It’s one more delay for the €8 billion (US$8.86 billion) integrated resort project planned for the former Hellenikon International Airport in Athens, Greece. Incomplete paperwork on the part of a license bidder apparently caused another holdup in the selection of an operator. According to reports, the latest snafu could stall the project for another six months, or even derail the plan completely.
The 30-year gaming license was to have been awarded by the end of the year, with groundbreaking soon to follow. With that timeline now in jeopardy, the two bidders, U.S.-based Mohegan Gaming & Entertainment and Hard Rock International, are threatening legal action. According to Greek news website eKathemerini.com, the Hellenic Gaming Commission is now “calling the candidates for evaluation in order to report back on what is the best combined offer.”
The airport, located four miles from Athens, was built in 1938 and closed in 2001, after a new airport was built in advance of the 2004 Olympics. In 2011, a bold plan was undertaken to transform the neglected waterfront parcel into a high-end complex with commercial and residential space, offices, a marina and aquarium, and the anchor development: a lavish casino resort.
Altogether, the destination was projected to create 75,000 jobs, bring in 1 million new tourists per year, contribute 2.4 percent to Greece’s gross domestic product at completion and generate more than €14 billion (US$15.5 billion) in taxes over 25 years. But eight years later, the grand plan remains stuck in a holding pattern.
The first big impediment was former ruling party Syriza, which didn’t welcome foreign investment even if it could help alleviate Greece’s decade-long economic crisis. New Democracy leader Kyriakos Mitsotakis, sworn in as prime minister this year, had different ideas, and promised to jumpstart the airport project again. In February, when the project went out to tender, the list of possible bidders included not just Hard Rock and MGE but Malaysian operator Genting and U.S.-based Caesars Entertainment.
Brendan Bussmann, partner and director of government affairs for Global Market Advisors (GMA), said “every major operator” looked at the opportunity; in light of the latest holdup, they may be glad they sat this one out.
In an interview with GGB News, Bussmann and GMA Managing Partner Steve Gallaway agreed that the fault was not in the site or with the operators but with Greek authorities, whose inept management of the process has caused back-to-back delays. Following setbacks in April, May and June, Caesars bowed out, followed by Genting.
“This is another procedural delay in a process that’s had procedural delays since it was launched 15-plus months ago,” said Bussmann. “I think there were six or seven delays over the course of the RFP (request for proposals). I guarantee you the developers are frustrated, because the casino is the launching point for the main portion of the development. It’s the anchor. And you cannot launch a ship without its hull.”
“We had clients who were actively looking to submit, but it was an unrealistic timeline, 60 days to respond,” said Gallaway. “The operators looked at it and said, “This is absurd. You cannot expect anyone to put together this information in 60 days.’ And then when you have one delay, two delays, three, four, five … It was a very poorly launched and horrifically written RFP.”
Gallaway went one better, saying, “This ranks as the highest on the list for the worst RFP we’ve ever seen,” light on details, “from the size of the building and constraints on the developer to develop” to the actual cost of the land. The plan called for a “postage stamp”-sized casino floor with little room for expansion and non-gaming amenities.
“I know operators who said, ‘I can put all the components in, but I can’t put in the back of house,” said Bussmann. “This RFP was written by people with no knowledge of how the IR industry works.”
All those uncertainties “scared off” operators and made a splendid site on the Athenian Riviera unattractive to investors, Gallaway said. “We were hoping for a strong regulatory structure and a well-written, well-launched and well-timed RFP process. This could have been a great development if they had just allowed investors determine the market opportunity that would have provided strong levels of job creation and economic, while creating beautiful IR on the south port of Athens.”
The proposed tiered tax rate of 8 percent to 20 percent, by the way, was “very reasonable,” according to Gallaway.
In May, Mohegan Gaming CEO Mario Kontomerkos was enthusiastic about the Hellenikon project, saying it would put Athens at the “center of the world” as a prime leisure and business destination.
“With a two-hour flight, it’s connected to 19 countries with 6 percent of the world’s population and 25 percent of the global GDP,” Kontomerkos said at the Delphi Economic Forum. He may feel less rapturous about it now, particularly with plans to relocate the Regency Casino Mont Parnes, overlooking Athens on Mount Parnitha, to the Athens suburb of Marousi.
Asked how the scenario may play out from here, Gallaway didn’t sound optimistic. “It’s basically a really bad situation for everyone involved: the operators, the government, and the Greek Gaming Commission,” he said. “Unfortunately, I don’t see it ultimately being developed to a degree anywhere close to what the government had originally anticipated.”