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Boyd Gaming suspends construction work on Echelon project

Boyd Gaming Corp. said this morning that it will delay construction of the $4.8 billion Echelon project because of the souring credit markets.  Watch the video Watch the video

In its quarterly earnings press release, distributed this morning, the company said: "We have decided to delay construction of our Echelon project on the Las Vegas Strip due to the difficult environment surrounding today's capital markets and the challenging economic conditions that currently exist. We expect to resume construction when credit market conditions and the overall outlook for the economy improve."

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  • Analysts said that the delay of Echelon could forestall a complete housing recovery in the local market. Housing observers had long relied on the 2009 opening of CityCenter, combined with the 2009 start of hiring for Echelon, to lift prices and sales of local homes by next summer. With financial markets questioning the number of new jobs the megaresorts will create, and with staffing delayed, prospects for improvement in housing are cloudy.

    After the delay of Echelon was announced, shares of Boyd Gaming Corp. climbed almost 18 percent in value this morning on the New York Stock Exchange. Shares were trading at $11.73, up $1.75 at 3:16 p.m. EST.

    For the most part, the analyst community supported the company's decision to stop construction on the Strip site that once housed the since-imploded Stardust.

    "We believe the Street has become overly negative on Boyd Gaming, and management has made the appropriate decision to protect and reinforce the underlying shareholder value of the core portfolio," Macquarie Capital gaming analyst Joel Simkins said in a note to investors.

    During a conference call to discuss the company's second quarter earnings today, Boyd Gaming CEO Keith Smith said he was unsure how many of the 800 construction workers who have been working on the Echelon project would lose their jobs.

    Smith said the current state of the credit markets made it virtually impossible for Boyd Gaming and two of its joint venture partners in Echelon to obtain financing for their portion of the development. General Growth Properties, which was building and will operate Echelon's retail space, and Morgan's Hotel Group, which is contributing two boutique hotel products to the development, were responsible for about $1.5 billion of the overall project's cost.

    Boyd Gaming executives hope to resume construction on Echelon sometime in 2009, which would delay the project by more than a year. Echelon was expected to open in the second half of 2010. Boyd Gaming broke ground on Echelon in June of last year.



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    mike c wrote on August 10, 2008 09:51 PM: Right from the first announcement through the Stardust demolition and into the eventual ground breaking, it seemed to me that pulling off a project of this size and status was way out of Boyd's league. This story only confirms that suspicion.


    chris m wrote on August 08, 2008 12:11 PM: this is sad.....these companies destroy vegas history at a whim......in the future they should not be able to shutter and demolish any casino/resort with out 100% financing.....they should be forced to sell the project to someone who have the resources to finish the project......how many people were put out of a job so they could build this resort....boyd is known for their casinos to be "favorite of vegas locals".....how many of the "locals" will be patronizing their casinos now that they are out of a job......can you cash your un-employement checks at their casino? shame on them.....i for one, will NEVER patronize any of their casinos again


    rob in south fla wrote on August 03, 2008 07:04 AM: this will never be completed at least under the boyd name/company. boyd cant handle the big time high end places. they are geared for small locals joints. permanent hold more like it.


    Travis Waker wrote on August 02, 2008 08:01 PM: The loss of the Stardust to gain an unfinished eyesore. That's great! If every single local, tourist, and normal person used common sense and saw this coming, how did Boyd not? They should have left the Stardust. You guys should check out LeavingLV.net/stardust It's really sad. RIP old friend. They imploded you for NOTHING. Even if this place gets done, it will always cary this stigma with it. TRAGIC.


    Maryann Cabarga wrote on August 02, 2008 12:40 PM: It is unfortunate that Boyd Gaming ever took down one of the finest "Ladies" on the strip. Once we found the Stardust & decided that it was our "home" in Las Vegas, we had no need to stay center strip again. I know we are not alone, besides longtime employees (who we were able to recognize visit after visit)and loyal customers, there are many who miss the Stardust being part of the landscape of Vegas. We have found a new place to take our business, and we are not sure that we will visit Echlon when finally built. Bigger & newer is not always better. Plus "if it isn't broke don't fix it".


    -The Greater Depression- wrote on August 02, 2008 09:29 AM: So the geniuses at Boyd want to build EVEN MORE RETAIL STORES ? What about that big Ghost Town next door called THE FASHION MALL ?

    So the "credit markets" are to blame ? Not their dumbass "If-we-build-it-they-will-come" mentality ?

    The amazing,towering STARDUST neon & incandescent SIGN was the best sign left in Vegas - a true iconic American art treasure from the mid century golden age - it's that sort of thing that can be a true tourist magnet (works for me)(or I should say, worked for me)


    keithdylan wrote on August 02, 2008 07:06 AM: Do the words "karma" and "greed" apply here. They imploded a beloved and profitable casino to try and make more. I'm betting this never gets finished.


    Free Nevada wrote on August 02, 2008 01:43 AM: Echelon and City Center have LITTL to do with the turn-around of the local housing market, unless you think it's a Good Thing to add their 10,000 heavily discounted high rise lofts (which may fall over and go boom during the four minute long 8+ magnitude earthquake that is 100% expected by top scientists within the next 10 years 200 miles South West of us). Most of the people losing their jobs on those projects don't own houses that will add to foreclosure mess. It'll hurt the local food/gamble vendors that cater to the hard hats to be sure and some of them are long time SKILLED labor (plumbers, electricians, etc.) which are going to be hurt, but for the most part, delaying/canceling the excess capacity those projects would have brought will actually help the local economy which depends chiefly upon taxes from healthy resorts. If you don't understand, just remember what happened to Mirage, Treasure Island and the Nugget when Bellagio (which replaced The Dunes) opened. The B didn't "add" capacity so much as it cannibalized customers from the existing resorts driving Wynn to sell out to Krikorian & Company (for a song) until he could regroup to do his two new heavily debt ridden mega-resorts. If he could go back, I'm thinking he would have delayed Bellagio and instead made its various new attractions as add-ons to his existing properties (linked by monorail or something). The deal with Boyd leveling Stardust and then stopping Echelon though will probably cost them the company (everything but Echelon improvements, including Echelon land, will be sold), which means no Echelon, ever --vacant lot until 2018.


    mkmkmk wrote on August 01, 2008 11:47 PM: "CEO Keith Smith said he was unsure how many of the 800 construction workers who have been working on the Echelon project would lose their jobs." Uhhh..... a rough guess would be right about 800 of them.


    charlie wrote on August 01, 2008 11:37 PM: Hey I wonder if their on track with that mc carren airport expansion.


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