Port Huron's Casino Odds Slim

as posted 1.06.06 at Gaming News:

MICHIGAN – As reported by the Port Huron Times Herald: "The odds of an indian-owned casino being built in Port Huron are slim, those familiar with the issue said this week.

"Nearly five years after city voters approved a referendum on a gaming facility to be built on land at the Thomas Edison Inn near the Blue Water Bridge, the plan lies dormant with a congressional committee. And there seems to be little enthusiasm to revive it.

"The Upper Peninsula's Bay Mills Indian Community in 2001 worked out a proposal to build and operate a casino at the hotel. Gov. John Engler signed off on the deal shortly before leaving office in 2002. It then went to Congress for required approvals.

"'It's a big long shot at this point,' said Jamie Roe, chief of staff for U.S. Rep. Candice Miller, the Macomb County Republican whose district includes Port Huron. Miller supports the casino proposal, although Michigan lawmakers from other communities, especially Detroit, oppose the idea.

"…Meanwhile, some local residents hope the Bay Mills issue gets new life. They are frustrated watching U.S. dollars leave the community to be spent at Ontario's popular Point Edward Charity Casino — directly across the St. Clair River from where the Port Huron casino would be built…"

The Detroit Gaming Syndicators: Marian Ilitch, Michael Malik and Tom Celani

For almost 15 years, the trio of Detroit business leaders has been entangled in a web of casino syndication companies and affiliates. Together they bankrolled MotorCity Casino, The Little River Casino Resort in Manistee and various urban casino proposals with Harrah's and the Bay Mills Indian Community.

In 1993, Thomas Celani (a Bloomfield Hills, MI businessman; once president of his family's prized Detroit Miller Brewing distributorship; ventured into gaming as a major shareholder in slot machine manufacturer SODAK Gaming Inc.) first partnered with Michael J. Malik, Sr. (a Detroit area developer and self-identified entrepreneur) to form North American Gaming (NAG), a developer and operator of gaming facilities. Concurrently Celani formed TVC Enterprises Development Co. to represent his interests and at the same time Malik formed MJM Enterprises Development Co.

Their first big idea came together in 1994: a Bay Mills Indian casino in the Ilitch dominated Foxtown area of downtown Detroit in partnership with Harrah's; the casino would fund a new adjoining major league baseball park. While that plan made little progress, it was the start of an ongoing relationship between Celani, Malik, the Ilitch Family, the Bay Mills Indian Community and Las Vegas heavy-hitters like Harrah’s, Circus Circus and MGM Mirage.

North American Gaming backed and helped finance the 1994 casino ballot proposals in Detroit. Although approved by local voters, Governor Engler blocked the Detroit casinos from moving forward at that time.

In November 1996, Michigan voters statewide approved Proposal E, the creation of three Detroit casinos, by a 52-48 percent margin out of nearly 3.5 million votes cast. Z.R.X. L.L.C. (ZRX), a partnership that would include Celani, Ilitch and Malik bankrolled the campaign supporting Proposal E by contributing $5 million+ to fund an “11th hour” campaign advertising blitz. In recognition of their role in the success of Proposal E, Atwater Entertainment Associates a partnership of more than 100 Detroit area leaders who had originally contributed at least $25,000 each for membership in the LLC had agreed to form Atwater Casino Group (ACG) with ZRX and awarded Celani, Ilitch and Malik 85% ownership interest in ACG.

Within months of the Proposal E victory, Celani and Malik had brought in Circus Circus Enterprises and together with Atwater Casino Group formed Detroit Entertainment LLC, the company behind MotorCity Casino. Circus Circus agreed to provide the capital funding needed for the planning and development of MotorCity Casino and also reimburse Malik and Celani for the costs of the Proposal E campaign -- reimbursement of political contributions is generally not legal in states with post-Watergate political reform laws. Circus Circus would oversee MotorCity's management once it opened. And on November 20, 1997, Detroit Mayor Dennis Archer announced Detroit Entertainment would be one of two entities invited to negotiate casino development agreements with the City of Detroit.

In 1999, word leaked out of the Michigan Gaming Commission that several casino investors wouldn’t be qualified for gaming licenses. Malik was one of those individuals. Before facing disqualification and a reduction of share price, Malik sold his shares in MotorCity Casino to Marian Ilitch, moved into the offices of Ilitch Holdings, Inc. and then went into partnership with her on other gaming projects. Celani and Ilitch retained their collective 35% interest in MotorCity Casino.

Tom Celani was one of those Marian Ilitch bought-out in 2005 when she acquired 100% ownership of MotorCity Casino; however, not before Celani and other minority shareholders in MotorCity Casino sued Ilitch, seeking damages of more than $50 million, saying she violated the terms of their partnership when she negotiated the deal to buyout Mandalay Resort Group's 53.5% interest in MotorCity.

At the same time the trio pursued gaming opportunities in Detroit and plans to establish MotorCity Casino, their North American Gaming (Celani, Malik & Ilitch) began working with the Little River Band of Ottawa Indians on plans for a Manistee, MI, casino resort and the necessary gaming compact required from the State of Michigan. They were instrumental in gaining Compact approvals in 1998.

In July 1999 the Little River Band of Ottawa Indians signed a management services agreement with Celani, Malik, and Manistee Gaming LLC. Celani and Malik were the first in Michigan to be awarded such a contract by an Indian casino. The National Indian Gaming Commission (NIGC) permits such outside contracts for tribal casinos for the first five years of operation with payments up to 30% of profits. The tribe opened their temporary Little River Manistee Casino that same month.

1999 served to be a banner year for Tom Celani when he reportedly pocketed more than $30 million upon the sale of Sodak Gaming Inc. of Rapid City, S.D., to the world's biggest slot machine maker, International Game Technology (IGT) of Reno, Nev. Celani was flush with cashand poised to make some new significant investments.

Throughout the better part of the 1990s; Tom Celani, the Ilitch Family and Michael Malik, expended substantial resources pursuing opportunities in Michigan to expand commercial and Indian gaming. With a couple of big success stories under their belts, the trio decided to parlay their experience beyond Michigan but took different paths.

Starting in 2000, Ilitch and Malik pursued casinos in New York; Hawaii; Barstow, California; and with the Bay Mills Indian Community. It's unclear if Celani was also an investor in any of these projects. In fact, it's not known who if anyone else Ilitch and Malik have included in their various ventures.

Celani, working with attorney James D. “Jim” Oegema, headed west and partnered with the Smith River Rancheria (Smith River Gaming LLC); Paskenta Band of Nomlaki Indians (Luna Gaming –Corning LLC); and Ewiiaapaayp Band of Kumeyaay Indians (Luna Gaming-San Diego LLC). They acquired ownership in the commercial Red-Dolly Casino in Blackhawk, Colorado. Today Celani has consolidated his numerous business ventures under the “Luna” family of companies’ banners: Luna Gaming, Luna Properties and Luna Entertainment. Luna, among other assignments, will now manage the casino in the Cal Neva Resort at Lake Tahoe once owned by Frank Sinatra.

Ilitch/Malik casino syndication partner to run Lake Tahoe casino once owned by Sinatra.

Former MotorCity Casino investor Celani to renovate, run Lake Tahoe casino

By Bill Shea

11:57 am, January 3, 2007

A former owner of Detroit’s MotorCity Casino now plans to operate a Lake Tahoe casino that was owned for a short time in the 1960s by Frank Sinatra

The Nevada Gaming Control Board on Dec. 21 approved Tom Celani’s license to run the Cal-Neva casino in Crystal Bay.

Celani plans to spend $35 million to renovate the 81-year old casino, hotel and spa, the Detroit Free Press reported. He said he’s hired historians to help restore the casino resort, which straddles the Nevada-California line, over a year beginning in April.

