Boyd Gaming to build $4 billion Las Vegas complex

Boyd Gaming Corp. will close the Stardust casino on the Las Vegas Strip to develop a $4 billion resort and convention complex that will open in 2010, one of the largest developments ever in the city.

Boyd will build and operate the $2.9 billion Echelon Resort and operate hotels and retail space with partners including Shangri-La Hotels Bhd. The development will include 1 million square feet of meeting and convention space, Las Vegas-based Boyd said Wednesday in a statement.

The entire resort, Echelon Place, will add another 5,300 hotel rooms as casino companies build in Las Vegas to meet record demand. MGM Mirage, the world's No. 2 casino company, is constructing condominiums, hotels and a casino on 66 acres it owns on the Strip in a $5 billion complex. Venetian owner Las Vegas Sands is building the $1.6 billion Palazzo casino.

"The field of development in Las Vegas is competitive right now, but we like our chances," said Bob Boughner, a Boyd executive who will oversee the project. He spoke on a conference call.

The Stardust, which opened in 1958, will operate through 2006. The casino's earnings before interest, taxes and depreciation have fallen in the past decade as gamblers flocked to newer resorts. Boyd bought the Stardust in 1985, according to Hoover's Inc.

Boughner, chief executive officer of Boyd's Borgata casino in Atlantic City, N.J., will become president and CEO of Echelon. The Borgata casino opened in July 2003 and is co-owned by MGM Mirage. It generated the most casino revenue in Atlantic City through November of last year, according to New Jersey's Casino Control Commission.

Boyd and New York-based Morgans Hotel Group Co. will jointly develop a Delano and Mondrian hotel on the Stardust site for a total of $700 million. Morgans Hotel will operate both properties. The Shangri-La hotel will be built and owned by Boyd and managed by Hong Kong-based Shangri-La. Boyd is seeking a retail partner to help build and manage 350,000 square feet of stores and restaurants.

The new resort will sit within walking distance of the city's convention center. Las Vegas, which hosts 38 of the largest 200 U.S. conventions, can attract more meetings, said Boughner.

Boyd will have pretax costs of as much as $60 million in the first quarter of 2006 related to closing the Stardust. Rating agency Standard & Poor's changed its outlook on Boyd to "stable" from "positive," saying that the scope of the Echelon is bigger than it expected.

Shares of Boyd fell $2.31, or 4.8 percent, to close at $46.09 Wednesday on the New York Stock Exchange. It was the biggest one-day decline since October.

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Contributing: Matt Nesto