Thoughts on Echelon

There’s nothing good about Boyd’s announcement today that it’s suspending work on Echelon, but it’s easy to overstate the bad. Some points to keep in mind:

1) Echelon was more than 2 years out, anyways.

It wasn’t going to make a big difference in the local economy for a long time to come.

2) Some of the reason for the suspension is Boyd’s dependence on partners. An important paragraph  that’s not getting much attention:

From the beginning, we strategically designed Echelon to be developed in a single phase, and this schedule adjustment allows us to preserve the holistic integrity of the project. By delaying, we will be able to better manage the timing of the construction of the wholly-owned aspects of Echelon and ensure that they do not outpace the construction of the joint venture components.

That suggests that the real heart of the problem are Boyd’s partners, the Morgans Group and the Shangri-La. Both of these operators plan non-casino hotels on the Echelon site, and neither has gaming revenue to support their financing.

3) $500m of improvements have been sunk into that piece of land. Whether or not Boyd develops it further, they’ve added a lot of value to the parcel by clearing off the Stardust, laying in major new utilities and building tons of underground parking.

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3 Responses to Thoughts on Echelon

  1. bill says:

    Lets not forget that MGM has also mentioned increased difficulty in a loan for three billion for city center. This is from a company in business with compaines with large oil interests making a killing right now in he oil market. The Las Vegas market did not need these hiccups. This is gonna scare people who were considering buying in near the bottom. The bottom may not be in site now.

    Bill

  2. Jason says:

    I hear from a very reliable source that Echelon will resume construction on the 18th of August. Hopefully this is indeed the case.

  3. bill says:

    I also heard a rumor that this all a play to get the current minority owned contractors tossed out. But the Union contracts would not allow without official work stopage. However if that is the case Boyd could be guilty of stock manipulation, since thier stock went up based on the news. I hope none of those directors sold any shares. I smell a lawsuit. The article in Wall Street Journal doesn’t make sense they are so close to full finance to back out.

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