Celani’s Luna Gaming Tahoe L.L.C. will lease the casino beginning today from its owner, Namwest L.L.C. Terms of the lease were not disclosed.

Celani, a Bloomfield Hills resident who helped fund the successful 1996 statewide referendum on casino gaming in Detroit, sold his 10 percent stake in MotorCity to Marian Ilitch in April 2005.

PRINTED FROM: http://www.crainsdetroit.com/apps/pbcs.dll/article?AID=200770103002&template=printart

© 2007 Crain Communications Inc.

From the Frank Sinatra Biography ...

"Sinatra lost his Nevada gambling license in 1963 after a Mafia leader, Sam Giancana, was seen in the Cal-Neva Lodge gambling casino in which Sinatra then held a major interest. The license was restored in 1981."

you may also want to see these posts:

* The Verifiable Truth: Ex-owner of MotorCity gets Nev. casino license

* The Verifiable Truth: The Detroit Gaming Syndicators: Marian Ilitch, Michael Malik and Tom Celani

* The Verifiable Truth: History of Cal Neva - Sinatra's one-time casino resort property

Suffolk Life: The Shinnecock speak out on legal battles

01.05.07
The Shinnecock speak out on legal battles

By Susan J. Greenberg

While several questions have been raised regarding a 79-acre piece of land in Hampton Bays known as the Westwoods property members of the Shinnecock Indian Nation are speaking out about the lawsuits, the land use and their overall frustration about dealing with town, state and federal officials.

"This is going way beyond the initial lawsuit," said Shinnecock Tribal Chairman Lance Gumbs.

"This now has turned into a question of whether we are Shinnecock. We are the only remaining tribe in the United States who actually live on our original land. It is very painful."

According to Gumbs, what was at issue in the 1600s is directly related to the issues at hand today, which involve ques­tions of land title, rights of land use, and equitable treatment. "Our territory before the settlers came here was from ap­proximately the town border of Brookhaven to the town border of East Hampton," Gumbs said. "That is the land we roamed."

Three lawsuits, according to Gumbs - two in which the Shinnecock are plaintiffs and one in which they are the defendant - bring to light what he characterized as "some very serious transgressions" that must be addressed.

"The town started this by suing us over our use of the [Westwoods] land," said Gumbs, referring to a suit filed by the town in 2003 seeking to stop the Shinnecock from building a 65,000-square-foot casino on the 79-acre parcel they own in Hampton Bays. "This essentially opened up a dialogue about many issues."

Amid protest by local residents as to the ramifications of building this facility, such as crowding and traffic implications, the case, once under the auspices of Judge Thomas Platt, is now being tried before Judge Joseph Bianco in First District Court in Central Islip. The Shinnecock must prove that the land was originally occupied by them in order for it to be offi­cially recognized as part of their main reservation to the east, and a place where gaming would be permitted under fed­eral law. (Full Story)

Future for the 79-acre property in Hampton Bays are still be debated by government officials and the Shinnecock Indian Nation

01.03.07

FUTURE PLANS

By Susan J. Greenberg

Future plans for the 79-acre property in Hampton Bays are still being debated by government officials and the Shinnecock Indian Nation. However, members of the Shinnecock, believing current lawsuits go beyond the question of land use, are angered over the ongoing battle about their status as a recognized tribe. Photo by Eagle Eye Air Photo

While several questions have been raised regarding a 79-acre piece of land in Hampton Bays - known as the Westwoods property - members of the Shinnecock Indian Nation are speaking out about the lawsuits, the land use and their overall frustration about dealing with town, state and federal officials.

"This is going way beyond the initial lawsuit," said Shinnecock Tribal Chairman Lance Gumbs. "This now has turned into a question of whether we are Shinnecock. We are the only remaining tribe in the United States who actually live on our original land. It is very painful."

According to Gumbs, what was at issue in the 1600s is directly related to the issues at hand today, which involve questions of land title, rights of land use, and equitable treatment. "Our territory before the settlers came here was from approximately the town border of Brookhaven to the town border of East Hampton," Gumbs said. "That is the land we roamed."

Three lawsuits, according to Gumbs - two in which the Shinnecock are plaintiffs and one in which they are the defendant - bring to light what he characterized as "some very serious transgressions" that must be addressed.

"The town started this by suing us over our use of the [Westwoods] land," said Gumbs, referring to a suit filed by the town in 2003 seeking to stop the Shinnecock from building a 65,000-square-foot casino on the 79-acre parcel they own in Hampton Bays. "This essentially opened up a dialogue about many issues."

Amid protest by local residents as to the ramifications of building this facility, such as crowding and traffic implications, the case, once under the auspices of Judge Thomas Platt, is now being tried before Judge Joseph Bianco in First District Court in Central Islip. The Shinnecock must prove that the land was originally occupied by them in order for it to be officially recognized as part of their main reservation to the east, and a place where gaming would be permitted under federal law.

According to Gumbs, the town and the state are putting their witnesses on the stand, which could take months. When asked about the Shinnecocks' actual plans for the parcel, Gumbs said that building an expansive resort - which some officials from the town of Southampton have raised concerns about - was never a plan. "When they were deposing the tribe, we were asked to turn over all relevant documents, which included outside proposals to us," he explained. "We get hundreds of proposals, none of which we are entertaining. The town is trying to assume what we are going to do."

The final outcome of this case, said Gumbs, is related to another suit filed by the Shinnecock against the US Department of the Interior, which runs the Bureau of Indian Affairs, forcing acknowledgment that the Shinnecock are a federally recognized tribe. Although Platt, in November of 2005, issued a ruling that they are indeed a tribe, Gumbs said that the BIA claims it is not bound by the judge's ruling.

"We submitted our initial papers in 1978, and were thwarted with bureaucracy," said Gumbs. "We were recently recognized by Judge Platt as a tribe. It is not the place of the Bureau of Indian Affairs to interpret. We have recognition and it is a matter of law."

Gumbs explained that there are three methods, as enumerated by a 1994 act of Congress, through which a tribe can get federal recognition. "One way is to go through the process and apply to the Bureau of Indian Affairs," said Gumbs. "The second method is by a declaration by Congress or the president. The third is by declaration of a federal judge. Judge Platt recognized us in 2005 and the federal government needs to respect that decision."

Along with the filing of the petition 28 years ago, said Gumbs, the Shinnecock requested that the DOI sue the town on their behalf for a claim to approximately 3,200 acres, reaching from the Shinnecock Canal to the Southampton Village boundary, "from water to water," which were "unjustly acquired" by the government. Using claims that the petition was incomplete, the BIA denied both the petition and the request for legal redress.

Despite the fact that the Shinnecocks have enumerated other situations in which tribes have been accepted and listed through court decision outside of the BIA administrative process, including native tribes in Alaska and California, Gumbs said that the BIA refuses to recognize Platt's 2005 decision.

Officials from the BIA declined to comment on the judge's ruling, but did say that the Shinnecock Nation is on the list, behind seven other tribes, for active consideration regarding their status as a recognized tribe.

According to Gumbs, the purpose of the third lawsuit, filed by the Shinnecock in 2005, is to once again address this land claim and to seek an equitable solution. However, Platt denied the petition this year on November 28, citing a lack of historical basis.

"The judge used a legal theory called 'latches,'" said Gumbs, "where he said that there was no merit to the case because we waited too long to file, and that we didn't sue 'often enough.' This is ridiculous. We have been protesting the wrongful taking of this land, both legally and culturally, since it happened in 1859, when the land was stolen from us."

In fact, said Gumbs, it was shown in court that the Shinnecock had homes and places of worship in the area since at least the 1800s, and that there was a trial in 1922 in which the Shinnecock challenged a property claim in a case against a landowner. "There were protests and court battles at every turn. We think that the judge did not look at all of the issues. We are seeking redress on this decision before we seek an appeal," Gumbs explained.

