SLS Las Vegas Sued by Former Owner Over Alleged Unpaid Licensing Fees

Posted on: June 26, 2019, 10:25h. 

Last updated on: June 27, 2019, 09:18h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The parent company of SLS Las Vegas has been named in a lawsuit on allegations that the ownership hasn’t been paying the appropriate licensing fees for the Strip casino property.

SLS Las Vegas casino Sahara
Current owners of SLS Las Vegas are accused of failing to pay licensing fees for the brand that it’s expected to soon forgo. (Image: Vegas Changes)

Iranian-American businessman Sam Nazarian’s SBE Entertainment Group says it’s owed $450,000 in licensing fees that have gone unpaid since November.

Alex Meruelo – who acquired the fiscally troubled SLS Las Vegas last year for an undisclosed sum – is currently in the process of investing $100 million into the north Strip casino, and is rumored to soon announce a rebranding back to the property’s Sahara roots.

Meruelo’s Las Vegas Resort Holdings, which is named in the licensing lawsuit, didn’t respond to comment requests. SLS Las Vegas is a 1,600-room hotel at the northern most end of the Strip. Meruelo says the $100 million renovation will overhaul the rooms, casino floor, pool, and entertainment space.

License to Lose Money

Nazarian and Stockbridge, a private equity real estate investment firm, acquired the former Sahara in March 2007 for an estimated $300-$400 million. It couldn’t have come at a worse time, as the US Great Recession hit that December and thrust the economy into turmoil.

The Sahara closed its doors in May 2011, Nazarian saying at the time the casino was no longer “economically viable.” After nearly two years of uncertainty, plans for a $415 million conversion into SLS Las Vegas were announced in February 2013.

Nazarian said the SLS moniker stood for “style, luxury, service.” But with the demolition of the Riviera, and uncompleted Fontainebleau (since renamed The Drew), and Resorts World projects, the northern end of the Strip continued to struggle post-recession due to a lack of foot traffic.

The casino lost more than $200 million between 2014-2015. Nazarian and Stockbridge sold the resort to Meruelo, who said he would turn the fledgling resort profitable, just as his did in Reno with the Grand Sahara.

SBE’s SLS brand has hotels in Beverly Hills, the Bahama’s Baha Mar, and Miami’s South Beach and Brickell neighborhoods.

Deserting SLS

Vital Vegas – the blog from Sin City insider Scott Roeben – expects Meruelo to announce a new name as early as this week. The frontrunner is to revert to the Sahara.

“Drama! As we’ve shared, SBE brands out soon, announcement of new name expected this week. Pattern seems to be not paying, then “take it or leave it” settlement offers, as has happened with vendors,” Roeben tweeted this week.

The Sahara was an iconic Strip staple from its opening in 1952 until its 2011 closure. The casino welcomed countless celebrities and was a Rat Pack hangout for Frank Sinatra, Dean Martin, Sammy Davis Jr, Peter Lawford, and Joey Bishop.

Along with trying to turn around SLS Las Vegas, Meruelo recently signed off on buying the struggling NHL franchise Arizona Coyotes. The professional hockey team hasn’t had a winning season since 2013-2014, and has bled money since filing for bankruptcy in 2009.