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Detroit's Greektown Casino Has Been Days Late and Millions
 of Dollars Short;  Owes Creditors and Lenders $777 million
By Mary Francis Masson, Detroit Free PressMcClatchy-Tribune Regional News

April 5, 2009 - From the outset, Greektown Casino has been days late and millions of dollars short.

The ching-ching-ching of slot machines rang out first at MGM Grand Detroit's temporary casino in July 1999. Five months later, MotorCity Casino got into the gaming groove.

But it wasn't until November 2000 that Greektown Casino took its first bets.

In October 2007, MGM Grand unveiled its $700-million permanent casino and hotel. Five months later, MotorCity opened its permanent facility.

But Greektown didn't open its 400-room hotel until February, the last piece of its permanent building.

This weekend, all three downtown casinos are full of Final Four revelers, with Greektown located closest to the Ford Field games.

"We're very optimistic," Randy Fine, a Greektown turnaround consultant, said Friday as crowds milled through downtown.

But one slam-dunk event won't erase the $777 million that Greektown owes creditors and lenders.

The owners of Greektown Casino, the Sault Ste. Marie Tribe of Chippewa Indians, filed for bankruptcy protection about a year ago.

It's still a good bet

Most gaming insiders say Greektown, which repeatedly has generated more than $300 million in annual gaming revenue, still is a good bet. There's so much potential that multiple bidders are trying to buy the property as part of its bankruptcy reorganization.

Things moved too slowly at Greektown, gaming insiders say, complicated by out-of-town tribal ownership that didn't make quick decisions, adding delays that only dug the tribe deeper into debt.

"They were trying to run the casino by committee from five hours away," said Fine, managing director of Las Vegas-based the Fine Point Group, hired by Greektown to manage the casino.

"They live close to their tribal casinos. Proximity is important. You've got to be around."

In a prepared statement, tribal Chair Darwin (Joe) McCoy said, "Greektown has a bright future ahead of it."

McCoy pointed out that the bankruptcy was filed before he became tribal chair, adding his board is working to be decisive. "Just as the city of Detroit has had its own issues with previous administrators, the tribe has as well," he said.

In a March 6 tribal newspaper Win Awenen Nisitotung, Dennis McKelvie, a tribal board member, wrote that Greektown was a great idea.

"It is a gold mine. Unfortunately, we may not be the ones to prosper from that mine. ... It is a business that would be supplying the tribe with millions of dollars per year if the debt did not exist," McKelvie wrote.

The Sault tribe has significant gaming experience. It opened Kewadin Casinos in 1984 and now operates six Michigan casinos including Greektown. The tribe reported a 2.5% increase in profit during 2008 at its five northern Michigan properties, despite a 4% drop in revenue.

But at Greektown, the tribe can't pay the bills, despite an operation with strong gaming revenue. Since filing for bankruptcy in May, the casino says it has lost more than $142 million.

'They were innovative leaders'

The tribe has been well regarded as a casino operator.

"Early on in the history of gaming, they were the front-runners, they were the first to move toward opening a casino. They were innovative leaders in the gaming movement," said Tom Shields, president of the Lansing-based Marketing Resource Group.

"But there were an awful lot of requirements put on all three of these casinos in Detroit. It was a lot different than operating on your own reservation."

That difference began with the Michigan Gaming Control Board. The board refused to license two of the investors initially involved with Greektown -- Ted Gatzaros and Jim Papas.

The tribe had to buy them out, starting out with $265 million in debt.

It took another $180 million to build the temporary casino and hundreds of millions more to launch the permanent casino.

The tribe had operated with little debt from its other Michigan casinos and didn't manage it well, said a person with knowledge of Greektown's finances who wished to remain anonymous because he fears repercussions.

The tribe's decision-making was slow, the person said, and it put off dealing with payments to Gatzaros and Papas.

That spurred financial problems and resulted in an agreement with the gaming board allowing regulators to force a sale if financial milestones weren't met.

Delays in construction

But the finances still could have worked if construction had continued on a time line that got the casino done by December 2007 and secured a state tax rollback by January 2008, the person said.

However, a tribal chair took Greektown management off the construction project and appointed someone from the tribe's Kewadin casino operations.

"He stopped the project from February 2006 to May 2006," the person said.

The person said the tribe was presented with a $750-million bid from a national gaming company about June 2006 to purchase Greektown.

The deal would have given the tribe $225 million in profit, the person said.

McCoy said the tribe has "neither rejected or approved any offer of $750 million."

Gaming experts say the casino is an attractive property that will sell in its bankruptcy proceedings.

Tom Celani, a Bloomfield Hills businessman and investor, is one of those interested in buying Greektown. He says it can work.

"It's difficult to manage a casino from northern Michigan. And they were debt-ridden from day one," Celani said. "Everything multiplied against them. ... But there is tremendous potential."

Contact MARY FRANCIS MASSON: 313-222-6159 or mmasson@freepress.com

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Copyright (c) 2009, Detroit Free Press

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