Friday, Feb. 25, 2005 | 10:42 a.m.
The owner of the Fitzgeralds hotel and casino in downtown Las Vegas said he is hungrily eyeing the Strip to expand his gaming business but intends to wait several months before casino-shopping in the hope that skyrocketing prices stabilize.
Detroit-based businessman Don Barden, in town Thursday to celebrate his third anniversary owning the Irish-themed property, also said he exploring the possibility of building a condominium high rise atop the casino to capitalize on the growing popularity of downtown real estate.
"Downtown is being rediscovered," he said. "People are finding that you can visit four to five casinos in 15 minutes."
Barden said "it's possible" that he would have to sell the Fitzgeralds to help pay for a more expensive casino on the Strip. But the property would be "hard to sell" because of its success and history with his company, he said.
"I'm going to wait on prices to settle down," he said. "Prices are way out of whack and there's too much speculation going on."
Some analysts say recent speculation and land prices estimated as high as $20 million an acre has priced most smaller investors -- of which Barden is one -- out of the market.
Revenue at Fitzgeralds' parent company, Majestic Star Casino LLC, was $261.8 million in 2003, including promotional expenses. That year's operating income, which includes casinos in Indiana, Mississippi and Colorado, was $31.4 million. As of September, the company had long term debt of about $311 million. Full year data for 2004 isn't yet available.
The parent company swung from a loss in 2003 to a profit for the nine months ended September in part because of higher casino revenue and the spinoff of the Las Vegas property, which posted a loss for the same period in 2003. The company is in the process of selling its Colorado casino in Black Hawk for $66 million.
Strip casinos, even older properties such as the Sahara and Riviera, could be worth several hundred million dollars each based on appreciated land value rather than operating performance, analysts say.
Also Thursday, Barden said he is "very much" interested in investing in a Detroit casino but said it's unlikely that would come anytime soon.
MGM Mirage is in the process of selling either its MGM Detroit casino or Mandalay Resort Group's part-owned MotorCity casino in Detroit to satisfy Michigan gaming laws in its pending acquisition of Mandalay. Barden said he won't be part of the bidding process because MGM Mirage is looking to expedite the deal by selling to a party that is already has a casino license in Michigan. Marian Ilitch, co-owner of the Detroit Red Wings hockey team and a 25 percent owner of the MotorCity property, is the likely buyer for that casino, he said.
After his bid was turned down in 1997, Barden criticized the bidding process that resulted in only three Detroit casinos.
But Thursday, Barden said he didn't feel shut out of the process.
"That's their prerogative," he said of MGM Mirage's dealings with Ilitch. "They have ready buyers and they're looking to do this in the most expeditious way."
Barden said it's possible that Detroit might open the market to more than three licenses but said that probably wouldn't happen for years.
The Fitzgeralds' financial performance is no longer public after the property was spun off into a private affiliate of Majestic Star at the end of 2003. The transaction removed the casino as collateral for the company's outstanding loans and allows for greater financial flexibility to pursue upgrades and expansions, officials said. The property's value was written down by $10 million at the time of the spinoff, though Barden said performance has improved.
The Fitzgeralds, bought out of bankruptcy in December 2001, turned a profit after just one year, Barden said. Profit at the property doubled last year, he said.
Barden said he is also interested in expanding into other states that are considering casinos, including Pennsylvania and Maryland. Barden expects to submit a bid this year to operate a casino in Pennsylvania, which has already legalized slot machines. Maryland is considering legislation to allow slots.
"We think our chances are excellent" in Pennsylvania, he said. "We think we've found people like the way we do business."
Barden said he isn't likely to develop a casino in Ohio, the state where he got his start investing in real estate. A number of casino companies have expressed interest in the Buckeye State but it soundly defeated casino legislation in 1996 and isn't considering a gambling bill for commercial casinos. The governor is also opposed to gambling expansion. The remaining option, opening and managing tribal casinos, is a "long, arduous" process that can take years, he said.
Though the Fitzgeralds was purchased in December, the downtown property celebrates its anniversary each February in a nod to Black History Month.
Barden, the ninth of 13 children, is the first black in the country to own a casino company.
The property on Thursday kicked off a celebration featuring celebrities including Kim Fields, Richard Roundtree and Omarosa of the TV show "The Apprentice." Celebrities will speak with elementary school students at Kermit R. Booker School today and the Fremont Street Experience will host a "Taste and Sounds of Soul" street fair featuring black-owned eateries, local entertainment and an art exhibit. The property also inaugurated the Don H. Barden Achievement Awards recognizing locals in education and business.