Stockbridge Capital received final approval from Nevada gaming regulators today to acquire the remaining 10 percent of SLS Las Vegas.
Stockbridge already owns the other 90 percent of the SLS, and it now has the blessing of the Nevada Gaming Commission to take control of the rest of the business. The SLS had disclosed previously that Stockbridge would acquire the remaining portion of the resort as SBE Entertainment Group gave up any involvement with managing the property.
SBE has switched from a management agreement to a licensing agreement with Stockbridge. That allows the SLS to keep its name, even though SBE will not be involved at all in the operations.
The Gaming Control Board approved the changes two weeks ago and also allowed SBE Entertainment’s chief executive, Sam Nazarian, to withdraw his application for a key employee license.
Nazarian was integral in transforming the former Sahara resort into the SLS, but he stepped away from day-to-day operations amid dramatic hearings before gaming regulators about a year ago.
Peter Bernhard, a former Gaming Commission chairman, represented Nazarian today and told commissioners that the ownership change was a good business move. Bernhard reiterated that Nazarian will not have “any ownership interest or equity” in the SLS, which he had previously told the gaming board.
Bernhard indicated that Nazarian, who was not at the meeting, is still pleased with the SLS.
“This was a dream of his, and he’s happy to see it come to fruition,” Bernhard said. “For business reasons, he’s determined this is the best way for him and the company to proceed forward.”
After raising serious concerns about Nazarian’s drug use and relationship with a man he said pressured him for money, the Gaming Commission ultimately gave him a limited, one-year gaming license last December that prevented him from being involved with running the casino.
The license also required Nazarian to submit to a series of conditions, with which regulators said he has complied.
Commission Chairman Tony Alamo said today that Nazarian had been given a “very short leash” and had overcome the challenges regulators put before him.
With Nazarian and SBE out, the SLS is left under the control of Stockbridge and SLS President Scott Kreeger, who was also licensed by the commission as a key executive today.
Kreeger was mindful of the challenge posed by running the SLS: it has reported substantial quarterly losses this year and has made significant changes to various aspects of its business operations.
“It’s probably fair to say that the first year at the property was a little tumultuous,” Kreeger said.
After Alamo pointed specifically to the SLS’ big net losses — which totaled $38.7 million in the third quarter and $122.7 million for the first nine months of the year — Kreeger said the resort was now focused on a more “fundamental Las Vegas casino model.” That includes placing a bigger emphasis on the hotel and casino sides of the business, he said.
On the hotel side, SLS recently announced that its Lux hotel tower will become a W Hotel managed by Starwood Hotels & Resorts Worldwide Inc. The deal also gives the SLS access to the Starwood Preferred Guest loyalty program.