FORTUNE COOKIE GAVE DEAL A BOOST

Published: Thursday, August 26, 1993
Edition: THIRD
Section: NATIONAL
Page: A1
Dateline: BATON ROUGE
Byline: By TYLER BRIDGES Staff writer

Text:

Wendell Gauthier was sitting in the casino "War Room" at his Metairie office Tuesday morning when the phone rang. It was Gov. Edwards and he had a strongly worded message for Gauthier, who headed the casino negotiations for Harrah's Jazz Co. with developer Christopher Hemmeter.

"There are people out of work in this state who need jobs," Edwards told him. "Get this thing together." He then hung up.

Gauthier has known Edwards for 35 years but never heard him speak so forcefully. He felt like he'd been given his marching orders.

Ten hours later, Gauthier and Harrah's cut a deal with Christopher Hemmeter that gave each group one-third of the casino.

Edwards' phone call was the pivotal moment in negotiations between Harrah's Jazz and Hemmeter that stretched over two days and ended less than an hour before the 3 p.m. press conference Edwards called at the Governor's Mansion Wednesday to announce the agreement, Gauthier and others said.

According to several participants and observers close to the events, here is the way the deal came down.

Negotiations took place most of Tuesday and Wednesday at the Sheraton Hotel in Metairie in suites overlooking Lake Pontchartrain. To throw off the media, they met under the name "the Rogers group."

Harrah's Jazz knew going into the negotiations that they would have to agree to demolish the Rivergate, company officials said. Their bid selected by the state casino board had called for renovating the Rivergate but discussions with City Council members and Mayor Sidney Barthelemy Monday and Tuesday convinced them that city officials would try to block any agreement unless the building came down.

There were two major sticking points during the negotiations, Harrah's Jazz officials said. One was the percentage of ownership each group would have. Hemmeter originally said he wanted half for himself and his partners, developer Daniel Robinowitz, Municipal Court Judge Eddie Sapir and lawyer-lobbyist Billy Broadhurst. Together they had the lease to develop the Rivergate. At a meeting Edwards refereed at the mansion a week ago, Harrah's Jazz offered Hemmeter 20 percent. Hemmeter balked and they didn't meet again until Tuesday.

The agreement in principle came at about 6 p.m. Tuesday on how to divide up the ownership, Gauthier said. "This is my best offer," Gauthier said, as he outlined the terms, and Hemmeter accepted them.

Harrah's Jazz officials said the other major obstacle was their demand that Robinowitz, Sapir and Broadhurst not be partners in the casino. Harrah's Jazz officials said they were wary of the three because of their political ties and because they were still angry that Robinowitz had not disclosed until recently that Sapir and Broadhurst owned shares in Hemmeter's Grand Palais.

If Hemmeter's three partners retained their share of ownership, "It was a deal breaker," said a Harrah's Jazz official.

Hemmeter Tuesday evening agreed to give Robinowitz, Sapir and Broadhurst only a limited role in his stake of the casino, with no say in decision-making.

The talks that evening with Hemmeter ended at about 7 p.m., but Harrah's Jazz officials met late into the night to ensure they had agreement of all their partners, Gauthier said. The major problem was that Harrah's top executives were on an executive retreat in Alaska and were hard to reach. At times the phone went dead during conversations.

"Promus (the parent company of Harrah's) executives had to guarantee a whole new building," Gauthier said. "They had to talk to their financial people (in Memphis). They said finally, `Go! Go! Go!' "

The two sides began meeting Wednesday at 8 a.m. at the Sheraton. While an agreement in principle had been reached, there were many details to be worked out.

Gauthier took a quick break to eat lunch. Food had been ordered out from the House of Lee.

"Depart not from the path which fate has you assigned," read his fortune cookie. Gauthier felt reassured, he said later.

At 2:10 p.m., they ended the negotiations to fly to Baton Rouge in Hemmeter's jet. During the flight, Gauthier said he and Hemmeter discussed plans for opening the temporary casino in the Municipal Auditorium.

When they got to the Governor's Mansion, they went around to the back entrance to avoid the reporters waiting for them outside.

"There were times I thought the whole deal would fall apart," Gauthier said as he slumped in a chair at the mansion after the press conference. "But we all knew we had to do this, as the governor reminded us."

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#ART:

*** THE CASINO ***

The Rivergate comes down. It will be replaced by a casino bigger than the Harrah's Jazz version, smaller than Grand Palais', but still the world's biggest casino. Developer Christopher Hemmeter will oversee design.

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*** THE TEMPORARY CASINO ***

It will be in the Municipal Auditorium and is expected to open in December or January.

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*** THE OWNERS ***

Ownership is split three ways among Grand Palais, Harrah's Casino Hotels and the Jazzville group of 10 south Louisiana businessmen.

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*** THE CITY ***

New Orleans probably will get a $15 million advance payment preventing imminent layoffs of more than 300 workers.

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GRAPHIC

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*** HOW THE DEAL WENT DOWN ***

AUGUST 11 - State casino board chooses Harrah's Jazz Co.

AUGUST 16 - Hemmeter demands 50 percent stake in project.

AUGUST 18 - Negotiations at Governor's Mansion end in stalemate.

AUGUST 24 - Afternoon negotiations take place at Metairie hotel; continue to 7 p.m.

AUGUST 25 - Talks begin at 8 a.m., end at 2:10 p.m.; negotiators hop on jet, fly to Baton Rouge for 3:45 p.m. announcements.

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STAFF GRAPHIC BY SCOTT FLODIN

Illustration: THEY SPLIT THE POT

Gov. Edwards, center, clasps hands with developer Christopher Hemmeter, left, and Jazzville representative Wendell Gauthier after announcing plans to merge the interests. [COLOR]

STAFF PHOTO BY MATT ROSE



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