On September 15, Clay Point Property owned by the Sim family of Hattiesburg, reportedly rejected an offer of million by an established—but unnamed– casino operator to purchase the land on which the Margaritaville Casino Biloxi was built. The action would have kept the casino open and saved more than 300 jobs.
Customers and employees were unaware of the dramatic developments the day the casino closed at 10:00 p.m. Michael Cavanaugh, attorney for MVB Holding LLC, which that operated the casino, said “The same day the owners turned down $13 million cash.” He added the property was appraised at $13 million and the deal would have closed within 60 days.
MVB filed bankruptcy on September 16, the day after closing. On September 22, Clay Point LLC filed a motion asking the bankruptcy court to force MVB to comply with the terms of the lease or abandon the building. In the filing, Clay Point stated MVB owes $4 million in rent and $825,000 in taxes, and has little or no equity to pay the landlords.
Cavanaugh disputes those claims and said Margaritaville paid the landlords $250,000 before construction began. The casino opened in May 2012 and the property owners agreed to defer the first year’s rent of $1 million. Cavanaugh said a year later, when the casino was struggling, Clay Point offered MVB a lease modification to write off the accrued rent and give an 18-month holiday from paying rent. Clay Point Property was to be paid $300,000 after ground was broken for a hotel, which MVB said was necessary for the company to be profitable. It never was built.
Also on September 15, MVB and Margaritaville General Manager Doug Shipley settled a lawsuit filed in February 13 by Golden Nugget Casino, alleging Shipley breached his employment agreement by stealing trade secrets and using confidential information when he left Golden Nugget and became Margaritaville’s general manager.
Robert Byrd, MVB’s bankruptcy attorney, has arranged for slots machines, beer and food to be removed.
Cavanaugh also represents Boyd Gaming, which recently asked the city to vacate the streets in order to build a parking lot at its IP Casino Resort. But Wayne Hengen, an attorney representing the owners of the pawnshop next door, said that would kill the shop’s business. “They really wouldn’t have anybody who could park at their store. Not even them, there’s not enough room,” Hengen said. Cavanaugh responded the pawnshop owners would have plenty of parking if the parking lot were built. “I don’t understand why we’re beating this dead horse when everything in the world improves his position,” said Cavanaugh. The measure passed in a 5-1 vote.
At Biloxi and other coastal communities’ casinos, five weekends in August delivered the best August since 2010, earning $94 million in winnings for the month, up by $4 million over August 2013, according to Mississippi Department of Revenue figures. As a result, despite the recent closure of Margaritaville Casino Biloxi, the Biloxi market is $7.5 million ahead of last year.
River county casinos dropped $8 million to $90 million for August 2013.
Statewide, gross casino revenue decreased by 2 percent to $175.1 million versus August 2013.
Allen Godfrey, executive director of the state gaming commission, said although two casinos closed in Mississippi this year, each had a different reason: Harrah’s Tunica because of increased competition and Margaritaville because it did not have a hotel. Godfrey noted South Mississippi now has 11 casinos. Scarlet Pearl, now under construction, is expected to open in D’Iberville in December 2015.
