84°F
weather icon Clear

10 years since Fontainebleau in Las Vegas went bankrupt

With the economy crashing in spring 2009, developers of the Fontainebleau gave their lenders a dire warning: Without more funds, the project will fail.

Less than two months later, the partially built hotel-casino was in bankruptcy. A decade later, the blue-tinted tower on the north Strip is still waiting to be finished.

The Fontainebleau, soaring 60-plus stories above Las Vegas Boulevard, went bankrupt 10 years ago on June 9, 2009. It has traded hands twice since then, with current owner Steve Witkoff planning to open the 3,780-room resort, which he renamed The Drew Las Vegas, in 2022.

Las Vegas was littered with abandoned real estate projects after the economy tanked, but most were eventually finished, typically after investors bought them at a steep discount. The Fontainebleau, one of the tallest buildings in the valley, also sold for a relative pittance during the recession. But the buyer, billionaire Carl Icahn, barely touched it as the tower became a constant reminder of Las Vegas’ wild real estate boom and devastating crash.

Given the bankruptcy anniversary on Sunday, here’s a look at the Fontainebleau’s history — one marked by big money, big promises and a big flop.

‘Most celebrated building’

Plans for the Fontainebleau were unveiled in 2005. The project — led by Florida developer Jeff Soffer of Turnberry Associates and Las Vegas casino executive Glenn Schaeffer, former president of Mandalay Resort Group — was named after the 1950s-era Fontainebleau hotel in Miami Beach, which Soffer agreed to buy months earlier.

Fueled by easy money, Las Vegas property values soared during the mid-2000s bubble, and developers flooded the valley with housing tracts, office buildings, high-rise condo proposals and megaresort projects.

“With what is happening in Las Vegas, you look (at) that site and we can do a tremendous project,” Soffer said after the plans were announced.

His group broke ground in early 2007. Later that year, the developers said they closed on financing that would be used, in part, to fully fund the $2.9 billion Strip resort.

The Fontainebleau was slated to open in fall 2009.

“It is destined to become the most celebrated building in the world,” Schaeffer said.

‘Will never open’

The economy was already showing signs of cracks by that point. It eventually imploded, with Las Vegas among the hardest-hit areas of the country during the recession.

As the economy spiraled, the Fontainebleau’s developers sued several banks in April 2009, alleging that the “unscrupulous” lenders backed out of their commitment to finance construction of the resort. The banks cited one or more alleged defaults, but the developers claimed there weren’t any, the lawsuit said.

The Fontainebleau was about 70 percent complete, though without the additional funds, the resort “cannot be finished and will never open,” the developers alleged.

Soon enough, construction work slowed at the site, Schaeffer left as president and CEO of parent company Fontainebleau Resorts, and the developers pushed the Las Vegas project into bankruptcy.

Icahn bought the mothballed tower in 2010 for around $150 million. He sold it in 2017 for $600 million to Witkoff, founder of New York development firm the Witkoff Group, and partners.

Soffer, now owner of Fontainebleau Development, and Schaeffer could not be reached for comment.

In an interview at the Drew in April, Witkoff told me he heard “150 nasty rumors” about the building before he bought it, including that it was falling down, that copper cables were stolen and that plumbers poured concrete in the pipes.

In truth, he said, the building is in “exceptional shape.” He also praised Soffer as an “outstanding developer” whose project got derailed by the failing economy.

“He did it impeccably,” Witkoff said of the resort. “The only mistake he made was he ran into the worst financial storm in U.S. history but for the Depression, which is unfortunate.”

