Greektown casino's history

No mention is made in recounting the history of the community destruction that accompanied Greektown.

Greektown casino's history
March 24, 2012

Nov. 10, 2000: Greektown Casino, principally owned by the Sault Ste. Marie Tribe of Chippewa Indians, opens a temporary casino -- the last of Detroit's casinos to do so -- and has since seen its revenue straggle compared with MGM Grand Detroit and MotorCity Casino Hotel.

Sept. 12, 2005: Greektown abandons plans for a permanent $450-million casino-hotel complex at Gratiot and I-375 and says it will stay at the temporary location but expand and build a 400-room hotel and parking structure.

Dec. 31, 2007: Greektown fails to meet state-mandated revenue projections.

May 30, 2008: Loaded with debt and years of financial troubles, Greektown files for Chapter 11 bankruptcy protection.

Nov. 29, 2008: Casino opens a luxurious, secluded high-limit gaming area after a six-month remodeling.

Feb. 12, 2009: Greektown's glitzy 400-room hotel in a gleaming, 30-story glass tower opens, years behind its competitors.

June 30, 2010: Greektown Casino-Hotel emerges from Chapter 11, owned by a group of investors, including several hedge funds. Its debt, which had peaked at $875 million, was reduced to $385 million. Ownership interests of the Sault Tribe is wiped out in bankruptcy.

June 15, 2011: New CEO Michael Puggi is approved by state gaming regulators.


Unhappy investor bets Greektown Casino could make more money
By Matt Helms
Detroit Free Press Staff Writer

Greektown Casino-Hotel's lackluster performance since leaving bankruptcy nearly two years ago has prompted a major investor to accuse the casino's board of directors of not doing enough to reverse losses in market share and revenue, according to securities filings.

Prominent shareholder Brigade Capital Management, a New York hedge fund, says in proxy filings with the U.S. Securities and Exchange Commission that it wants seats on the board of the casino's parent company, Greektown Superholdings.

The filings reveal a significant rift over the recovery strategy for Detroit's third-place casino.

It's not that Greektown isn't making money, insiders say, but that the casino isn't profiting the way it should be compared with its better-performing competitors -- especially since Greektown shed $500 million in debt from its bottom line in Chapter 11 bankruptcy.

"Greektown should be much better off" at this point, said Jake Miklojcik of Michigan Consultants in Lansing, a casino analyst who served on the casino's interim board during its bankruptcy. The fact that a major investor wants a more hands-on role in managing the casino indicates its concerns "have got to be somewhat serious," he said.

Brigade, which owns 15% of Greektown's outstanding capital stock and controls about 7% of its shareholder votes, says it's concerned that Greektown saw significant declines in market share and earnings under current board Chairman George Boyer amid a recovery in Detroit's gaming market that boosted the city's other casinos, market leader MGM Grand Detroit and second-place MotorCity Casino Hotel.

While combined revenue at Detroit's casinos grew 6.3% from 2009 to 2011 (from nearly $1.34 billion to more than $1.42 billion last year), net revenue fell by 0.5% at Greektown, and its market share slipped from 25.8% to 24.8%, Brigade argues in the filings. Brigade estimates the casino's equity value fell from $318.6 million in June 2010 to $227.9 million as of December.

Brigade declined to comment about the filing, but its proxy filings make clear the fund is unhappy with Boyer and wants its two nominees, James Barrett Jr., a Las Vegas CPA, and New York financier Neal Goldman, on the board.

Brigade says Boyer has presented the company's financial data in ways that minimize decline in cash flow compared with more generally accepted Wall Street measures.

While the company's cash flow margin, market share and equity value fell under Boyer, his compensation did not. The $743,000 in pay and benefits he makes "is outrageous by any standard, but particularly for a chairman who has destroyed equity value under his tenure," Brigade said in preliminary proxy statement filed Tuesday.

Neither Boyer nor Greektown CEO Michael Puggi could be reached for comment this week. Casino spokeswoman Lloryn Love said both were out of town on business and unavailable for interviews.

The casino released a statement Friday saying it "believes there are numerous inaccuracies in the Brigade proxy statement, but is constrained, under SEC regulations, from addressing those inaccuracies, except in a proxy statement filed with the SEC. Greektown intends to outline its position and point out those inaccuracies in its proxy statement, which will be filed with the SEC shortly."

Greektown announced Friday that its board unanimously approved a slate of nine directors for election or re-election on May 8: Barrett, the director proposed by Brigade, along with Boyer; investor and Toronto Raptors founder John Bitove; prominent Detroit area accountant Darrell Burks; Detroit Medical Center CEO and President Michael Duggan; former Detroit Deputy Mayor Freman Hendrix; New York hedge fund founder Soohyung Kim; lawyer and casino consultant Yvette Landau, and Charles Moore, a crisis management and turnaround consultant who led Greektown's bankruptcy effort for the Birmingham firm Conway MacKenzie.

Brigade's effort to get seats on the board also will be complicated by the need for principal investors in the fund to go through ownership-suitability background checks by the Michigan Gaming Control Board. Regulators granted Brigade and other investment-fund owners of Greektown waivers that allowed them to bypass the state's suitability checks, a status Brigade forfeited with its bid for more control.

Puggi took over as CEO at Greektown in June and quickly touted Greektown's strategy to restore its fortunes and attract new customers with an expansive remake and costly capital projects including a top-to-bottom remodeling through 2013. The casino recently completed refurbishing table game space into one new SuperPit and a makeover of a bar and promotions space. The casino also is building a valet parking facility on the site of a former Wayne County Sheriff's Office building to make it easier for patrons to get inside. The improvements are said to cost tens of millions of dollars.

But people familiar with Brigade's concerns, who talked to the Free Press on condition of anonymity because they're not authorized to speak on the firm's behalf, said the potential management shakeup amounts to a referendum on the board's decision to bank the casino's recovery on expensive remodeling and capital improvements. They said there should be a stronger focus on day-to-day marketing and planning events and attractions to lure new business and revenue.

Brigade lays such strategy decisions on Boyer, who was named board chairman and interim CEO of Greektown after it emerged from Chapter 11 in June 2010 under the majority ownership of a group of private equity and hedge funds, including Brigade, MFC Global Investment Management and Oppenheimer Funds.

Detroit's casinos proved resilient during the recession, with revenues rebounding moderately after a slight dip in 2009.

Figures compiled by Michigan gaming board regulators show that, comparedwith 2009, MGM Grand's revenues bounced back 9.5% in 2011, and MotorCity's revenues grew nearly 5.9%. Greektown's revenues rose 1.9% in that period.

Still, Greektown remains profitable, the insiders say. Greektown had $30 million in cash on hand at the end of 2010, and $45 million in cash at the end as of Sept. 30, filings show.

Puggi has previously said the casino expected its market share to drop while it was remodeling major parts of the casino, temporarily reducing the number of slot machines and tables available for play. Since the first big phase of the makeover wrapped up in September, Greektown's market share has been rebounding, from 23% that month to 25% as of February, gaming board figures show.


Prominent Greektown investor says casino should rake in more dough
By Ashley C. Woods

Under the casino's chairman, George Boyer, whom Brigade claims is presenting financial data "in ways that minimize decline in cash flow," the hedge fund claims the casino's equity value fell from $318.6 million in June 2010 to $227.9 million as of December.