Monday, September 15, 2008

Ilitch holds celebration marking the end of construction at MotorCity Casino which was over budget and dealyed by almost a year

The Detroit News has reported that the Ilitch-owned MotorCity Casino celebrated the “the completion of a $300-million, three-year expansion and renovation of the site” last Friday, 9.12.08

A press release issued 11.30.05 to coincide with a formal groundbreaking for MotorCity Casino’s renovation and expansion reported the project would be completed in late 2007 and was budgeted to cost $275 million.

That seems to suggest completion of the construction project was nearly a year behind schedule; and, given that MotorCity Casino’s owner Marian Ilitch isn’t required to file full public financial disclosures, the project was at least $25 million over budget.

Consider this:

  • MotorCity Casino is a d/b/a for Detroit Entertainment LLC which is owned by CCM Merger, Inc., an entity reportedly controlled solely by Mrs. Marian Ilitch, and as such she has no requirement for full public financial disclosure beyond what she chooses to include in a press release.

  • Marian Ilitch reportedly borrowed hundreds of millions from investors and other creditors creating debt of more than $1 billion in orderto fund her acquisition of MotorCity Casino from MGM/Mirage Resort Group and other investors; fund the cost of construction; and fund debt service during construction.

  • Since Ilitch acquired MotorCity Casino (Detroit Entertainment LLC) and established CCM Merger, Inc., that company’s credit ratings have been placed on watch lists and downgraded by both Moody’s and Standard & Poor’s. Among concerns, Ilitch has leveraged the entity beyond what investors were originally told to anticipate during construction.
  • MotorCity Casino’s expanded gaming floor opened in June 2007 (15 months ago) and Ilitch reported a 3.5% bump over the previous year for the subsequent four months (July-October 2007); but so far that's not been sustained during those same months in 2008. Revenues reported for Summer 2008 (Jul-Aug) dropped 6.5% over Summer 2007. (MGCB)

  • A 17-story, 400-room hotel with resort amenities opened at MotorCity Casino in November 2007 but revenues for eight of the last ten months (Nov. ’07 – Aug. ’08) have been down compared to those same months the previous year. (MGCB)

  • Ilitch has desperately leveraged her family’s affiliated charitable foundation, sports teams and other business interests to promote and drive traffic into the expanded MotorCity Casino property; and still, revenues reported for the new and improved MotorCity Casino through August 2008 are down 1.65% over the previous 12 month period. (MGCB)

    Source of revenue figures: Michigan Gaming Control Board

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