Industry Insiders React To Harrah’s Putting Biloxi Plans On Hold
Palace Casino General Manger Keith Crosby understands well the challenges of casino development in post-Katrina Biloxi.
“Escalated construction costs are obvious,” says Crosby. “It’s something we’ve encountered and wrestled with ourselves.”
But he feels there may be an even bigger reason why his casino neighbor Harrah’s is delaying its September 2005 pledge to “build something spectacular” where the Biloxi Grand Casino once stood.
“The Choctaw development,” says Crosby. “And that is a significant development that, we’ve been saying for the past two or three weeks, is going to have an effect on the development over here in Harrison and Hancock County. And, I think, what you’re seeing is the first evidence of that.”
“Yeah, this was it. This was casino row,” former President and CEO of Treasure Bay Casino Bernie Burkholder says while standing along side Highway 90. “This is where it was all happening.”
He believes Harrah’s reluctance to move forward in Biloxi is a blow to the area’s recovery.
“If I were an operator on this end of town, I would want that energy back. I would want that synergy.”
Burkholder says another factor to consider is Harrah’s ownership or control of so much east Biloxi property. He says that effectively means that unless, or until they rebuild, no one else can either. And that would bring further development along Biloxi’s Casino Row to a virtual standstill.
“They’re buying Casino Magic,” says Biloxi Mayor A.J. Holloway. “They’re buying property from all the way from Oak Street to Pine Street, all the way to Howard Avenue.”
That’s why Mayor Holloway believes something spectacular is still coming, only later rather than sooner.
“They own a tremendous foot print right now. So I don’t think they’d continue buying if they didn’t have some plans there.”
Mayor Holloway also speculates that a proposed buyout of Harrah’s by two private equity firms may have also played a part in the delay.
by Don Culpepper WLOX
Casino officials cite volatile marketplace
BILOXI – Harrah’s Entertainment is backpedaling on, or at the very least delaying, its commitment to build a world-class casino resort in Biloxi.
High construction costs, a volatile marketplace and uncertainty over a proposed Choctaw casino were cited as factors by company officials.
Gary Loveman, the company’s chief executive officer who pledged in September 2005 that Harrah’s would build something “spectacular” if Mississippi changed state law to allow Coast casinos on land, said Wednesday plans for Biloxi are on hold. The company had been expected to release details on its expansion plans midyear.
Loveman, in a conference call with investors, did not say whether the proposal of two private equity firms to buy the company played into the Biloxi plans. At the onset, Loveman said he and other executives would not comment or answer questions about the proposed buyout. He did mention “spiraling construction costs” as a concern.
“We continue to look at our options in Biloxi,” Loveman said. “We don’t have anything to tell you right now.”
Harrah’s has entered into an agreement to buy the Casino Magic property next to its Grand Casino property and continues to acquire small parcels of residential and commercial land on Point Cadet for future development. Deed transfers continue to be recorded at the Harrison County Courthouse in Biloxi, including one that was filed as recently as Monday.
“Over some period of time, there will be something new,” Loveman said. “We have a very competitive land position that is as good as any or better than any. The time at which we would wish to pursue – that is really the question.”
Harrah’s, which had the most slot machines and table games on the Coast with two casinos before Hurricane Katrina, is now a small player. It sold its Gulfport property for $55 million to Rick Carter and Terry Green, who converted the Oasis Hotel into one of the Coast’s largest casinos and are continuing to expand.
Harrah’s reopened the Biloxi Grand Casino inside its hotel on the north side of U.S. 90 in mid-August. Its opening apparently did little to grow the market that month. Gross gambling revenues dipped from the month prior.
Harrah’s does not report earnings by property. Instead, the company lumps revenues into regional totals. Company executives did say Biloxi revenues have been “encouraging.”
Anthony Sanfilippo, president of Harrah’s operations in the central United States, said the company had assumed a “terrific footprint” in Biloxi for future expansion.
“The economics that will drive our ability or our decisions to expand do center around the cost of construction to do so,” Sanfilippo said. “We have seen in the last six to nine months extreme escalation broadly, not only on the Gulf Coast, but throughout the U.S. in the cost of materials and cost of labor. We continue to work on a master plan that will allow for future expansion. We look closely at economic conditions on the Mississippi Gulf Coast, which also include the potential changing landscape in new casino projects.
“Specifically, we’ve been watching the evolution of the potential Choctaw casino and the impact such a project may have directly on Biloxi.”
Harrah’s earnings
Harrah’s Entertainment reported third quarter earnings of $178.3 million or 96 cents per share. Analysts were expecting earnings of 99 cents per share. Gary Loveman, the company’s chief executive officer, said Atlantic City properties were weak because of a three-day shutdown over a state budget impasse and aggressive marketing by the company’s competitors.
“Clearly, Atlantic City was our Achilles’ heel this past quarter,” Loveman said.
Harrah’s is spending hundreds of millions of dollars to expand its presence in Atlantic City, while the company’s plans for Biloxi are on hold.
By TOM WILEMON – Sun Herald
Planning Commission Votes For Waterfront Zoning Change In D’Iberville
In D’Iberville Tuesday night, the Planning commission voted unanimously for a zoning change that could lead to a casino and other developments east of the 1-110 bridge.
Right now casinos can locate in D’Iberville west of I -110. Now, if the city council approves the recommendation from the planning commission, casinos will also be legal east of 1-110.
“The border’s of course, going to be Jackson County. Northern boundary’s going to be Quave Road, Gorenflo Road, and across to Rodriguez,” said City Manager Richard Rose.
It’s not just casinos that would be able to locate there, but also condos and other retail developments. As for people who lost their homes and want to rebuild in that area, they can do so under existing zoning laws.
Before the vote, residents had a chance to comment. No one opposed the zoning change.
“After this storm, it occurred to me that we could have a casino on either side of the bridge. We could have ourselves a nice little gateway to Biloxi’s monopoly,” said one resident.
Another resident saic, “We lost everything. We’re still in the FEMA trailer. Insurance gave us nothing. It’s the story in this area of D’Iberville. This will really help a lot of people get on with their lives.”
Any gaming establishment there would still have to follow existing state law. That means it could not be more than 800 feet from the waterline. As of right now, Rose says no developer has filed an intent with the city to build a casino east of I-110.
Source: WLOX
