[dude66]

LOS ANGELES, Aug 1 (Reuters) - Boyd Gaming Corp said on Friday that it would delay construction of its partially built Echelon casino project on the Las Vegas Strip, and investors concerned about a glut of new resorts in the city sent the company's shares up as much as 30 percent.

Las Vegas-based Boyd said it had decided to delay the construction of the $4.8 billion Echelon, already built to around eight stories, because of the challenging economy.

UPDATE 2-Boyd delays Las Vegas project; stock jumps | Reuters

[MR77]

So they are going to let a half built project just sit there? Crazy. I always figured that these risks were calculated before they began building. You would think there would be some foresight on an economic slowdown before the first shovel hits the ground.

[olecapt]

Can't get it financed. So hold and hope things change in a year. That is however a hell of a step...you are left burning the cash needed to support the development while pushing out the offsetting revenue. Can't hold like that for long .

[SHEPNYC]

In Manhattan, back in the early 1990's, lots of skyscrappers were left in various states of completion and vacant until the market began to turn around several years later. Very common in an economic slowdown.

Obviously Boyd doesn't expect any quick turnaround, probably won't start to build again for several years.

[ByebyeVegas]

This was huge news in my office this morning, and it is causing a slight uproar in the contractor community. Plenty of Commercial Contractors and Subs are now scrambling because they don't have a job to finish, which means there will most likely be bid wars for any upcomming projects since the contractors kicked off of echelon will now need more work. Thankfully the company I work for only had minor work on this project, but for the main subs this is a nightmare and a potential multi-million dollar loss of contract revenue.

I'm shocked to see a project like this get put on hold indefinitely after they were already 8 floors up.

[Kalbo]

If new home and apartment builders would stop building too for now, until things get better that would help the housing market maybe? Of course the down side is what will all the unemployed construction workers do?

Projects put on hold or sitting idle are never a good thing.

[dynimagelv]

Originally Posted by Kalbo

If new home and apartment builders would stop building too for now, until things get better that would help the housing market maybe? Of course the down side is what will all the unemployed construction workers do?

Projects put on hold or sitting idle are never a good thing.

Most will have to move back home

[ClarkGrisowld]

Originally Posted by dude66

and investors concerned about a glut of new resorts in the city sent the company's shares up as much as 30 percent.

Reuters is a quality financial reporting, but that is bizarre.

But, sure enough, BYD closed up 20%. Granted, it was up $2.03 off a base of $9.98.

Doesn't make a lot of sense though. A return on that investment and the future growth potential of that property would have been baked into the share price. Financing has been a big concern for many operators and it's highly unusual to see what amounts to a lack of financing cause share prices to leap BECAUSE a company won't get funding.

Only a few factors I can think of to explain. One being shorts covering figuring that was the bottom for the stock (when they cover, they buy which puts upward price pressure). And such short-covering can cause a chain reaction.

The bigger factor was probably fears of bankruptcy or a secondary equity offering (which leads to dilution) to finance it, both of which likely have crushed valuations recently. So that probably explains it. A very cynical view would be, since many investors tend to look out only 12-24 months (or less), such action is actually positive for earnings because they expected the new property to lose money, at least early on, not to mention the financing and development costs. But what about the interest on the sunk costs they've already dumped into the project? 20% up just doesn't make much rational sense. Very bizarre for what amounts to very negative information on future growth to cause a pop in the stock.

But, wow, casino stocks are not a place for the feint of heart these days.

[desertsun41]

Originally Posted by dynimagelv

Most will have to move back home

But there ain't no work there either.

[RandalR]

Originally Posted by ClarkGrisowld

But what about the interest on the sunk costs they've already dumped into the project? 20% up just doesn't make much rational sense.

Even worse, they tore down Stardust for nothing. It was making money and not using the whole property...with a little foresight they could have left it up while building out the main Echelon towers about where Delano and Mondrian were going to go, then torn it down later and put those two on the north end of the property. Would have saved them money, even if the high rolling L.A. drug dealers staying at the boutique hotels ended up having to look at a 100 foot high insane clown outside their windows.