For the second time in five years, Harrahs will bankrupt its New Orleans casino to try to save it. As predicted in the column last week, Harrahs has formerly declared bankruptcy to work out its considerable debt load.
In papers filed last week, Harrahs revealed the downtown casino had $641.7 in liabilities and $87 million in assets. JCC Holding and four subsidiaries make up the casinos total assets and liabilities. Each of the casinos ventures is a separate business and includes the casino, developing the second floor of the casino, developing the restaurant and retail space and developing a separate piece of property.
The casino building is not listed as an asset. While JCC Holding owns the building, title would revert to the city if the casino closes under the terms of the land lease with the city.
The casino has been losing about $8 million a month since opening last October.
This bankruptcy is to reorganize only finances. It promises to be a "kinder, gentler" bankruptcy. The facility will stay open, at least for now, with no reduction in staff.
The November 1995 bankruptcy closed the temporary casino and halted construction on the property the casino occupies at the foot of Canal Street. It took almost four years for Harrahs to emerge from bankruptcy, to complete and open the permanent casino.
The casino is struggling under the load of a $100 million state tax payment to the city. With only $20 million or so a month in revenue, the casino is paying an effective tax rate of over 40 percent.
Harrahs has been lobbying the state Legislature to reduce its tax payments by one-half or face closure of the casino by this March 31. To do so would require a special session of the Legislature, which doesnt meet for its regular 2001 session until March.
Gov. Mike Foster was quoted again last week saying he would not call a special session unless lawmakers had an agreed-upon plan beforehand. With no agreement in sight, a special session looks doubtful but, of course, in Louisiana politics anything is possible.
The threat of losing those 2500 jobs keeps the pot bubbling for some sort of relief for the casino. I look for some sort of last-minute deal to keep the casino afloat.
Meanwhile, back at the Coast
As bleak as the casino situation looks in New Orleans, about 80 miles east on I-10 in Biloxi, things keep churning along. The Gulf Coast casino revenues are in their predictable winter swoon, however. Total revenues for the year will set a new record somewhere around $2.7 billion with $1.2 billion being registered on the Mississippi Gulf Coast.
Small expansions among the states 30 casinos continue. On the Gulf Coast, Beau Rivage has announced a five-month, $2 million expansion that includes remodeling its casino and expanding the buffet. The casino will add 250 slot machines, move its high end games to a more secluded area formerly used as a bar. The former high-end area will be used for high-denomination slot machines. Work should be completed in April.