Cosmopolitan sued over name, still seeking new owner
by Andy Holtmann
August 1, 2008
Cosmopolitan Resort & Casino.
Currently under construction on the Las Vegas Strip, the property is being sued by the publishers of Cosmopolitan magazine for trademark infringement.
The $3
billion Cosmopolitan Resort & Casino, currently under construction on the
Las Vegas Strip, is being sued by Hearst Corporation, publishers of Cosmopolitan magazine,
for trademark infringement.
The $500,000 lawsuit claims that the use of the
Cosmopolitan name “demonstrates an intentional, willful and bad-faith intent to
trade on the good will of [Hearst Communications Incorporated’s] registered
marks and to cause confusion, deception and mistake in the minds of customers
and potential customers to the great and irreparable injury of
HCI.”
The defendants in the lawsuit — Cosmo Senior Borrower LLC
and 3700 Associates – had yet to respond to the lawsuit as of
presstime.
The trademark infringement suit is the latest setback for
the star-crossed property. Just two years ago, the 2,998-room resort was touted
as one of the “must-see” properties being built as part of the next wave of
expansion planned for the Las Vegas
market. Since then, however, tightened credit markets and an economy in
recession have proven to be formidable roadblocks in the Cosmopolitan’s — and
several other Las Vegas
projects’ — progress.
The original developer of the project, New York-based
businessman Ian Bruce Eichner, defaulted
on a $760 million loan with the financial firm Deutsche Bank. At the beginning
of this year, Deutsche Bank said it would foreclose on the property, but has
reportedly been paying the project’s monthly construction bill since
March.
Strapped with significant debt, but nearly 85 percent
complete, Cosmopolitan has been the subject of increasing speculation as to who
its ultimate owner-operator will be, and several hotel and development companies are rumored to be negotiating to purchase the
project.
So who might be the eventual suitor? Gaming industry
observers and analysts note that MGM Mirage may have both the best motive and
resources to emerge as the Cosmopolitan’s new owner. The 8-acre project site
sits between two of MGM Mirage’s biggest ventures, the Bellagio and CityCenter,
the $8 billion development that, when complete in late 2009, will include
multiple hotels, entertainment venues, amenities, retail, gaming space and
apartments and condominiums.
MGM Mirage hasn’t expressed outward interest. President
and COO Jim Murren has not outright dismissed the idea of taking over the
Cosmopolitan, but told the Las Vegas Business Press it would have to make significant sense for his company
from a financial perspective.
“It’s not something we’re looking at,” Murren said. “We
hope somebody can find a way of fixing this because it doesn't help the Strip, Las Vegas or us to have a
half-finished project sitting there.”
Another possibility could lie with some form of joint
venture between Marathon Asset Management, a New York-based hedge fund that
loaned roughly $125 million to Eichner, and Hyatt Hotels, which had signed on
to be the project’s hotel operator.
Still other interested parties include Starwood Hotels
and real estate developer Related Cos. There is also speculation that other
established casino companies without a Las Vegas Strip presence, such as
Pinnacle Entertainment or Penn National Gaming, may become involved in talks.
Andy Holtmann
holtmanna@bnpmedia.com
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