Las Vegas- Sex sells.
And on Monday, it carried a price tag of at least $35 million.
To resolve a dispute over control of the Sapphire Gentlemen's Club, District Judge Elizabeth Gonzalez had ordered an auction of the 70,000-square-foot strip club and the 6.2 acres of land underneath it.
The auction was scheduled for Monday at 2 p.m. inside Gonzalez' courtroom at the Regional Justice Center downtown. It will place the property at 3025 Industrial Road on the market with a court-assigned opening bid of $35 million. Bids must rise in increments of at least $100,000.
By midday Friday, five parties had put down the $4 million deposit required to participate in the sale. Accountant George Swarts, the court-appointed special master of the auction, said he expected more down payments to trickle in by 5 p.m. Friday, when registration closed.
Swarts said the club's feuding owners, Michael Talla and Pete Eliades, are among the five parties who had put up the requisite $4 million.
Sapphire opened in December 2002, part of a wave of adult-oriented megaprojects that were more Strip than strip club. Developers of Sapphire, Jaguar's, Treasures and the Board Room promised Bellagiolike opulence at their massive clubs, which featured touches such as marble bathrooms, sky boxes, buffets and steak houses.
But Sapphire's owners might have invested more than their auction will net them.
Media reports at the time of Sapphire's opening estimated the club's construction costs at $26 million. Records at the Clark County Assessor's office show the owners paid $14.5 million for the land in November 2001.
David Atwell, a real estate broker specializing in resort properties on and around the Strip, said the $35 million starting price is reasonable if the property is deemed suitable for high rises. Another factor that could add to the property's value: plans for Echelon Place, a $4 billion resort that Boyd Gaming Corp. will develop on the Stardust site across Industrial Road from Sapphire, Atwell said.
But Rodney Tucker, a land broker with CB Richard Ellis in Las Vegas, questioned the opening price. The site is very narrow, which could create design challenges, Tucker said. Also, he added, Echelon Place might not be the ideal neighbor for a high-rise.
"(Sapphire's) position behind the Stardust would lead one to believe its view corridor would be impeded in a major way," Tucker said.
In addition, with the recent failure of several local high-rise condominium projects, Atwell said potential buyers need to perform serious due diligence to see if another luxury tower makes sense.
"We sold three different high-rise sites not that far from (Sapphire), so the area is certainly coming in that direction," he said. "But timing has gotten a little strange because a couple of big deals in the market have backed away. The timing is important. How many high-rises do we need, and what will the market absorb?"
Atwell said one of his high-rise clients is studying the Sapphire site with those absorption issues in mind. Atwell said he would attend the auction to represent the developer if "he gets a little warmer and wants to take a shot at it."
But Atwell said the likeliest scenario would have one of the owners bidding successfully for their former partner's share of the property.
"They put a lot of money into Sapphire -- they wouldn't want to see it go away," Atwell said. "It would be ideal for a major developer to team up with one or the other (partners) to embellish the property with a high-rise, and leave (Sapphire) alone. Only in Las Vegas would something like that work."
Tucker agreed the owners would show keen interest in keeping the property.
"It would be an emotional acquisition based on the premise that the future holds the possibility of a high-rise," Tucker said. "Today, a high-rise is not the best use. It will be difficult to assess the highest and best use until after the Stardust project has matured enough to know how it's going to affect the neighborhood."
Sapphire's owners didn't return calls seeking comment.
Talla is chief executive officer of the Sports Club Co., a Santa Monica, Calif.-based chain of health clubs.
Eliades owns Olympic Garden, a strip club on Las Vegas Boulevard just south of Charleston Boulevard. In June, members of the Eliades family bought for $5 million the site of the nearby Del Mar Hotel, at 1411 Las Vegas Blvd. South. The hotel was demolished, and family members said at the time that they would likely build a condominium project there.
