'Below-the-radar' New Orleans hotel owner steps reluctantly into limelight to oppose Harrah's deal
Tyler Bridges | The Advocate, Baton Rouge, La. | April 16, 2018 3:39pm
April 15--Joseph Jaeger Jr. is the most successful New Orleans businessman you've never heard of.
It's not because he doesn't have a compelling story to tell. He does. He spent his early childhood in the Lower 9th Ward, dropped out of college in the mid-1960s, and went from an apprentice plumber to owning the company he worked for -- and then selling it for a mint in 2015.
Now he's the biggest hotel owner in New Orleans, with a dozen more lodging and tourism projects in the works.
And while Jaeger has always avoided the limelight, he has stepped into the public arena this year for the first time, not to promote a business deal or a new hotel, but to fight a bill in the Legislature that he says is bad for taxpayers.
Jaeger (pronounced YAY-ger) has emerged as the biggest critic of legislation pushed by a team of lobbyists for owners of the Harrah's casino in New Orleans. House Bill 553 would give Harrah's a no-bid, 30-year extension of its exclusive license to operate a land casino in New Orleans in exchange for the company's promise to invest $350 million to build a new hotel and other amenities and to increase its annual payments to the state by about 10 percent.
Jaeger thinks state lawmakers should push for a much better deal, and he is trying to persuade them to insist on better terms, especially since the state is so short of money for health care, jails and public education.
HB553 blew through the House with little opposition -- Speaker Taylor Barras, R-New Iberia, is the sponsor, and Harrah's lobbyists made sure to secure lawmakers of all political stripes as co-sponsors -- and is now awaiting a hearing before the Senate Judiciary B Committee.
Jaeger visited the state Capitol for only the second time in his life on a recent Tuesday to buttonhole senators and was invited to the fourth floor, where he spent 20 minutes outlining his concerns to Gov. John Bel Edwards.
Jaeger first aired his criticisms in a letter to the editor of The Advocate last month.
"At a time when budget cuts could force the closure of hospitals and layoff of educators, and as the Legislature debates how to raise taxes on Louisiana citizens," he wrote, "we cannot let the state lose out on the $500 million of revenue it could earn when it authorizes a 30-year contract for the downtown New Orleans casino."
Dan Real, Harrah's general manager, noted that Jaeger is virtually alone in the business community in publicly expressing opposition to a measure that the company says will create 600 construction jobs and 500 permanent jobs.
The Louisiana Restaurant Association, the Greater New Orleans Hotel & Lodging Association, the New Orleans Chamber of Commerce and other business groups -- plus the Greater New Orleans AFL-CIO -- have written letters of support, citing the planned investment, which includes a 340-room hotel.
"He's going against the grain of the entire hospitality industry," said David Satz, a senior vice president and attorney for Caesars Entertainment, Harrah's parent company.
Jaeger's decision to launch his public crusade has shocked friends.
"He's a below-the-radar kind of guy," said Barry Kern, who co-owns Mardi Gras World with Jaeger. "He doesn't like attention. He keeps his head down and does the work."
Indeed, it took repeated requests over a week before Jaeger agreed to sit down for an interview. He has shunned the press for 40 years, he said. And he initially rejected a request to take photos of him, fearful that the focus on him might overshadow the work of his employees and his business partners.
At 71, Jaeger is behind his desk by 7 a.m. He gets his hair cut at 6 a.m. to avoid interfering with his work schedule.
"I juggle a lot of balls, and I'm a workaholic. I like to be hands-on," he said in the interview, which stretched to three hours.
Jaeger seems just as surprised as his friends that he is leading the charge against the Harrah's deal.
"I've never gotten involved in anything like this before," he said. "I've never been involved in anything controversial."
Jaeger dismissed speculation that he is challenging the Harrah's deal because it might hurt his hotels or his planned projects or that he is trying to elbow his way into owning a share of the casino to be operated by Harrah's or another company.
"At the end of the day, somebody is going to criticize Joe," he said. "That's OK. I'm at a point in life that I don't really care because I do the right thing. I believe in fairness."
Jaeger also ruled out partnering with another casino company if lawmakers reverse course and force Harrah's to bid for the extension of the casino license.
However, some of what he is asking of Harrah's would undoubtedly help his business interests. For instance, he wants the company to pay for extra police protection in the French Quarter, where he owns boutique hotels.
'A deal junkie'
Jaeger sat for the interview at the head of a conference table at his office on North Causeway Boulevard, in a building he owns that formerly housed the University of New Orleans' Metairie campus.
To his left, nearly scraping the ceiling, was a towering steel figurine that Jaeger believes came from one of the "Transformers" movies, something he bought at an auction as a symbolic reminder of his business philosophy.
"We transform dreams into reality," he said.
Jaeger told a story about his first dream house, half of a double in Mid-City. He rented it at 19 with a bride and a toddler. All of the furniture was used. The coffee table had three legs and a concrete block to prop it up. The couch was from the Salvation Army, left behind by the previous tenant. But the place was a step up from what Jaeger had known, and it was the envy of friends.