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Southern Nevada could set a new resale-price record in coming months.
The median sales price of previously owned single-family homes – the bulk of the market – was $310,000 in September. Before the economy crashed last decade, prices peaked in June 2006 at $315,000, according to the Greater Las Vegas Association of Realtors.(Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Walmart container park in Henderson - VIDEO
Henderson could be home to a container park associated with a Walmart Inc. initiative. (Las Vegas Review-Journal)
Recession lessons could help Las Vegas face next slump - VIDEO
While the last economic downturn had a dramatic impact on local casinos, most experts expect the industry will be better able to weather the storm during the next recession. (Mat Luschek / Las Vegas Review-Journal)
MGM and victims of Oct. 1 reach settlement agreement - VIDEO
MGM Resorts International and lawyers representing potentially thousands of victims of the Oct. 1, 2017, mass shooting on the Las Vegas Strip have reached a tentative settlement of between $735 million and $800 million. (Mat Luschek /Las Vegas Review-Journal)
Live music and EDM dominate the night on day 2 of A’Le’Innstock
After sunset bands rocked the crowds at A’Le’Innstock in Rachel, Nevada on the second night of the event.
iPhone 11 Release
Local Las Vegas long time Apple product consumer shares her excitement for the new iPhone 11 release Downtown Summerlin. (Elizabeth Page Brumley/Las Vegas Review-Journal)
Lihi Levin talks about a mobil app Dropit - VIDEO
Lihi Levin, regional manager at Dropit Shopping, talks about a mobil app Dropit. The app lets customers leave their shopping bags at a store then have them delivered the same day to their home or hotel so they can shop without carrying multiple bags all day. (Bizuayehu Tesfaye Las Vegas Review-Journal) @bizutesfaye
North Las Vegas company prepares for Mars - VIDEO
Robert Bigelow and his Bigelow Aerospace manufacturing facility played host to eight NASA astronauts and 60 engineers this week getting to know the company’s B330 autonomous, expandable space station. (Elizabeth Brumley/Las Vegas Review-Journal)
Las Vegas developer talks about a new apartment complex called “the yoU”
Frank Marretti lll, founder of G2 Capital Development, talks about his new apartment complex called “the yoU” near UNLV. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Steel cables will hoist roof at Allegiant Stadium - VIDEO
Stainless steel cables are being put into place at Allegiant Stadium to begin the process of putting the roof on the 65,000-seat stadium in Las Vegas. Stadium Chief Operating Officer Don Webb explains how the cables will be used to get the roof put on the future home of the Raiders and UNLV football. (Heidi Fang/Las Vegas Review-Journal)
The last remaining Sigma Derby game in Las Vegas
Derek Stevens, owner of the D Las Vegas, talks about the last remaining Sigma Derby horse racing game in Las Vegas inside his casino floor. (Erik Verduzco/Las Vegas Review-Journal)
Popeyes Spicy Chicken Sandwich Review
Janine Blake of Las Vegas gives her review of the new Popeyes Spicy Chicken Sandwich at the restaurant’s location on west Bonanza Road on Thursday, Aug. 22, 2019,
SuperZoo 2019 takes over Mandalay Bay in Las Vegas
SuperZoo 2019 show for pet retailers brought pet products of all description to the Mandalay Bay Convention Center in Las Vegas. (Heidi Knapp Rinella/Las Vegas Review-Journal)
MSG Sphere at The Venetian to cost $1.2B plus
Scheduled to open in 2021, it is expected to be busier than Madison Square Garden in New York. (Michael Quine/Las Vegas Review-Journal)
Favorite products from SuperZoo 2019
Some of the fun and interesting pet products on display at the SuperZoo in Las Vegas at the Mandalay Bay Convention Center. (L.E. Baskow/Las Vegas Review-Journal)
MAGIC Convention Day 3
The fashion trade show MAGIC, held Monday through Wednesday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
MAGIC Las Vegas - Day One
The biannual MAGIC convention show opened Monday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
Allegiant celebrates naming deal with tailgate party
Allegiant Air employees celebrate with a tailgate party after the company’s naming deal with the Raiders for the new Las Vegas stadium.
Nevada's sportsbook operators welcome competition
Sportsbook operators from near and far are looking to get into in the established Nevada market, experts say. (Las Vegas Review-Journal)
Get a first look of MSG Sphere construction in Las Vegas
Representatives of The Madison Square Garden Company give the first glimpse of progress Tuesday of the under-construction MSG Sphere — a first-of-its-kind performance venue with high-tech audio and visual capabilities.
There's a new place to play board games in Las Vegas
Matt Smiciklas, co-owner of Boarding School Games, talks about the new Las Vegas business that he co-owns with Emily Labejof. Dedicated tabletop gamers can choose from more than 500 games to play for free in-store. The doors open to the public Saturday, July 20, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Renovations at the STRAT
Analysts say the $140 million renovation project at The STRAT, formerly the known as the Stratosphere, could help the hotel-casino compete with the evolving north side of the Las Vegas Strip. (Bailey Schulz/Las Vegas Review-Journal)
THE LATEST
Price gap between new and resale homes nearing $100k in Las Vegas

The median sales price of a newly built single-family house in Southern Nevada was around $389,450 in July, compared with $295,000 for a previously owned one, a gap of almost $94,450, according to data from Las Vegas-based Home Builders Research.

MGM parking plans for Route 91 site hark back to earlier use

MGM Resorts International announced this week that the site of the 2017 mass shooting would be used for parking until a planned community facility is built. The property’s previous owner, Circus Circus Enterprises, had used it for employee parking in the 1990s.