Gumbs underscored the history of the Shinnecock, saying that their existence can be traced back more than 10,000 years to the first hunters and gatherers who found their way onto the Island. The heart of the matter for the Shinnecock is the sequence of events in history that Gumbs believes led to their land - and culture - being taken from them by the English colonists in the 17th century.

Government officials believe that, while the Shinnecock own those 79 acres of property in Hampton Bays, there are zoning issues that must be addressed. Arguing for the town of Southampton that the Shinnecocks have no legal claim to build on the Westwoods property and that a gaming facility would bring undue traffic and congestion to the area, Michael Cohen, an attorney from the firm Nixon Peabody, said that the real issues are zoning and land use regulations. "It is not whether the tribe owns the property," said Cohen. "They do. What is being contested is whether [Westwoods] enjoys a special status that makes it immune from zoning regulations and state gaming and environmental law."

In order to contest claims by the Shinnecock that the land does enjoy special status, Cohen explained that the town is relying upon the testimony of what he called an "ethno-historian" named James Patrick Lynch, who has a master's degree and "all but a final dissertation" in the study of the indigenous tribes of the Northeast. "He has been working on this matter and has been engaged in connection with this litigation for several years," said Cohen.

"He [Lynch] is a hired gun," Gumbs contended, "used by entities to refute the land claims of tribes. He is a former air conditioning mechanic turned so-called ethno-historian who dropped out of the University of Connecticut in the middle of his doctoral program. He has admitted in court that he has never found a tribe that would qualify for a land claim. How can this be?"

However, according to Cohen, for Westwoods to "have the special status of immunity from local and state law is to disregard 300 years of history about that property." Cohen said that "aboriginal title" must be proven about the parcel for it to enjoy such status, showing that the Shinnecock used it throughout history. "There simply is not enough title evidence to show that this property should have such status," said Cohen.

The Shinnecocks disagree. Will Reed, a member of the Shinnecock Indian Nation, noted that federal recognition from the BIA is not just about building a casino. "It is also about the ability under the federal program for us to acquire certain benefits, such as mortgages and medical and educational assistance," Reed said. "We would be open to federal money to help us complete our infrastructure and start our own police department, which will not only help us, but the community as a whole."

Cohen said that it is the town's intention to examine the potential environmental and traffic effects of a casino or resort, in case it is the Shinnecocks' plan to build one. "In spring of 2003, they announced their plan and cleared five acres," said Cohen. "A resort as big as Foxwoods could be built, with the only limits being economics and imagination."

"Where would we build Foxwoods?" asked Gumbs. "There is simply not enough room. The building that we planned was only as big as the biggest house in Southampton."

Regarding the issues of traffic, Gumbs said that there have been several attempts by the Shinnecock to negotiate with the town and the state to construct an exit off of Sunrise Highway that would prevent traffic overflow into Hampton Bays. "The area on Sunrise Highway surrounding the rest stops is Shinnecock land," said Gumbs. "We can work with the government to ease any traffic concerns, if they want to work with us."

Reed added that he believes a casino could be a financial advantage for the area. "People have to realize the economic benefit to the entire East End of having a large corporation here like a casino, where there is essentially no industry," said Reed. "Even if every member of the Nation quit their jobs and worked at the casino, we would still need to hire 3,000 to 5,000 local employees, who would get full pension and medical benefits, tuition reimbursement and salaries that are much higher than what is being offered in this area by local businesses now. It is hard to make a living out here and building this casino is about security for everyone on the East End, not just Shinnecocks. We want to include everyone.

NPR's Sacramento Bureau Chief says Dem leaders skeptical of Barstow Casino deal

Previously posted by blogger John Myers @ KQED – Capital Notes

03.28.06
Tribal Casino Deal Debated

If the Legislature signs off on a deal to allow two Indian tribes from different parts of the state to converge and build side-by-side casinos in the city of Barstow, will it be making lemonade out of lemons... or setting a dangerous precedent for expansion of tribal gaming?

Those seemed to be the key questions in a marathon hearing of the Senate Governmental Operations Committee that lasted into the evening, and included at least one testy exchange between lawmakers.

Under discussion were gaming agreements between Governor Schwarzenegger and two tribes: San Diego County's Los Coyotes Band of Mission Indians and the Big Lagoon Rancheria of Humboldt County (actually, only Big Lagoon's deal was on the agenda).

The agreements would allow each tribe to build a casino in Barstow, more than 150 miles from Los Coyotes' tribal lands and more than 700 miles from those of Big Lagoon. In part, the deal would settle Big Lagoon's seven year legal battle with the state, which arose over environmental concerns about a casino on the tribe's north coast reservation. Barstow city leaders also support the deal, leading Schwarzenegger tribal negotiator Daniel Kolkey to tell the committee it's a "win-win" agreement.

But two Democrats, committee chairman Sen. Dean Florez (D-Shafter) and Sen. Gloria Romero (D-LA), seemed skeptical and suggested the deal could set a precedent for off-reservation Indian gaming in areas where a tribe has no ancestral ties... (Full Post)

Michigan Senator's re-election realizes $113,000 from Detroit syndicators after she introduces plans for their Port Huron Indian Casino

Background on the financial entanglements between Senator Debbie Stabenow (D-MI), the Bay Mills Indian Community and the Detroit casino syndicators bankrolling the tribe's proposed Port Huron casino and other business ventures.

Throughout the 1990s, the Bay Mills Indian Community, already with two casinos on its existing trust lands in Brimley, MI, has attempted to win approvals to build a casino in more lucrative markets including Detroit, Pontiac and Auburn Hills.

Then, Gov. John Engler (R-MI), who once vowed to oppose any additional casinos in Michigan, cut a deal in late September 2002 to allow the Bay Mills Indian Community to open a gambling parlor on non-tribal land in Port Huron as a way of settling a longtime land dispute with the tribe. The tribe had claimed to own land in Michigan's eastern Upper Peninsula Charlotte Beach community; property that had been given to them by the federal government, but that the state subsequently sold.

Following on Governor Engler's intentions, on September 20, 2002 Senator Debbie Stabenow (D-MI) introduced S. 2986, a bill to approve the Governor's land claims settlement. If approved the bill was intended to allow the Bay Mills Indians to construct a casino in Port Huron, Michigan on the grounds of the existing Thomas Edison Inn at the Blue Water Bridge international crossing. The site is located 350 miles from the Bay Mills reservation but just one hour from Detroit.

A hearing before the Senate Indian Affairs Committee was swiftly organized for October 10, 2002, less than two weeks after S. 2986 was introduced. In introducing S. 2986, Stabenow, the Junior Senator from Michigan, found herself at odds with one of the senior leaders of her party, Senator Harry Reid (D-NV), who has remained opposed to any casino outside a tribe's ancestral territories.

Before September 2002 Senator Stabenow’s previous campaigns for public office had not been backed by the Ilitch Family of Detroit or their casino syndication partners including Michael J. Malik, Sr. (including her first campaign for the U.S. Senate nor several previous terms in the House representing Michigan’s 8th District); however, after introducing S. 2986, records filed with the Federal Election Commission indicate the Ilitch Family and Malik (primarily registered Republicans with a history of giving strategically to some Democrats) directed at least $113,000 toward Stabenow’s 2006 re-election:

• $54,400 Michigan Senate 2006 – Democrat
• $32,000 Stabenow for U.S. Senate – Democrat
• $26,700 Democratic Senatorial Campaign Committee

The Ilitch Family/Malik also contributed to the following leadership PACs, and possibly others, which in turn supported Stabenow's re-election as well:

• $22,000 Friends for Harry Reid/Searchlight Leadership Fund contributed $10,000 on 2/2/05
• $10,100 Friends of Hillary/HILL PAC contributed $10,000; $5,000 each on 6/24/05 & 3/15/06
  

Although S. 2986 was never brought to the floor of the Senate for a vote, recently, in an apparent re-direction of cash flow, Senator Stabenow announced on December 20, 2006 that the Bay Mills Indian Community would receive a $900,000 grant from the U.S. Department of Commerce to further a plastics business venture. According to The Bay Mills News, March 24, 2005, one of the same Detroit casino syndicators behind the Bay Mills casino in Port Huron, Michael Malik, owns 49% of the plastics venture that is the beneficiary of this recent grant.

