It sounds like a plot from a movie. But it isn’t. The future of Pittsburgh’s new arena may be tied into whether the North Shore casino opens as planned next May.
Bugsy Siegel never had these kind of problems. Don Barden promised the city of Pittsburgh $7.5 million for 30 years if his plan for a casino was approved, money that was pledged to help pay for a new Pittsburgh Penguins (NHL) arena. But now Barden wants to transfer the license for slots to Walton Street Capital Partners. So far, Pennsylvania state regulators have not acted on the matter.
Neil Bluhm, one of the big investors in the project, says if nobody acts by the end of the month, they might be looking elsewhere to build their casino. If that happens, a major funding source for the new rink could dry up. And if that happens … well … Pens owner Mario Lemieux doesn’t want to think about the consequences.
And you thought refinancing your house was tough.
This started when Barden ran into financial troubles. His share of the project has slipped from the original 81 percent (the rest being with singer Smokey Robinson and the family of ex-Steelers running back Jerome Bettis) to 25 percent and now to 20 percent, with the increase in the Walton Street share. (Robinson and the Bettis family are no longer investors.)
The Walton Street guys say they will honor Barden’s promise to the Pens and the city if they get the license. They also said they would pay some subcontractors who have been waiting for a couple of months now.
But they added they might not necessarily put into as many slots as Barden had said he would.
This annoyed some legislators, who complained of having guns pointed to their head and the like. Bluhm, who has been rumored to have nearly $600 million tied up in the project, says this isn’t so. He’s just a businessman trying to make a deal.
The ones who are suddenly nervous about the deal are the Pens, basically an innocent bystander in the deal.
Pittsburgh Mayor Luke Ravenstahl said yesterday he’s sticking to his guns regardless of any deadline, and regardless of who emerges as the city’s lone slots casino operator.
"I don’t know if I’d refer to it as being held hostage," he said. "But we do need to consider what that deadline means."
He said financing deadlines shouldn’t dilute the Gaming Control Board’s obligation to hear the city’s position: that all commitments made related to arena funding, casino design and neighborhood development help be maintained, and that the emerging ownership group proves that it has the money to build and operate the casino.
"We don’t want to just continue construction at the expense of a sub-par facility or financing that doesn’t work."