If I Had a Hammer: Slots in Pittsburgh #2

Since Don Barden's Majestic Star casino group was awarded the one slots license in Pittsburgh last Wednesday, there has been a lot of ballyhoo about the situation, ranging from the critically serious (the Penguins could leave Pittsburgh) to the annoyed (the Steelers and Del Monte Foods, among other North Shorers, are more than a little wary of the effects of a casino in their neighborhood) to the out and out excited (numerous smaller (read: less successful) North Shore businesses). But perhaps the most interesting backlash of all this has been a grumbling among some in the city that Barden, the only minority in the slots license war, was the beneficiary of some sort of super-affirmative action; that he won the licensure from the state simply because he's black. At first, this seemed to be the view of some wild-eyed Penguins fans upset that Isle of Capri, the slots owner promising $290 million for a new multi-purpose arena that would have ensured the Penguins' viability in Pittsburgh for decades, did not receive the license. On the surface, the complaint is wholly valid because neither Barden/PITG Majestic Star nor Forrest City/Harrah's had any kind of inclusion in their plans to give Pittsburgh that much money upfront for capital development. However, to go so far as to say Barden won the license simply because he's black is a little hard to swallow. But to be fair, Gov. Ed Rendell, in a statement released Dec. 20, didn't help this conspiracy theory, referring to Barden as "one of the most successful minority gaming owners in the U.S." If Barden's race had nothing to do with his being awarded the license, then why refer to him as a "successful minority gaming owner"?

More than that, though, a story published Dec. 22 in the Tribune-Review throws the other half of Rendell's statement -- that Barden is a "successful" gaming operator -- into doubt. According to the story, "Barden's only other property under the Majestic Star brand [are] two casino boats in Gary, Ind. Barden took over the Trump Casino boat in January." (Barden also owns three casinos under the Fitzgeralds brand.) Since Barden took them over, the properties have lost money. As cited in the story, the boats took in $11 million in revenue in November 2005 and $8.8 million in November 2006.

Merriam-Webster defines "successful," in part, as "gaining or having gained success (successful investor)." Losing $2.2 million in less than one year is not gaining or retaining any kind of success.

The Tribune-Review story goes on to say that in an effort to make the boats more profitable, Barden has been cutting costs. One of his cuts was a reduction in gaming tables from 66 to 37. To be fair, this shows that Barden is at least attempting to keep his interests afloat – as any good business owner would. But what does all this say about Barden’s ability as a gaming operator?

More questions have sprung up in the past few days concerning Barden’s ability to cash in on his promise to have the Pittsburghcasino, a sprawling $450 construction, up and operating by March 2008. A Post-Gazette story run on Dec. 25 expertly -- and starkly -- investigates the trials and tribulations of casino construction. Kevin Daly, "a professional construction scheduler [and] the head man for Benchmark Associates, a St. Louis-area consulting firm," is quoted over and over again as doubting Barden's ability to erect the kind of facility he is touting. The reason is that the timetable isn't simply aggressive, it's almost unworkable. Daly is currently planning the design and construction of a new casino being built near the Gateway Arch in St. Louis, Lumiere Place. This casino is similar in size, scope and monetary figures to Barden's proposed North Shore facility. And like Barden, Daly is going to be utilizing double shifts in order to complete the project -- in a proposed two years.

The rest of the story is eye-opening in how iffy Barden's plan seems to be. But the most troubling aspect revealed by the Post-Gazette is that Barden has never constructed a new casino, let alone one as big as the proposed North Shore facility. Besides the two riverboats Barden operates, the three casinos run under the Fitzgeralds brand were purchased as pre-existing structures. If this is the case, what kind of compelling argument was given to the Pennsylvania Gaming Control Board to entice them to vote for Barden's casino plan as the best one for Pittsburgh and Pennsylvania?

To recap, Barden was the only minority gaming operator with a proposal for the Pittsburgh casino. The only other pieces of his Majestic Star brand, the one that will operate the Pittsburgh casino, are riverboats that are losing money. His plan for getting a casino built and running by March 2008 seems not only unlikely but out-and-out ridiculous. And he has never, ever overseen the construction on the scope of the Pittsburgh casino. While you're at it, top that off with these facts: Barden's plan offered the fewest number of slots machines and, as a result, offered the lowest amount of tax revenues for the city and state.

There is something seriously afoot in this casino business that goes beyond the Penguins leaving or staying. The PGCB has yet to release its reasoning for awarding the slots license to Barden, but you have to hope that when they do the reasons are damn good because Barden did not offer the best plan for Pittsburgh and is not the best person to operate a casino in the city. Besides his spotty track record as a casino operator, his plan for getting this casino built is cause for great concern. How many corners will have to be cut in order to build something as aesthetically and constructionally difficult as a $450 million casino? If he's dead-set on getting it running by March 2008, how will that effect the aesthetic quality of the construction? Will it transform from space-age dream into modernist nightmare? And what about the safety concerns this accelerated timetable will raise, not only for those working on the project but for the quality of the work?

Ultimately, I don't think the PGCB awarded Barden the license because he's black. I think the awarded Barden the license because there wasn't any controversy around him and his plan the way there was around Harrah's and Isle of Capri. But when you get right down to it, the reason there wasn't any controversy was because no one actually believed Barden would win the contest, and no one thought he would win the contest because his plan was obviously the worst of the three. In their haste to do away with all the noise around the Pittsburgh casino, the PCGB rushed to the wrong judgment and inflicted serious damage and danger on Pittsburgh.

And for anyone who believes that the Penguins potentially leaving Pittsburgh is the least of this damage, think again. If the Penguins leave, Pittsburgh will lose vital revenue streams that come from an NHL franchise existing in town. And when the team begins to win championships with their superstars-in-training nucleus of young players, Pittsburgh will lose out on a lot of money and a lot of positive psychological reinforcement. But perhaps more important than that, an entire generation of Pittsburghers will watch a major league sports franchise walk away from their city. And they'll hold this memory forever. And they'll draw on this memory when it comes time to decide: should I live and work in Pittsburgh? (Dave Molinari of the Post-Gazette wrote a brilliant column on Dec. 24 addressing this issue.)

When Don Barden was awarded the license to operate a slots casino in Pittsburgh, maybe the PCGB thought they were doing the right thing. Or maybe they thought they were leveling the racial playing field. Or maybe they thought they were alleviating major controversy. Whatever the reason, their short-sightedness, while it might result in some short-term gains (whatever they might be), will ultimately translate into awful, tremendous and possibly cataclysmic long-term losses.