As you may have heard, Deutsche Bank owns a casino (/hotel) in Vegas, called the Cosmopolitan. The Germans never intended to run the joint, originally merely funding the project by developer Ian Bruce Eichner but in 2008 Eichner had to go and default on his loans. No one else wanted to invest in the place, so DB decided to man up and finish the job itself, laying out an additional $3 billion of its own money. Allowing themselves to get momentarily excited, Deutsche scrapped Eichner's plans and hired its own team of gambling and real estate experts, architects and interior designers. The Cosmpolitan now includes "a three-story crystal-strewn bar meant to evoke the inside of a chandelier" and guests in its hotel reportedly love the massive rooms that typically sell-out. Unfortunately, the bank is nowhere near close to breaking even on its investment (and lost $139.5 million in 2010), which might have something to do with the fact that no one is gambling there. Instead, visitors think of it more as a place to eat dinner, get drunk, and then vomit while waiting to get into a club.
The Cosmopolitan is missing just one major component: a deep base of gamblers. It is betting on a relatively young demographic, a challenging crowd that usually prefers partying. On a recent Saturday night, the casino was almost empty as visitors flocked up one flight to the Marquee nightclub, where one inebriated partygoer threw up in line.
Also not helping? The fact that the upper echelons of Deutsche Bank management think they're too good for the place.
The Cosmopolitan created a risqué advertising campaign featuring farm animals and proclaiming that the casino had “just the right amount of wrong.” But senior officials in Germany felt that the commercials were too “racy for a bank,” said a former Deutsche staffer who spoke on the condition of anonymity. Despite Deutsche’s concerns, the Cosmopolitan ran the ads. The bank’s senior management has also kept a low profile in Las Vegas. Its chief executive, Josef Ackermann, has visited the Cosmopolitan only twice in recent years. He was also notably absent from the opening party, a $12 million affair on New Year’s Eve with A-list appearances by Beyoncé, Coldplay and Jay-Z.
According to mostly everyone (except DB spokesman John T. Gallagher, who said in a statement that the bank believes the Cosmopolitan will become "an outstanding business, and serve our shareholders well"), this thing will not end well. One former employee, Bill Lerner, now an analyst with the Union Gaming Group noted that "there has to be pressure on Frankfurt," and, feeling the need to really kick his old pals while they're down, added: “With the world coming to an end in 2008, I wouldn’t have done that project if someone had a gun to my head." Lerner then finished his analysis by concluding, "When you build a $4 billion casino in the middle of the Strip, it is important to have a base of gamblers-they have zip."
While his need to put something that is not lost on anyone, including Deutsche Bank, in the most awesomely prickish way possible seems harsh, perhaps this was just Bill's way of lighting a fire under his former employer's ass? Prove him wrong, force all your first years and friends to lose their bonuses through 2014 here, etc?