Monday, April 19, 2010

Foxwoods Philadelphia Project Seeks New Investors

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This installment of The Tribes In The Media is an article in The Philadelphia Inquirer on the Foxwoods Philadelphia group who is looking for new investors since Wynn Resorts said they were not interested.

Foxwoods partners seeking new investors
By Jennifer Lin
Philadelphia Inquirer
April 18, 2010

With Las Vegas casino developer Steve Wynn out of the game, the local partners in the Foxwoods Casino project are talking to more than one investor group about taking his place, according to sources familiar with the venture.

One of the groups is said to involve several investors from Philadelphia and is being assembled by Gregory Weinberg, a local entrepreneur who was a real estate developer in Atlantic City during the 1990s.

Who might replace Wynn "is premature to discuss," Stephen A. Cozen, a Foxwoods lawyer, wrote in an e-mail reply to The Inquirer. "We are working on the options with several folks, but we have no intention of discussing it publicly."

For the South Philadelphia casino, time is running out.

In 11 days, Foxwoods' lawyers must appear before the Pennsylvania Gaming Control Board to present a plan to salvage the waterfront project on Columbus Boulevard between Tasker and Reed Streets.

The seven-member panel could give the Foxwoods team more time to work out a deal, or revoke the $50 million license, opening the possibility of a new round of bidding for a different site.

The Foxwoods project won one of the city's two slots licenses in 2006. The Mashantucket Pequot tribe was supposed to raise money to build the casino and run it, but the tribe has had to take a backseat because of financial problems back home in Connecticut.

Wynn, the founder and chairman of Wynn Resorts, emerged in March to revive the stalled project. But he abruptly pulled out of the deal April 8. According to people familiar with the situation, the Las Vegas operator concluded that the Philadelphia project was too complicated to pursue.

"The hope is they can move this forward without the project and license withering on the vine," said Alex Picou, a gaming expert in New York for the investment bank KeyBanc Capital Markets Inc.

The gaming board expects to discuss Foxwoods at its next public hearing April 29 in Harrisburg, board spokesman Doug Harbach said, "but I'm not sure what shape the discussion is going to take."

The Foxwoods project includes the charitable trusts of two prominent friends of Gov. Rendell's: Center City developer Ron Rubin and New Jersey lawyer Lewis Katz. A third Rendell friend - Comcast-Spectacor chairman Ed Snider - has pledged his profits to charities.

With Wynn, the local investors and the tribe would have given up control in return for Wynn's developing, financing, and operating a casino.

If the Foxwoods partners can attract new investors, their first order of business will be to ask regulators for an extension of their license.

The existing license calls for 1,500 slot machines to be operating by May 2011. The gaming board's chief enforcement counsel, Cyrus Petri, testified at a board meeting April 7 that he had "no confidence" the partners could meet that deadline.

The state's new gaming law allows them to seek an extension through December 2012 - a provision Cozen lobbied for during closed-door drafting of the gaming bill last fall.

Gaming experts say it is unlikely that a recognizable gaming company such as Harrah's or Penn National would step in. Both operators already own casinos in Pennsylvania - Harrah's in Chester and Penn National in Dauphin County - and are limited by law to a 33 percent stake in a second project.

A more likely scenario, experts say, is for a group of investors and lenders to team up to pump money into the project, with a casino operator hired to manage the facility.

State Sen. John Wozniak, a Democrat from the Johnstown area, has proposed another option: Strip Philadelphia of its second license and put it on his side of the state.

"There comes a time when you have to pull the plug," Wozniak said in an interview.

But redrawing Pennsylvania's gaming map would be more complicated than it might seem. Other lawmakers say it would require reopening the gaming act just passed in January after three months of wrangling.

State Sen. Lawrence M. Farnese Jr., a Democrat whose district includes the Foxwoods site, would prefer that the gaming board select the operator - but allow the city, with public input from stakeholders, to pick a better location.

The Foxwoods project faced immediate backlash from neighbors when it was selected in December 2006. In the commercial corridor of Columbus Boulevard, the proposed casino would draw tens of thousands of cars a day.

"We all agree on one thing: that's not a good site for a full-blown casino," Farnese said, speculating that "Steve Wynn came to the same conclusion. You can't build that particular project at that location because of the congestion and traffic."

Farnese said he wouldn't count Wynn out. He would not be surprised, he said, if Wynn made an independent bid on a site "where he wants to build his casino - not where he has to."