In the span of six months, Las Vegas nightclub KAOS signed DJ Marshmello to an unprecedented $60 million two-year residency, abruptly dropped the deal, and then, on Tuesday, announced it would be shuttering entirely.
KAOS Nightclub and Dayclub, which is part of the Palms Casino and Resort, signed Marshmello to the contract in April and was rumored to be paying the artist as much as $600,000 each performance weekend; in late September, the club released the DJ from the contract early, amid several abrupt changes to its executive team. (Both the Palms and Marshmello’s management team declined to comment on the cancelation.) While Tuesday’s closure announcement did not name specific deals or acts, the Palms’ parent company, Red Rock Resorts, said that its decision was based off untenable entertainment expenses.
Red Rock Resorts, which owns both the Palms hotel and KAOS, reported a $26.8 million net loss in its third quarter on Tuesday, and its CEO Frank Fertitta said on an investor call that market conditions for Vegas nightclubs have been difficult. It “doesn’t appear that the market has grown enough for the amount of supply,” he said, and “the cost of entertainment is excessively high and we just made the decision to focus where the fish are.” A press release stated that the $26.8 million loss was largely due to “one-time charges relating to the termination of certain artist performance agreements and employment arrangements at the Palms” and called the Palms’ business expenses “challenging to date, due in large part to the entertainment and fixed cost structure associated with KAOS.”
While neither Red Rocks, Palms, nor KAOS have discussed the specifics of Marshmello’s contract cancelation, a source close to the situation tells Rolling Stone that it was both the result of an internal investigation into executive management and the realization that the club was not bringing in nearly enough money to cover employee salaries, overhead costs, and Marshmello’s fee. Many employees were promised bonuses that were unable to materialize because so much of the club’s revenue was going to that single DJ fee, the source said.
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An internal Palms memo obtained by Rolling Stone said the Palms hotel has decided to “take some time to reassess the programming and use of these venues going forward,” and that in the meantime the dayclub and nightclub will be used for pool operations, private meeting space, and special events. All KAOS positions will be eliminated within 60 days, according to the memo; those who choose to terminate their employment this Friday will receive two weeks of severance.