Stockbridge to buy out Sam Nazarian’s stake in SLS Las Vegas
The majority owners of the SLS Las Vegas plan to buy out Sam Nazarian, the Los Angeles nightclub mogul who spearheaded the $800-million casino-and-hotel project.
San Francisco-based Stockbridge Capital Partners, which owns 90% of the 1,600-room casino and hotel, has agreed to buy Nazarian’s 10% share and take over management of the facility, according to officials knowledgeable with the deal. Nazarian’s company, SBE Entertainment, will be paid a licensing fee as the hotel will remain under Nazarian’s SLS brand.
“Converting SBE’s current management agreement into a license agreement benefits all parties involved -- our valued guests and employees, SBE and Stockbridge,” Terry Fancher, Stockbridge’s executive managing director, said in a statement.
“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.”
The owner and operator of dozens of Los Angeles nightclubs and hotels, Nazarian opened the casino last year, calling it his biggest business challenge so far. At the time, it was the biggest hotel Nazarian had opened and was located in a hardscrabble neighborhood several blocks from the major casinos on the Las Vegas strip.
“We believe formalizing this transition is a win-win for the thousands of hotel employees and guests of SLS Las Vegas,” Nazarian said. “The resort remains a valued member of the expanding collection of SBE branded and managed luxury hotels across the country and the globe.”
Nazarian was engulfed in a scandal shortly after opening the SLS when the Nevada Gaming Control Board, performing a routine background investigation, discovered that he was involved in drug use and had been targeted for extortion payments. Nazarian was awarded a gaming license but was required to undergo random drug tests.
The hotel has yet to become the success Nazarian envisioned. Stockbridge and SBE reported an $84-million loss in the first six months of 2015, according to a filing with the Securities and Exchange Commission.
The move to sell his stake in the SLS comes as Nazarian prepares to merge SBE Entertainment with New York-based Morgan Hotel Group Co., according to people familiar with the deal. As proposed, Nazarian would head the new publicly held company that would operate hotels throughout Los Angeles, New York and Miami.
To read more about travel, tourism and the airline industry, follow me on Twitter at @hugomartin
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