Foxwoods Casino officials announced this morning that they have reached an agreement calling for an infusion of cash and re-negotiated terms with Harrah’s and other current creditors. The deal would allow the long-delayed South Philadelphia project to open in the summer 2012.
The announcement comes the day before Foxwoods faces key oral arguments in a battle to keep its license – something the Pennsylvania Gaming Control Board’s chief enforcement attorney has said should not happen.
Foxwoods’ new agreement for the long-delayed casino project at Columbus Boulevard and Reed Street would also have to be approved by the board. So would Philadelphia Entertainment Development Partners’ target opening date – their current deadline is spring of 2011, but, under state law, the gaming board could grant them an extension up to December 2012.
Philadelphia Entertainment Development Partners said in its press release that under a term sheet reached with Citizens Bank, Harrah’s and other current creditors, the creditors have agreed to “restructure their interests” and Harrah’s has agreed to provide more money in exchange for “a minority ownership position in the property.” Harrah’s would also take on a management role.
Under state gaming law, Harrah’s could not take more than a minority ownership interest, because the Foxwoods site is too close to Harrah’s Chester casino.
“This is an exciting day for Philadelphia, Foxwoods attorney Stephen A. Cozen said in the statement. “This planned transaction enables our investor group to move forward with our project with a view towards opening our doors to the public for gaming within approximately 20 months.
“We have always believed in this project despite the setbacks we’ve experienced,” he said. The press release cautions that this isn’t a done deal.
“Completion of the transaction is contingent upon certain conditions, including without limitation the negotiation of definitive documentation, receipt of required regulatory approvals, receipt of acceptable financing, and other terms and conditions,” it states.
At a 10 a.m. session in Harrisburg tomorrow, the gaming board will hear testimony to help it decide whether it needs to hold a full revocation hearing, or it can decide – based on existing evidence – whether Foxwoods should keep or lose its license. The board also has the option to vote on revoking the license.
Despite the announcement that a term sheet has been signed, the PGCB will not consider any decisions related to new financial agreements, deadline extensions, or anything else beyond the original intent of the hearing, board spokesman Doug Harbach said in an email.
“We will be pursuing a dual track in this matter and oral arguments on the pending motions for summary judgment will be heard tomorrow,” he said. Foxwoods “could acknowledge the deal since circumstances have changed since the motions were filed, but that is not the subject matter to be heard tomorrow.”
Harbach confirmed that the board has received documents related to Foxwoods’ new deal. Additional documents are expected to come in, he said. “Staff will need time to review before any board action could occur,” he said.
The Philadelphia Entertainment Development Partners include the Mashantucket Pequot tribe in Connecticut and charities of the families of local businesmen Lewis Katz, Ron Rubin, and Ed Snider.
When the board first approved Foxwoods’ license, it considered the expertise in running a casino that the Mashantucket tribe would bring – they operate a casino in Connecticut. But the Mashantucket have fallen on tough financial times, and their role in the Philadelphia project has diminished.
Harrah’s is the second replacement Foxwoods has found. Last spring, Las Vegas casino mogul Steve Wynn came to town, showing both the gaming board and city officials his physical and financial plans for the casino. Wynn, too, had a term sheet with the Foxwoods team.
Gaming board members seemed glad to have Wynn on board, but some also expressed caution, saying they had seen agreements fall through before. And, in fact, Wynn did soon pull out of the agreement.
The gaming control board has also indicated it likes the charitable component of the Foxwoods deal. In the statement, Cozen said more money would go to charity under the new agreement.
“We believe that the provisions regarding charity contributions from the partnership have been substantially enhanced,” he said. “In addition to an upfront payment at the time of the opening of the casino, annual payments will be made to charities designated by PEDP from the net revenues of the business.”
Another key player announced back when Foxwoods was negotiating with Wynn days is still in the mix – local real estate developer Dan Keating and his Keating Building Company.
When the Foxwoods team originally annouced Keating’s involvement, the gaming board gushed. Keating built SugarHouse and Pittsburgh’s casino, and the board said they have been impressed with his performance. “This is a fantastic site on the banks of the Delaware with great views. Keating Building Company has been involved in the initial design work and we think this will be a great addition to the Center City entertainment options,” Keating said in the release.
Casinos have received passionate response, both pro and con, from the Philadelphia public.
Advocates have touted the jobs they would bring – when Wynn, appeared before the Gaming Control Board, union members formed a huge receiving line in the capitol and greeted him with loud hoots and hollers, and by wearing cut out masks of Wynn’s face. Some casino opponents, such as Casino-Free Philadelphia, do not want casinos anywhere in the city. They are still fighting to close SugarHouse, which opened recently in Fishtown. They say casinos lead to addiction and crime, and hurt local businesses.
But other opponents just didn’t like the two approved Philadelphia projects’ locations. They wanted the casinos to be sited further away from neighborhoods. They think the waterfront would be better served by different types of development. They worry about traffic.
Philadelphia is in the process of creating a master plan for the redevelopment of the Central Delaware Waterfront, from Oregon to Allegheny Avenues. Currently, there are plans that show the Columbus and Reed parcel where Foxwoods plans to build both with a casino and without one. The “without casino” includes residential developments. Planners say that wouldn’t work so well with a casino there, and so the “with casino” version shows hotels.
Foxwoods says it expects to open with 1,500 slots and more than 70 table games at the facility – PEDP would also need board approval for table games.
According to the press release, the casino would include several dining options, including a Philadelphia steak house and a Philadelphia themed sports bar.
If the board decides at any point to revoke Foxwoods’ license, the casino can appeal to the courts, most likely Commonwealth Court.
Foxwoods’ Chief Executive Brian Ford was listed as the contact person on the press release, but he could not be reached for comment Tuesday morning.
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