This $900,000 grant is a small consolation prize for the Port Huron casino if that’s the intention; unless of course, there’s more to come.

12.20.06
the blog, Great Lakes Politics
post from fnemecek 02:31 PM

$900,000 Coming to Chippewa County
U.S. Senators Debbie Stabenow (D-MI) and Carl Levin (D-MI) today announced that the Bay Mills Indian Community and Community College will receive $906,000 to construct a plastics technology research, testing, manufacturing and training center. The funds were awarded through the Economic Development Administration (EDA) of the U.S. Department of Commerce.

“This investment is great news for the economy of Northern Michigan,” insists Ms. Stabenow. “These funds will create good paying jobs in Chippewa County and help bolster economic development throughout the community.”

“This is great news for the eastern Upper Peninsula,” insists Mr. Levin. “This federal funding will bring jobs and investment dollars to the U.P. and help make Michigan a leader in plastics technology.”

This funding will create fifty five new jobs and generate over $2.8 million in private investments, according to the EDA. It is the goal of the EDA to enhance regional competitiveness and promote long-term development in regions experiencing economic hardship.

As reported in the Bay Mills News coverage referenced earlier, during the General Tribal Council (GTC) meeting March 14, 2005 matters involving the tribe’s plastics ventures were questioned by the Bay Mills general membership including the involvement of Michael Malik.

Skirting around the matter, Council leaders avoided any such disclosures and denied a motion that would have required a written report on the plastics venture matter be prepared for discussion at the next Council meeting . Immediately thereafter, the GTC approved a motion to allow the tribe’s executive council to enter into a joint venture agreement regarding the plastics venture presumably involving Michael Malik.

03.24.05
Bay Mills News
Bay Mills GTC “PLASTICS BUSINESS”

… Parker said that Mike Malik is involved in the plastics business because the tribe did not want to expend any tribal funds on the project. He said the initial concept
is to have the business in Kinross until the planned creation of an industrial park on tribal properties at I-75 and M-28…

Another member said that it was his understanding that Malik would invest $1.3 million into the company and would own 49 percent of it, while Bay Mills would own 51 percent. He also recommended a committee be put together to investigate some of these allegations and report back to the GTC with their findings. Parker said he would like to have the tribe do the venture on their own, but said that they did it this way so they would not be out any money.

A motion to have the council report back with paperwork at the next GTC meeting on all of the legal issues presented failed to pass.

A motion to have the Executive Council enter into a joint venture for the Plastics Business carried.

One way or another, it appears the unprecedented “investment” of $113,000 by the Ilitch Family/Malik, channeled to Senator Stabenow’s ’06 re-election campaign, will “pay off” for all involved; what remains to be seen is the ultimate size of the virtual “jackpot.”

You may also want to review these posts:
Great Lakes Politics: Bay Mills & Malik get into Plastics; Senator Stabenow announces they'll get $900,000 federal jumpstart
Candy Land: Calling for More Candy
The Verifiable Truth: Ilitch Family, Associate increased political contributions 2000%
The Verifiable Truth: Six bills in Congress, over six years & political gifts in the six figures: That's what Ilitch Family has invested in Port Huron Casino deal

under the radar in 2006: S&P dropped credit ratings of Detroit's MotorCity -- venture's poor performance and higher leveraged debt cited

Standard & Poor’s dropped CCM Merger, Inc’s (corporate parent of MotorCity) credit rating as a result of MotorCity Casino’s poor performance and mounting debt in the first year since Marian Ilitch took the reigns. In addition, S&P analysts note concern over growing debt ratios facing CCM Merger, Inc. and its single asset portfolio.

6.26.06
Troubled Company Reporter

"The downgrade reflects Standard & Poor's assessment that the combination of weaker-than-expected operating performance during 2005, a highly competitive operating environment in the Detroit market, and high debt levels associated with the ongoing expansion project, have resulted in higher-than-expected near-term peak debt leverage that would no longer be consistent with the former rating," said Standard & Poor's credit analyst Michael Scerbo.

MotorCity Casino has been valued at roughly $1 billion by Crain’s Detroit Business. However, to finance the $525 million buyout of MGM Mirage/Mandalay Resort and others in 2005, Forbes indicates Ilitch had to borrow $950 million: $300 million in junk bonds, yielding 8%, and $650 million in fixed- and variable-rate bank debt. Close to $1 billion has been “borrowed” on a casino that’s estimated to be worth $1 billion suggesting MotorCity’s debt to value ratio is approximately 100%.

Ilitches’ acquisition of MotorCity was nearly 100% debt financed, much like their original 1992 acquisition of the Detroit Tigers ball club. That was followed by construction of a 30% taxpayer financed Comerica Park. The Stadium is a cornerstones of the Ilitches’ concentation of slow moving downtown Detroit development. The Ilitches funded the other 70% of Comerica Park using debt financing too. The team has lost money nearly every year since 1993.

Analysts believe that MotorCity’s debt is currently more than 8x its annual operating income, already higher than estimated in the 2005 prospectus announcing the $950 million capital offering. In other words, owners would not realize any profits for at least eight years, the amount of time estimated needed to repay debtors.

Marian Ilitch formed CCM Merger, Inc. in order to buyout the interests of Mandalay Resort/MGM Mirage (Circus Circus Michigan) and take total control of MotorCity Casino, a dba for Detroit Entertainment LLC.

The new credit ratings raise the possibility that holders of $300 million in junk bonds will not be repaid.

Michigan state regulations only permit ownership interest in one casino. When MGM Mirage wanted to acquire Mandalay Resort Group in 2005, the companies were forced to sell one of two Detroit Casinos – either MGM Grand Detroit or MotorCity and the two Las Vegas powerhouses agreed to sell MotorCity Casino and keep MGM Grand Detroit in their portfolio.

In additional actions, Moody’ s credit ratings for MotorCity Casino’s parent were tagged with a Negative Outlook indicating that if anything unexpected happens in the local market, regional economy, casino operations or expansion the next move would certainly be a drop in credit rating.

Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data.

Moody's Investors Service is among the world's most respected, widely utilized sources for credit ratings, research and risk analysis. Moody’s publishes market-leading credit opinions, deal research and commentary, serving more than 9,000 customer accounts at some 2,400 institutions around the globe.

[MORE Details]

Controversial D.C .Lobbyists/PAC Treasurers Barbara Bonfiglio and Mark Valente III have ties to Team Ilitch; Reps J. Lewis, C. Miller, R. Pomb

PAC-Men Lobbyists
Almost 80 members of Congress used corporate lobbyists
to head their fund-raising committees

By Elizabeth Brown and Shaylyn Cochran

WASHINGTON, October 3, 2005 — When lobbyist William Oldaker sits down to negotiate with a member of Congress, he brings years of experience working for the federal government to the table, as well as the legislative resources of his own firm. He also brings quite a bit of money.

Summary of Study Findings

As the treasurer of 23 political committees, groups that raise funds to elect or defeat politicians, Oldaker has signed off on more than $2 million in donations since 1998 to the parties and candidates he is paid to influence, according to a study by the Center for Public Integrity. At the same time that these committees doled out millions to politicians, some 100 companies paid Oldaker's lobbying firms $14 million to influence some of the same lawmakers.

