Barden casinos in debt talks

Barden casinos in debt talks
Bankruptcy lawyers to discuss reorganization of four properties owned by ill businessman

Sometime today, as Don Barden continues a fight against cancer and a family-court battle with his wife, the dismantling of his casino empire may accelerate.

Bankruptcy attorneys are scheduled to meet this morning in U.S. Bankruptcy Court in Delaware regarding the reorganization of Barden's debt-ridden casino holdings. If approved, the emerging company will leave the Detroit mogul on the outside of a gaming business he spent more than a decade building.


The four Barden-operated casinos in Indiana, Mississippi and Colorado seek to shed millions of dollars in debt — the byproduct of the recession and increased competition. Currently, Barden Development Inc. is the parent company for Majestic Holdco LLC and its subsidiaries. If the proposed reorganization goes through, it would have new management controlled by members appointed by creditors.

That would leave Barden, 67, with only one casino property, in Las Vegas, where he was the first African-American to wholly own a casino.

It will be the latest in a series of wrenching changes for a man considered one of the most successful African-Americans in the country who got his start with a cable television company in Inkster.

"It's a sad situation, but that's the nature of the business," said Adolph Mongo, a business and political consultant who has known Barden for years.

"The bottom line (though), is being in bankruptcy court isn't the most important thing in his life right now," Mongo said.

Barden, who is not required to attend the hearing in Delaware, is undergoing treatments for cancer.

According to court filings this month by his wife, Bella Marshall Barden, he is being treated for "late stage metastasized cancer, including brain cancer." Marshall Barden, Wayne County's chief operating officer, claims her husband is no longer physically or mentally capable of "effectively representing his interests."

That claim, in a lawsuit asking the court to protect her interests and preserve the "financial status quo" of the marital estate, prompted Barden to file a counterclaim for divorce.

Mongo said he talked with Don Barden last month and found him coherent and in good spirits. "He's a fighter and I think the first thing on his mind is his health," he said.

According to bankruptcy records, Barden's casinos owe more than $700 million to creditors. The company was hammered by the recession and its effect on people's disposable income. And in regional gambling markets where repeat local customers are paramount, casinos have to constantly revamp themselves.

"It's imperative that the operators keep their products fresh," said Joseph Weinert, senior vice president for Spectrum Gaming Group, which analyzes the gaming industry.

"If you don't have capital to renovate and your competition does, you're going to find yourself behind the eight ball pretty quickly."

Barden's isn't the only hurt gambling business. Weinert said bankruptcy has enveloped several companies, including those owned by Donald Trump. "It's certainly not uncommon," he said.

Less discretionary income for slots and another bankruptcy

From Indiana --

November revenues dropped 9.7 percent from October and 11.5 percent from November 2008. Majestic Star I in Gary was the only casino to show a gain from October to November, posting a 0.2 percent increase.

"There is some cause for concern," said Ed Feigenbaum, the publisher of Indianapolis-based Indiana Gaming Insight newsletter. Feigenbaum attributes the poor economy to the increasingly lower casino revenue statewide since July.

"It's something we're not accustomed to seeing," he said. " We saw the same progressive decline in 2007 but not quite this much."

Each of the five Northwest Indiana Casinos -- Horseshoe Casino in Hammond, Ameristar Casino in East Chicago, Majestic Star I and II in Gary and Blue Chip Casino in Michigan City -- individually reported less revenue from the same period a year ago.

Fewer people have discretionary income these days, which affects casinos' revenues, Feigenbaum said. For many people, "these aren't even choices, anymore."

Ameristar saw the highest percentage drop in revenues year over year with a 16.3 percent decrease from November 2008. Majestic Star I had the next-largest drop with a 14.8 percent decrease, followed by Horseshoe with a 12 percent drop. Horseshoe, which reported a 12 percent revenue drop from November 2008, posted the largest year-over-year revenue decrease of $5.6 million.

Attendance at the local gambling riverboats followed suit, as 71,970 fewer people walked through the turnstiles in November when compared to October. The five casinos saw 23,074 fewer customers than in November 2008. Both Majestic Star I and II reported 15.9 percent fewer customers month to month, and 14.38 percent fewer customers from November 2008.

Feigenbaum doesn't believe Majestic's bankruptcy proceedings will disrupt its revenues.