for the company. For management, it is both a financial and emotional decision to stop such a complicated and sizable project."

***

Macquarie Capital gaming analyst Joel Simkins also weighed in on Echelon. He wanted to quash concerns that Boyd Gaming was on the hook for an additional $800 million.

"Wind-down costs are likely to be closer to the tens of millions versus hundreds of millions," Simkins said.

Most of Boyd’s construction contracts covering Echelon have standard out clauses where the company can easily terminate deals. Simkins said the construction companies would seek involvement when Echelon restarts.

***

CityCenter sold 37 high-rise condominiums during the second quarter ended June 30. That may not seem like a sizable amount, but the figure was worth $34 million in sales to MGM Mirage in what has become a challenging environment.

"We tracked the entire market in Las Vegas, particularly for high-rise sales," said CityCenter Chief Executive Officer Bobby Baldwin. "For better or worse, CityCenter represents virtually all new high-rise condo sales in Las Vegas."

Baldwin said 32 units were sold in July. Seventeen of the deals came through CityCenter’s newly opened sales office in Dubai. The Persian Gulf state’s investment arm is MGM Mirage’s 50-50 joint venture partner in CityCenter.

"We look forward to future success in that channel of sales," Baldwin said.

The $9.2 billion CityCenter development is offering 2,650 high-rise residential units in four different developments. High-rise also translates into high-priced; the 1,421 units are valued at $1.75 billion.

***

Three of the nine players who reached the World Series of Poker’s final table will play in the tournament’s European event in September in London.

Ivan Demidov of Moscow, Peter Eastgate of Denmark and American David Rheem will tune up for the Nov. 9-11 main event at the Rio.

Howard Stutz’s Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871.

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