For example, in 2004 four committees that he managed donated a combined $30,000 to Sen. Patty Murray, D-Wash., the ranking member of the transportation appropriations subcommittee. In that same year, Oldaker lobbied Congress on transportation appropriations issues for at least five of his clients. Oldaker did not return repeated calls from the Center.

Oldaker is just one of hundreds of Washington, D.C., lobbyists who play this dual role, influencing members of Congress while also controlling donations that finance their campaigns.

Lobbyists have served as treasurers for at least 800 political action committees and 68 campaign committees in the past six years, according the Center's study. In that time these committees have spent more than $525 million to influence the political process. In other words, these lobbyist-led committees spent more money than President George W. Bush and Sen. John Kerry raised in combined contributions during the 2004 presidential campaign.

"That is truly a lot of money," said Frances Hill, the tax program director at the Campaign Legal Center and a professor of election law at the University of Miami law school. "I think it is all right for people to band together and hire a lobbyist in an expensive suit to represent their interests, but I don't think it is OK to use [campaign] money as the clincher," she said.

Although there are no restrictions on who can be a committee treasurer, Hill said she was "seriously concerned" that so many lobbyists are filling the position. According to federal election law, the treasurer is responsible for all of a committee's expenditures and is also responsible for monitoring contributions.

Meanwhile as these lobbyist-led PACs donate millions, their firms have raked in $3 billion from 10,610 companies and organizations between 1998 and 2004—constituting one quarter of all federal lobbying expenditures for that period. In addition, 557 companies that spent more than $3.5 billion lobbying employed PAC or campaign treasurers as in-house lobbyists.

Most PACs with lobbyist treasurers were actually formed by their clients. New York Stock Exchange lobbyist Cecile Srodes, for example, was the treasurer of two NYSE PACs in 2004. Under her management that year, the committees donated $11,000 to Rep. Michael Oxley, R-Ohio, while Srodes simultaneously lobbied on the "Broker Accountability through Enhanced Transparency Act," which Oxley co-sponsored.

Lobbying expert Bertram Levine said that appointing a lobbyist as the treasurer of a corporate PAC is a "very poor practice." He said that because corporate PACs raise money from the company's employees, they should be the ones designating where the money goes, not lobbyists.

"It buys access," said Levine, a professor of political science at Colgate University in Hamilton, N.Y., and co-author of a book about lobbying. "And that is not something that should be taken lightly; the opportunity to make the argument is the opportunity to win the argument."

'How you buy influence'

Although Levine said that allowing lobbyists to run corporate PACs raises "red flags," he characterized the practice of having them run campaign committees and leadership PACs as the "most obvious conflict of interest." Campaign committees raise money for a candidate's election; leadership PACs are committees formed by politicians to fund other candidates' campaigns.

"Raising money is how you buy influence," Levine said. "There is a loophole here that needs to be closed or at least more closely monitored."

Since 1998, 79 members of Congress have appointed lobbyists as the treasurers of their campaign committees or leadership PACs. There are 39 sitting members of Congress who currently have lobbyists at the helm of such committees. Lobbyists have also been treasurers for major presidential contenders, including Al Gore's 2000 campaign.

For instance, Harold Ickes, a partner at Ickes & Enright Group, is the treasurer of New York Democratic Sen. Hillary Clinton's campaign committee "Hillary Rodham Clinton For U.S. Senate Committee Inc." Ickes clients have included the insurance company Equitas Ltd. and Verizon Services Group. Rep. Rahm Emanuel, D- Ill., co-sponsor of the recently introduced lobbying reform act, the "Emanuel-Meehan bill" also appointed a lobbyist to oversee his campaign committee, "Friends of Rahm Emanuel." Emmanuel's committee raised more than $4 million under the watch of lobbyist William Singer, whose clients include Sara Lee Corp. and United Airlines.

But these lobbyist-led campaign committees are not limited to the Democratic side of the aisle. Lobbyist Timothy McKeever is the treasurer of Alaska Republican Sen. Ted Stevens' campaign committee, "Stevens for Senate." McKeever said that he has worked on the committee since 1980, before he became a lobbyist.

During McKeever's last two election cycles as treasurer, the committee raised nearly $3 million to influence the political process. He insists, however, that his work as a fund-raiser has no impact on his role as a lobbyist.

"I really don't think there is a connection between the two (positions)," McKeever said. "I do relatively little lobbying work for the senator."

Still, in 2003, McKeever reported lobbying on a Senate appropriations bill rider authored by Stevens that would have eliminated funding for certain habitat protection programs in the North Pacific Ocean. The measure was supported by the commercial fishing industry, including Seattle-based Arctic Storm Management Group, one of McKeever's clients. Despite much opposition by environmentalists and other Republicans in Congress, Stevens attached the rider to the bill. In the end, the bill passed, but without the rider.

McKeever did not comment on the specifics of his lobbying, but said that his committee position does not give him any special advantages in attracting clients. "I don't believe they hire me because of it," McKeever said. "Whether (an advantage) is something they perceive, I don't know."

Among the lobbyists overseeing leadership PACs is the Republican political consultant Mark Valente. He serves as the treasurer of 15 PACs, nearly all of which are leadership PACs, including those of House Republicans Joe Wilson, S.C.; Mike Ferguson, N.J.; and Mike Rogers, Mich. [and Candice Miller (CANDICE PAC), Mich.]

Valente, who heads his own lobbying firm Valente & Associates, said he does not believe any conflicts of interest result from heading the leadership PACs of several members of Congress while lobbying. Although at times the job requires fund-raising, Valente said that the majority of his tasks as treasurer involve filling out forms and keeping banking records.

"The members are looking for people they can trust, and we want to help our friends out," Valente said. "And they are already our friends."

Only a few of his clients donate to the PACs he oversees, Valente said, and not many of them have PACs that could make contributions. "Just as we encourage our clients to donate to like-minded members of Congress, we would not exclude the PACs," he said.

By the book

While lobbyists like William Oldaker and Mark Valente are connected to many PACs, neither of them hold the record for the most committees controlled by a registered lobbyist. That distinction belongs to political savant Barbara W. Bonfiglio.

During her tenure as a lobbyist from 1998 to 2001, Bonfiglio mastered the demanding jobs of both overseeing the finances of 31 political committees—more than half of which were campaign committees and leadership PACs—while lobbying for six companies at the D.C. law firm Williams & Jensen. In addition to running FEC-regulated committees, Bonfiglio was also the treasurer of five 527 organizations once connected to members of Congress, which were allowed to raise money without contribution limits.

[Bonfiglio signed Michael J. Malik's MJM Enterprises & Development as a client on Indian and gaming matters while she was concurrenty treasurer of Rep. Richard Pombo's leadership committee RICH PAC. While retaining Bonfiglio's firm, Malik his partners, affiliates and advocates contributed close to $100,000 to Pombo's committees and causes. MJM, a brand few would have on their radar, quietly paid Bonfiglio's firm $220,000]

Though balancing such a vast array of lobbying and campaign finance interests at one time may seem difficult, Bonfiglio could be considered an expert. She wrote the book on it—literally. The attorney is author of How to Cross the Potomac without Falling In, a guide to following the Lobbying Disclosure Act, Federal Election Commission regulations and House and Senate gift rules.

http://www.publicintegrity.org/lobby/report.aspx?aid=750

Detroit News predicts 2007 battle between Ilitch MotorCity Casino and MGM Grand Detroit Casino

12.29.06

2007 Industry Outlook:
More tough times ahead
Experts say Michigan's jobless rate will grow in '07

Detroit News Business Staff

This year was a somber one in Michigan, with only a few bright spots for businesses. And 2007 will bring more of the same, experts say.

The domestic auto industry will continue to downsize as it strives to hold its own against global competition. The housing market will remain soft as the state works to replace thousands of auto jobs.

