The empires built by Greektown Casino

Just months before Greektown Casino opened in November 2000, there was a shakeup of the property.

In June 2000, Kewadin planned to buy the Gatzaro and Papas’ 40% stake in Monroe Partners after what the Associated Press at the time described as a forced surrender “due to issues uncovered in their background during state-mandated investigations.” This sale created a 90% ownership structure owned by the Sault Ste. Marie Tribe of the Chippewa Indians and 10% by the remaining local partners, Crain reported at the time.

But Archer was also pushing for more local ownership, so the tribe agreed to sell 10% of that interest, creating an 80-20 structure.

“It put a burden on Greektown from day one due to the significant redemption of interest,” he said. “Before we even built the casino, before we built the hotel, we had a significant inherited debt that we were saddled with that drove a wedge between us and the Sault tribe.”

Documents later filed in federal court say the tribe and local property group were “obligated, directly or indirectly, to pay the installments” to the Gatzaroses and Papases, but by 2004 both groups were in default. of these debts. They then agreed to a discounted cash buyout of $95 million for the Gatzaroses and $55 million for the Papas, with approximately $50 million outstanding.

Jackson noted that around 2005, he and Blackwell sold Barden part of their stake, giving him a 3.8% stake in the casino. The Detroit Free Press reported at the time that the sale was worth $11.4 million.

This became important due to a right of first refusal provision that required the tribe, if it sought to sell the casino, to offer it first to local owner partners. And because Barden had amassed enough wealth from gambling and other business ventures, the local partners would have enough financial firepower to conduct a serious bid to purchase Greektown.

“The tribe didn’t anticipate this maneuver, that we would bring in someone like Don,” Jackson said. “His casinos were smaller than Greektown, but they were successful and he owned games and knew the operational side. He challenged the leadership of the tribe from operational and management opposition. of power but also a position of experience in the industry… At that point, it became somewhat contentious and the relationship deteriorated.”

Barden and other local partners “challenged the tribe and the operators at the time regarding the running of the casino, specifically how (they) marketed the casino to the African-American market,” Jackson said.

After putting a buyout offer from the tribe on the table, Jackson said, the tribe hit back with a buyout offer from local owners, including Barden. They agreed to a four-year buyout, and in the third year, according to Jackson, the tribe received what he called “bad legal advice”.

Messages left for former Tribal Chairman Aaron Payment were not returned.

With a debt to local partners, the Gatzaroses and Papases, and during construction, the tribe filed the casino for Chapter 11 bankruptcy, thinking they could get out of debt while retaining ownership of the casino.

An adjustment plan was approved in January 2010 and Greektown emerged from bankruptcy in June 2010, Crain’s reported at the time. The bankruptcy eliminated about $500 million in debt, CEO Cliff Vallier said in a statement at the time.

Under the terms of the plan, the tribe lost ownership of the casino to a group of secured creditors led by New York-based Merrill Lynch, which had loans secured by liens on the casino property, Crain reported. . The new ownership group was made up of institutional shareholders who were original shareholders known as Greektown Superholdings Inc. and Greektown Newco Sub Inc. It was led by a board that included current Mayor Mike Duggan; Freman Hendrix, former deputy mayor; and Darrell Burks, director of PricewaterhouseCoopers LLP in Detroit.

Three years later, the casino was sold to a subsidiary of Dan Gilbert; he then sold it in 2019 for $1 billion: $700 million for Vici Properties Inc. to buy the property’s land and real estate and $300 million for Penn National Gaming Inc. for the assets of operation.

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