Published: Wednesday, December 13, 1995
Column: JAMES GILL
Byline: By JAMES GILL
It is time to admit that the Municipal Auditorium's days as a casino are over, and Harrah's must yearn for the day when New Orleans is no more than a bitter memory. The feeling is one that New Orleans should warmly reciprocate.
Harrah's financial forecasters say that they could turn a modest profit at a scaled-down temporary casino, although not enough to meet their interest payments. These are the same guys who concede they were off by about $250 million a year when they projected revenues at the permanent casino, but that little miscalculation does not appear to have undermined their confidence.
They now explain that, if they are to bring us the inestimable benefits of half a temporary casino, it will be necessary for the city to give them a break on rent, suspend a study on the impact of gambling and virtually quit all this tiresome regulation.
Oh, and don't even think of trying to enforce that guarantee to complete construction of the permanent casino. That was the guarantee that came with "the full faith and credit" not of the New Orleans partnership but of the $2.4 billion parent company, Harrah's Entertainment, its vice president Colin Reed proclaimed just before the crash.
This does not read like a list of demands that anyone, even in a business founded on greed, could conceivably expect to be met. Indeed, it looks more like a charade designed to give Harrah's a pretext to limp back to Memphis, although Morial now responds that he is willing to negotiate.
But he can't be serious either, for he demands that Harrah's reopen the auditorium for at least a year and pay $12 million upfront in rent. Since the city was getting only about $500,000 a month before Harrah's closed up shop and filed for bankruptcy at Thanksgiving, Morial would appear to be overplaying his hand.
He also wants, by Jan. 1, a promise from Harrah's that the permanent casino will be completed. Our experience with Harrah's suggests that the mayor should require more than a handshake to seal any such promise, but surely the time has come to acknowledge that these negotiations will go nowhere.
Harrah's may have little choice but to cut its losses, because it is hard to believe that anyone in that company still believes that a casino at the foot of Canal Street is a pot of gold at the end of the rainbow.
Certainly the owners of the Flamingo do not regard the market there as all that strong; they have found gamblers so thin on the ground that they are switching to a smaller boat.
The collapse of Harrah's could be contemplated with complete equanimity except that it means another knock to the city and the state. One bond trader has been quoted as saying that the debacle had convinced him never to do business in Louisiana again, and Gov. Edwards chimes in that Harrah's failed because we drove too hard a bargain.
Well, top executives in the casino industry are generally assumed to have progressed beyond the babes-in-arms stage, and, Harrah's knew coming in what the tax burden would be. It was not, in any case, high taxes that killed the casino, but the folly of investing $820 million, mostly borrowed at ruinous rates, to open a casino in a small city and face vigorous competition from suburban boats and the Mississippi Gulf Coast.
The burning question now is what we do with the permanent casino building. It has had some poor reviews - Gov.-elect Mike Foster calls it a "horrible monstrosity" and City Councilwoman Peggy Wilson thinks it an "abomination" that should be demolished.
Whether we do that, or adapt the building to other uses, is what we should be worrying about. It is time to stop pretending that Harrah's can make a success of the land casino in New Orleans.
James Gill is a staff writer.
Copyright © The Times-Picayune Publishing Corp.