On the plus side, commercial building activity and retail spending should remain healthy, analysts say.

Here's an industry-by-industry breakdown of what's ahead in 2007...

...Casinos
Casino expansion in Detroit in 2007 is the hot topic.

Both the MGM Grand Detroit Casino and the MotorCity Casino will be battling to see who can open it doors first with permanent casino/hotel/convention facilities.

Both are targeting the fourth quarter for completion.

The third Detroit casino -- Greektown Casino -- is lingering far behind with a completion date now set for sometime in September 2008.

Both MGM and MotorCity have now capped their new 17-story, 400-room hotels and are planning to work on the interiors this winter.

"We're moving right along," MotorCity spokeswoman Jacci Woods said. "Our expanded casino will open sometime in the first quarter of 2007 with the hotel completed near the end of the year."

Jacob L. Miklojcik, president of Michigan Consultants in Lansing, a gaming expert, said at this point, it's a 50-50 shot whether they'll get open this year or early next year.

"The land and permits are the killers. Once you have that and the financing, you want to get that sucker open."

Miklojcik said he'd be surprised if there isn't a push in 2007 to expand the number of commercial casinos in Michigan from its current three in Detroit. It would require a change in the state law.

"The move will come in 2007, but whether or not it's successful is another matter," he said.

(full story)

-- Joel J. Smith

Casinos: Marian Ilitch, owner of MotorCity Casino. Ilitch is one of the few female and sole owners of a major casino in the United States. MotorCity's $275 million expansion of the casino, which includes a 400-room hotel, is expected to open in late 2007.

GOP Congresswoman received at least $74,000 in bundled funds from Ilitch Family sources after introducing bill for syndicator-backed Indian casino

Detroit casino syndicators Marian Ilitch and Michael J. Malik, and their families, have funneled $74,000 in individual contributions to GOP Congresswoman Candice Miller (MI-10th), since Miller introduced H.R. 831, a bill that would grant approvals for an Indian Casino in Port Huron to be built and managed by an Ilitch/Malik affiliate. The Federal Election Commission has no records to indicate Ilitch/Malik had supported Miller when she first ran for Congress in 2002 or any time before she introduced the bill.

Bay Mills Land Claims Settlement in Congress
In the 108th Congress (2003-04), Rep. Candice Miller (R-MI), a freshman member, introduced H.R. 831 on February 13, 2003 after barely serving one month as a Member of Congress. Rep Don Young (R-AK) agreed to co-author the bill. The bill was the sixth attempt in less than a decade to get congressional approval on land claims settlements for the Bay Mills Indian Community (Brimley, MI). The first three bills were introduced by Rep. Bart Stupak (R-MI). H.R. 831 was finally scheduled to be heard before the House Resources Committee 16 months later (on June 24, 2004).

Rep. Miller represents Michigan’s 10th District, a seat previously held by former Rep. David Bonior (D-MI). Port Huron is in Miller’s districit.

Rep. Stupak represents Michigan’s 1st District. The Bay Mills Indian Reservation is in his district.


Casino Syndicators Behind Bay Mills
Detroit casino syndicators Marian Ilitch and Michael J. Malik, Sr. are backing the Bay Mills tribe‘s casino plans. They have been working with the Bay Mills Indians since 1994 to site a more lucrative urban casino site. Previous proposed locations have included Auburn Hills, Detroit and Pontiac.

Marian Ilitch and her husband Michael Ilitch founded Little Caesars Pizza carry-outs in 1959 and established Ilitch Holdings, Inc in1999. They own the Red Wings Hockey team, Detroit’s Fox Theater and various other dining and entertainment related businesses. He owns the Detroit Tigers baseball team; and she owns MotorCity, one of the three large commercial casinos in Detroit. She continues to partner with Michael Malik on gaming ventures (IH Gaming, Inc. Barwest, Gateway Casino Resorts, etc.). The parent of all these entities is Ilitch Holdings, Inc.


Parallel Political Fundraising Activities
Team Ilitch makes widespread use of "bundling" to federal candidates who have taken significant actions to advance the expansion of Team Ilitch's gaming empire. In addition, Team Ilitch is able to beat the individual contribution limits governing campaign committees by either encouraging establishment or giving to so-called leadership PAC's or contributing to party committees that are designed to directly benefit a specific Member of Congress. Since 2002, the Ilitch Family members and Michael J. Malik, Sr. have contributed $16,000 to Alaskans for Don Young, Inc. (he, and no one elese, co-authored two of the six congressional bills); there are no records of previous or subsequent contributions to Rep. Young. To put it in context with their other giving, Ilitch/Malik also contributed a total of $16,000 individually to Rep. Richard Pombo’s RICH PAC during this same period of time; and when reviewed in combination with their partners, agents and advocates contributed a total of $40,000 to RICH PAC.

On the other end of the giving spectrum, from March 2003 to June 2005 (a little more than two years), Ilitch Family and their casino syndication associate Michael Malik made at least 20 recorded individual (non-PAC) contributions totaling $74,000 to Rep. Candice Miller’s political committees:

1. $14,000 to her campaign committee, Candice Miller for Congress; and
2. $60,000 to her “leadership PAC,” Conservative American Network Delivering Increased Congressional Excellence (CANDICE) PAC.

Nearly all of that was paid on one of three specific dates:

1. $13,000 on March 11, 2003(all to Miller for Congress Campaign)
2. $30,000 on April 2, 2004 (all $5k each to CANDICE PAC)
3. $25,000 on June 30, 2005 (all $5k each to CANDICE PAC)

CANDICE PAC filed a Statement of Organization with the Federal Elections Commission on February 13, 2003 – ironically the same day she introducedH.R. 831.

In the first disclosure report filed by CANDICE PAC July 18, 2003 for the period closing June 30, 2003 there were just three donations recorded totaling $6,500 and received in this order as follows:

1. $5,000 from Michael Malik on March 19, 2003
2. $500 from John Milne on April 25, 2003; and
3. $1,000 from Mark Valente III on June 30, 2003

A review of FEC disclosure documents through June 30, 2004 (three official reporting periods after CANDICE PAC was formed), indicates CANDICE PAC had raised $55,649 from individual (non-PAC) contributors -- 83% of that came from Ilitch Family/Malik and a Florida family (Cherry) that makes gaming devices (ID Interactive) on the same day (April 2, 2004) – any affiliation between the Cherry Family and Ilitch/Malik is unknown at this time.

During the subsequent two year ’06 campaign finance cycle, CANDICE PAC raised $30,594 from individual contributors and $25,000 (82%) came from Ilitch/Malik -- once again avoiding any limits that would apply to donors/funds directed to a campaign committee.

* * *CANDICE PAC may have violated Federal Election laws.* * *

On February 9, 2006, CANDICE PAC made two $5000 contributions to Candice Miller for Congress, Shelby Township, MI; however, contributions from one's leadership PAC to their respective campaign committee are prohibited.

PAC Treasurer Mark Valente III terminated CANDICE PAC on June 28, 2006 after lobbyists’ ties to “leadership PACs” had come under great scrutiny in the wake of the Jack Abramoff scandal. By terminating the leadership committee on June 28, 2006; the committee avoided the spotlight that other active committees endured in the Fall ’06 Elections.

Campaign Finance Summary
From inception to termination, at least 48% of all funds (from individuals and other PACs) received by CANDICE PAC came from the Ilitch Family, Malik. Ilitch/Malik made up a much greater share of the total contributed by individuals (80%+). In various analyses available from PoliticalMoneyLine for Congressional Quarterly ’04 & ’06, it is clear to see that Ilitch Family and Malik were significant forces behind CANDICE PAC and perhaps the reason CANDICE PAC was formed.

