Sam Nazarian says he is trying to create "the next era of Las Vegas”… (Lawrence K. Ho, Los Angeles…)
LAS VEGAS — He's the biggest nightclub owner in Los Angeles, the man whose Hyde Lounge and Shelter became prime hunting grounds for the paparazzi. He's been photographed cozying up with Paris Hilton, Kristin Cavallari and Sofia Vergara. When HBO's "Entourage" needed a club owner, he got the part — playing himself.
Now Sam Nazarian is moving to shed his party boy image and become a Vegas mogul, hoping to parlay his success in L.A.'s fiercely competitive club scene into the cutthroat world of casinos. In his tony office near the Strip, he points to a scale model of his latest venture: the SLS Las Vegas, a 1,600-room hotel, casino and night-life venue that will emerge from the shell of the legendary Sahara.
Clad in jeans and a black dress shirt, Nazarian taps the sleek white model, with its valet circle dominated by artist Jeff Koons' giant red stiletto-heel sculpture.
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"This is the birthplace of — and the gateway to — the next era of Las Vegas," says Nazarian, a 6-foot-4 bear of a man. "How do you reinvent history?"
It's not just a rhetorical question. Nazarian is betting more than $800 million that he can create the Strip's hottest new destination as Vegas rebounds from a long slump. A win would give his fledgling SLS hotel chain a flagship for future expansion. Lose, and who knows whether he will get another shot.
The hotel industry is watching closely, especially because Nazarian plans to stock the SLS with restaurants and clubs in which he has an ownership stake, bucking the Vegas trend of outsourcing these reliable cash generators to celebrity chefs and well-known club brands. Nazarian's Hyde Lounge, for example, is the featured nightspot at the Bellagio.
Bringing in food, beverage and night-life partners spreads the risk but also diminishes the profit potential, especially in an era of high-end restaurants and pricey bottle service. Nazarian says he has spent years creating his own food and nightclub brands, or buying into them (he grabbed a 50% stake in Umami Burger in 2011), with just this endgame in mind. His SLS Las Vegas will feature incarnations of Umami along with renditions of his first club, Shelter; the Sayers Club; Katsuya by Starck; and the Bazaar by Jose Andres.
"He's making a play on his food, beverage and entertainment options as a way to differentiate his hotels from his competitors," says hospitality consultant Bruce Baltin of PKF Consulting.
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Nazarian's timing appears good: Tourism and gambling revenue on the Strip are once again on the rise. But getting this far hasn't been easy.
Nazarian knew the aging Sahara was a fixer-upper when he bought it with partner Stockbridge Capital Group for $345 million in 2007. The following year, the housing market crashed and the nation plunged into financial crisis.
"The forecast was rain every day and we were trying to sell sunshine," he recalls. "In Vegas we were trying to get construction financing and banks wouldn't even return our calls — they said Vegas was dead."
In February, six years and countless headaches later, work began on the $450-million makeover after Nazarian managed to secure crucial financing from an alternative source — foreigners participating in the federal government's EB-5 program that grants green cards in return for investments of $500,000 in job-creating ventures.
That Nazarian persisted despite financial hurdles is one reason he has enjoyed success, says Thomas Barrack, the billionaire founder of Colony Capital in Santa Monica.
"On a business level he's relentless; he's tireless; he's 100% there," says Barrack, whose firm invested $35 million with Nazarian's Los Angeles-based SBE Entertainment Group in 2011. "What Sam has is unique, especially as a young man."
Nazarian was just 31 when he bought the Sahara. Now 37, Nazarian says he's no longer a fixture on the celebrity club and party scene, focusing his energy on business instead.
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"I really don't recognize myself anymore," he says between drags on an American Spirit cigarette and sips of Pellegrino. "I've turned into that guy who's in bed by 8 or 9 o'clock."
Not that Nazarian's home is a bad place to be. His $8.5-million, 14,000-square-foot mansion in the hills above Las Vegas boasts an epic view of the Strip, a 10-car garage, a home theater and other amenities. His girlfriend, fashion model Emina Cunmulaj, is a frequent guest.
He's accustomed to posh surroundings, having been born to a wealthy Iranian family that was forced to flee that country when the shah was deposed in the Islamic Revolution. In the 1980s, his father, Younes Nazarian, invested in a small startup that was acquired by San Diego technology firm Qualcomm, making him a fortune when Qualcomm went public.