A graduate of Holy Cross School and the son of a federal government employee, Jaeger had dropped out of Southeastern Louisiana University after 18 months and was working as an apprentice plumber in New Orleans at Mechanical Construction Co. This meant crawling under buildings to fix the plumbing and carrying out other dirty jobs.
His supervisors soon made him a foreman. He worked far longer and harder than anyone else.
They also realized that Jaeger had a good head for numbers. When he was 10, he was helping his father manage the payroll and books for several small companies.
As his career prospered, he would see business opportunities before others did.
"It takes him 15 minutes to watch '60 Minutes,' " joked Lenny Wormser, a hotel broker who calls Jaeger "a deal junkie."
Soon Jaeger was president of MCC, and by 1983, 18 years after starting there, he owned the company. Over those 18 years, MCC had grown from 25 employees to 200.
Throughout, Jaeger practiced an old-fashioned paternalistic style meant to reward and retain employees with generous bonuses.
He treated everyone as integral to the overall company effort, telling his employees, "The inner workings are like a clock. There are big gears and little gears. If little gears are broke, the company doesn't work."
He viewed himself as the leader of the team and insisted on airing all views before making a big decision.
"We shut the door and discussed things in a democratic environment," Jaeger said. "But when I said go, then it was a dictatorship."
In that same vein, his sick-leave policy in the early days was to tell employees not to get sick.
Working for Jaeger is not for thin-skinned people.
"You don't ever have to worry about what I'm thinking. I'll tell you," he said. "If you're worried about what I say, get over it."
He also wants his employees to tell him exactly what they are thinking rather than complain to others behind his back: "Why have all this pent-up anger or dissatisfaction?"
By the 1990s, MCC was installing the heating and ventilation systems on new buildings throughout the South, including casinos in Mississippi.
He sold MCC in 2015 to Bernhard Capital Partners, a Baton Rouge-based company, for an undisclosed price. By then, MCC had between 800 and 1,500 employees -- depending on the size of its projects -- and annual revenue of $250 million.
"To take the next step and really make it a lot bigger was not necessarily what I wanted to do," Jaeger said.
Besides, by then, he had developed a deep romance with real estate.
Jaeger had begun buying property on the side when he was 21. He and a friend purchased a house for $6,000 and sold it for double that price six months later.
Today, he owns 15 hotels in and around the French Quarter, plus the Crowne Plaza New Orleans Airport Hotel in Kenner. The Royal Orleans and the Omni Riverfront -- which he owns 50-50 with hotelier Darryl Berger -- are the only ones in which he doesn't own a majority share.
His business partners and friends say a handshake is enough to seal a deal with him.
"I'd do any venture with him. I trust him," said "Boysie" Bollinger, who owned a shipbuilding company and spent years with Jaeger in the New Orleans chapter of the Young Presidents' Organization, an international organization.
In most cases, Jaeger renovates hotels using his deep knowledge of contracting, with an assist from taxpayers through the use of state and federal historic rehabilitation tax credits.
In 2012, he bought the Jung Hotel, which had been vacant since Hurricane Katrina. In 2017, after a $145 million development, he reopened the Canal Street property as an upscale hotel that has won rave reviews.
"He went in courageously with all fours on the Jung," said Pres Kabacoff, another developer. "It's a complicated business. He's a talented guy."
In all, MCC Group, which Jaeger owns with his two sons, Ryan and Joey, controls 51 commercial properties, with about half in New Orleans and the others mostly in surrounding parishes. He has designs to develop 13 properties in New Orleans, with several slated to be hotels and others to be tourism-related museums.
On Thursday, he stood by Mayor Mitch Landrieu as Landrieu announced that a company called Drive Shack will lease the former home of The Times-Picayune newspaper from Jaeger and three partners to create a high-tech golf and entertainment venue
The city is "stale," he believes, and needs more attractions.
'Not going to pout'
Of late, Jaeger has turned a portion of his attention to the Harrah's deal. He questions why state legislators would renew the contract now, six years before it expires, instead of putting it out for bid in a few years to see how much more money the state could receive.
He notes that Harrah's executives offered an upfront payment of $125 million to the state in 1994 to get the original 30-year license but are offering nothing upfront now for the 30-year extension.
Satz, Harrah's attorney, said the $7 million per year in additional payments that the company is offering the city and state is roughly equivalent to the $125 million when inflation is factored in over time.
Jaeger also asks why the state hasn't done an independent analysis of the Harrah's deal.
At the state Capitol earlier this month, Jaeger met with half a dozen senators, including Danny Martiny, a Republican from Kenner who is listed as one of the Harrah's bill's co-sponsors. It's not clear whether Jaeger is winning any converts.
"Why are you all doing this six years early?" he asked Martiny. "I don't know," Martiny said he replied. "I haven't been actively involved in that thing."
After Jaeger met with Edwards, a spokesman said the governor still supports the legislation.
Jaeger said he will turn back full time to his business projects if senators ignore his arguments and don't insist on more money from Harrah's.
"I'm not going to lose any sleep," he said. "I'm not going to pout. I will have done my job trying to make sure everybody is educated as best I can try it."