In the 28 months that followed February 13, 2003 – the day Rep. Miller introduced H.R. 831 and her treasurer filed paperwork establishing CANDICE PAC -- Ilitch/Malik made individual contributions totalling at least $74,000 to Rep Candice Miller’s controlled committees ($60,000 of that to CANDICE PAC); far out distancing contributions they made to the controlled committees of any other Federal office holder.

During this same period for instance, these casino backers contributed $32,000 to committees controlled directly by Senator Debbie Stabenow (D-MI). Ultimately Stabenow was the beneficiary of more than $113,000 in campaign funds contributed by Ilitch/Malik; however she did not control the majority of those funds as they were directed to Party committees for the Party's use in electing a Democrat to the Senate from Michigan.

Similar to Rep. Miller's circumstances, Stabenow introduced S. 2986, one of the six Bay Mills Indian land claims settlement bills, on Sept. 20, 2002. A hearing before the full Senate Indian Affairs Committee was held two weeks later on October 10, 2002.

The contributions to Stabenow and the Democratic party organizations were delivered after she introduced S. 2986.

As with Rep. Miller, Senator Stabenow (previously a Member of the House of Representatives) does not appear to have received support for her political career from Ilitch/Malik prior to introducing the bill.

You may also want to review these posts:
The Verifiable Truth: Michigan Senator's re-election realizes $113,000 from Detroit syndicators after she introduces plans for their Port Huron Indian Casino
Great Lakes Politics: Bay Mills & Malik get into Plastics; Senator Stabenow announces they'll get $900,000 federal jumpstart
Candy Land: Calling for More Candy
The Verifiable Truth: Ilitch Family, Associate increased political contributions 2000%
The Verifiable Truth: Six bills in Congress, over six years & political gifts in the six figures: That's what Ilitch Family has invested in Port Huron Casino deal

Ilitch/Malik said to have paid $10 million in legal fees advancing Port Huron Indian casino

A surrogate for Detroit casino syndicators Marian Ilitich and Michael J. Malik (Team Ilitch) says the pair have paid more than $10 million in legal fees advancing a proposal for an Indian Casino in Port Huron, Michigan at the site of the current Thomas Edison Inn, and close to the Blue Water Bridge international border crossing.

Richard "Dick" Cummings, president (lobbyist) of the Michigan Machinists Council, is one of the cast of characters recruited by Team Ilitch to support their casino expansion plans. In exchange for his assistance, they've represented they'll allow unions in their casinos. Among other things, they took him to Washington D.C. in 2004 to testify before Congress.

At a November 2006 Port Huron City Council meeting, the Times Herald newspaper quotes Cummings as saying,

"I'm no genius, but I can do the math," Cummings said. "Well, no one builds a casino for $10 million. You don't build the parking garage for that. Malik and the Ilitches have spent more than $10 million just in legal fees." Dick Cummings (Team Ilitch Surrogate)

Michael Malik also spoke at that Council meeting and was present during Cummings' comments. Malik did not refute or make any corrections to Cummings' claims.

The Bay Mills Indian Community (Brimley, MI) has asserted land claims over various property in Michigan including approximatey 110 acres in the Charlotte Beach community. In 2002, the Bay Mills Indians concluded a settlement agreement with then Governor John Engler over these land claims which would allow them to build a casino in Port Huron, 350 miles away from their current reservation lands, in exchange for relinquishing any claims to the 100+ acres in Charlotte Beach. Six months after negotiating that agreement, Team Ilitch has retained the Governor's former negotiator, R. Lance Boldrey, as their attorney.

The agreement needs Congressional approval. More than six bills have been introduced in Congress since 1999 on this matter -- most recenly H.R. 831 by Congresswoman Candice Miller (MI-10th) who has taken in more than $74,000 from Team Ilitch since introducing the bill. Team Ilitch and the Bay Mills Indians have paid D.C. lobbyists close to $1.5 million to push their proposals since 2002. However, little real progress has been made on Capitol Hill.

In 2006, Standard & Poor’s (S&P) downgraded credit ratings of Ilitch Holdings, Inc. subsidiary -- MotorCity's parent company

Slipped by unnoticed in 2006: Standard & Poor’s (S&P) downgraded the credit rating of the Ilitch Holdings, Inc. gaming subsidiary, CCM Merger Inc. (MotorCity Casino); Moody’s put it on the “Watchlist” earlier in the year and gave it a negative outlook rating.

The downgraded ratings based on S&P ratings definitions suggest:

• CCM Merger, Inc. (MotorCity Casino) as a corporate credit risk (rated B) is “more vulnerable to nonpayment of its obligations” than other companies; and suggest that
  
• Nearly $300 million in junk bonds issued by CCM Merger, Inc. (rated CCC+) to fund the Ilitch acquisition of MotorCity Casino are “currently vulnerable to nonpayment;” and also that
  
• “In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.”

Troubled Company Reporter, a service of Internet Bankruptcy Library (IBL), has tracked the concerns of these international credit rating companies over the last 18 months. However, one would have to be looking for CCM Merger, Inc. rather than MotorCity Casino, Detroit Entertainment, or any of the other entities that people recognize publicly as affiliated with MotorCity Casino. "CCM Merger, Inc." is MotorCity Casino in disguise.

Both S&P and Moody’s cited MotorCity Casino’s weaker-than-expected operating performance during the first year of Ilitch ownership, a highly competitive operating environment in the Detroit market, and risky leverage of debt to income that’s also higher than what had been anticipated as reasons for their actions.

CCM Merger, Inc. a unit of Ilitch Holdings, Inc./IH Gaming, Inc. is the survivor of Ilitch’s 2005 merger with Mandalay Resort Group’s Circus Circus Michigan, and the entity that raised $950 million in capitol needed to finance Ilitch's $525 million buyout of MGM Mirage/Mandalay Resort Group’s interests.

S&P
In 2006, S&P’s corporate credit rating for CCM Merger, Inc. dropped from B+ to B after one year of Ilitch ownership -- five or six levels below "Investment Grade." CCM Merger Inc. has acquired nearly $1 billion in debt on a venture that Crain’s Detroit has estimated to be worth $1 billion. Troubled Company Reporter estimates it would take the Casino eight years to pay off all the debt before owners could recognize any profits. The highest S&P rating is AAA. Anything below BBB is considered below “investment grade.”

“An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.”

S&P downgraded ratings on the $300 million in junk bonds that were issued to fund CCM Merger’s capital needs to a rating of CCC+ -- seven levels below “investment grade.”

“An obligation rated 'CCC' is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.”

Moody’s
Moody’s has assigned a corporate credit rating of B1 and ratings of B3 for the “junk bond” offerings:

“Obligations rated B are considered speculative and are subject to high credit risk”

Moody’s notes:

“CCM Merger is now weakly positioned in its rating category and more vulnerable to a ratings downgrade if future operating results fall short of Moody's expectations.“

The Ilitch organization has a history of risky leverage. Forbes Magazine estimates that the Detroit Tigers have the third worst debt to value ratios in Major League Baseball only two teams leveraged their assets more.

News reports during the 1990s consistently talked about leverage being one of the major factors in the downturn of Little Caesar’s Pizza.

And the amount of unattended or boarded-up real estate in downtown Detroit owned or controlled by the Ilitch Family for more than a decade is another example.

One would have to recognize CCM Merger, Inc. as the parent of MotorCity Casino in order to have caught this earlier in the year. Most people are more familiar with MotorCity Casino, Detroit Entertainment, Ilitch Holdings, etc. and not CCM Merger, Inc. (CCM is a reference to the former Circus Circus Michigan enterprise).


The Standard & Poor's analyst for this matter was:

Michael Scerbo
S&P Analyst
Phone (1) 212-438-7858

Notice of $625 million MotorCity offering lead by Deutsche Bank and Merrill Lynch states, Marian Ilitch is co-owner of the Detroit Tigers

A July 11, 2005 announcement of the $625 million offering lead by Deutsche Bank and Merrill Lynch to raise capital for Ilitch Holdings' subsidiary CCM Merger, Inc. (MotorCity Casino) states the purpose of the offering was:

"... to fund the April 2005 acquisition of 75% interest in MotorCity not controlled by CCM's principal shareholder, Marian Ilitch, co-owner of the Detroit Red Wings, the Detroit Tigers and Little Caesars Pizza.

(see complete announcement below)

---

Duo launch MotorCity funds. (Primary Market)

Source: Loan Market Week
Publication Date: 07/11/2005

Deutsche Bank and Merrill Lynch are leading a $625 million credit facility for Detroit-based MotorCity Casino. The credit, launched at a bank meeting July 6, consists of a five-year, $75 million revolver and a seven-year, $550 million term loan. Pricing on both tranches is LIBOR plus 2 1/2%. Motor City is owned and operated by CCM Merger.

A portion of the funds will be used to fund part of CCM's acquisition of MotorCity, while other portions will be used for expansion plans at the Detroit gaming facility, according to Moody's Investors Service. Moody's assigned a B 1 rating to both tranches and a B3 to $200 million of senior notes due 2013 that the company is also issuing.

Proceeds from the senior notes will be used to refinance CCM's $200 million existing second-lien term loan. The second lien, along with $550 million of first-lien bank debt, were used to fund the April 2005 acquisition of 75% interest in MotorCity not controlled by CCM's principal shareholder, Marian Ilitch, co-owner of the Detroit Red Wings, the Detroit Tigers and Little Caesars Pizza.

The ratings consider CCM's high leverage and single asset profile, Moody's states in its report. Pro forma debt/EBITDA is about 5.2 times, but is expected to increase to almost 7 times over the next 18 months as a result of a $275 million expansion plan that is expected to be funded with $50 million from cash flow and $225 million of additional senior secured revolver borrowings made available under a greenshoe option contained in the credit agreement. Positive ratings consideration is given to the successful operating history of the casino and the size of Detroit's casino market, the report states.

The MotorCity sale has been months in the making after MGM Mirage agreed to buy Mandalay Resort in June 2004 for $4.8 billion and the two companies were required to sell either its MotorCity stake or the MGM Grand Casino in Detroit to comply with Michigan law on casino ownership. Mandalay subsidiary Circus Circus had owned about 53% of MotorCity.

COPYRIGHT 2005 Euromoney Institutional Investor PLC.

Internal use only 10 copy limit. No further use w/o permission.

Publisher@euromoneyplc.com.

http://www.accessmylibrary.com/comsite5/bin/comsite5.pl?page=document_print&item_id=0286-9511706&purchase_type=ITM&action=print

You may also want to review these posts:

The Verifiable Truth: Detroit Tigers owner doubled his net worth gambling on casinos
The Verifiable Truth: Baseball and Casinos Don’t Mix, or Do They?
The Verifiable Truth: New York Times sports writer recognizes conflicts in Ilitch casino ownership

Gambling Stocks Still Look Like Good Bet

November 21, 2006 2:30 PM ET

Gambling Stocks Still Look Like Good Bet

NEW YORK (AP) - You've gotta know when to hold 'em.

Investors recently doubled down on gambling stocks despite a yearlong winning streak, wagering that expansion will spur growth and bettors will keep spending even as the economy softens.

The Dow Jones U.S. Gambling Index has surged more than 35 percent since the start of the year, easily outpacing the broader market as represented by the Standard & Poor's 500 index, which has added about 12 percent.

The gambling index, comprising 67 stocks weighted primarily toward large hotel-casino operators such as Harrah's Entertainment and MGM Mirage, has generally tracked sentiment about the overall economy.

After rising through April, the index gave back most of the gain amid worries consumers would be cash-strapped as oil prices climbed steadily ahead of the summer months.

"Those concerns didn't come to fruition," said Robert LaFleur, a gaming, lodging and leisure industry analyst with Susquehanna Financial Group. "Expectations were that higher gas prices and a softening housing market would pressure the industry, but visitation has remained strong."

Part of the reason is that casino performance does not necessarily track consumer spending, despite investor reaction.

"The Las Vegas strip market is driven more by overall economic growth," said Morningstar equities analyst Sumit Desai. "The stocks are more cyclical than the underlying business," he said.

And gamblers don't necessarily curb spending in economic slowdowns, anyhow. "The high-roller business is always going to be strong because these guys don't worry about short-term factors," LaFleur said.

Either way, there was more good news Monday when a leading economic indicator edged higher, suggesting the recent housing slump was not enough to offset lower gas prices and a rising stock market.

Another boost for the sector, said Frank Fahrenkopf, head of industry trade group American Gaming Association, is casino operators' expansion into other businesses.

"The industry has moved to the total entertainment package," he said. "People come to destination resorts -- they come to shop, to see shows and to play golf."

That trend in Las Vegas, which attracts more families and couples to what was long considered a bachelor's paradise, has turned off some of the city's more committed gamblers, but it has benefited the operators.

"It used to be that a casino's bottom line was about 65 percent gaming revenue," Fahrenkopf said. That's down to around 40 percent now at some companies, even as gaming revenue surged past $30 billion for the first time last year, according to the AGA.

And casino operators are boosting investment into additional entertainment venues. There are $20 billion worth of projects in Las Vegas alone that will be completed by 2010, said Desai.
"They want to offer a resort experience instead of just gambling," he said.

The danger is that new casinos and hotels could lead to excess supply. "That could be a hiccup for the industry, especially if it coincides with an economic slowdown," he said. "But generally the industry does a great job at managing growth."

Driving that growth -- in Las Vegas and Atlantic City, N.J., and also in the numerous other states that license American Indian casinos -- is increased social acceptance of gambling, Fahrenkopf said. The lobbyist traced the start of public softening toward gambling back to the reintroduction of lotteries in 1963 in New Hampshire. Now 48 states have some form of legalized gambling, from lotteries to horse racing to casinos.

But the surge that benefited casinos most came as poker soared in popularity, first through Internet sites and then, starting in 2002, televised tournaments. The Poker Players Alliance, a player-based lobbying group, estimates there are more than 70 million Americans who play poker. The number of poker tables in Las Vegas has risen to 405 in 2005 from 142 in 2003.

"Poker clearly helps," said LaFleur. "It's a tough game for casinos to make money on, but it attracts gamblers."

Harrah's, the country's largest casino operator, has turned the game's popularity into a major revenue source with its annual World Series of Poker. The company is currently being courted by private-equity groups with a $15 billion buyout offer, excluding debt assumption.

The offer, which would be about a 25 percent premium, helped bolster the sector, LaFleur said, because it sets a mark by which to determine the value of other companies in the sector. "The stocks often trade up in anticipation of other deals," he said.

The news helped Harrah's stock recover after it stumbled earlier this year on investor concerns about its lack of a presence in Asia.

Las Vegas Sands Corp., run by billionaire Sheldon Adelson, and Wynn Resorts Ltd., run by Steve Wynn, have licenses to operate in Macau, China -- the former Portuguese colony on the Chinese mainland that is now considered the next gambling paradise.

The expansion overseas marks the first time U.S. casinos have ventured abroad, lured by a strong gambling culture in Asia and the Chinese government's desire to attract foreign direct investment.

"The market trends are very strong in Asia and there are no indigenous companies with the experience to operate on the scale they want in Macau," LaFleur said, adding that Singapore is also a growing market for U.S. casinos.

The attraction of new markets is clear, but Desai warns that intense capital spending could hamstring some companies. "A lot of times investors think you can't lose with these stocks, but Trump went bankrupt two years ago.

"The problem is they require a lot of investment to keep them fresh and new and they have a ton of debt on the balance sheets. They are inherently risky investments," he said.
You also need to know when to fold 'em.

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