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When Bad Ideas Fly—II

The Coming Destruction of South Philadelphia

January 2007 By Denny Hatch
12
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In the News

Pinnacle Entertainment to sell shares for casino funding
Pinnacle Entertainment Inc. today said it will sell 10 million shares to fund property renovations and build new casinos in Atlantic City, N.J., and Lake Charles, La. The company is giving underwriters an option to buy an additional 1.5 million shares, for a maximum offering of $384.6 million. At mid-morning, Pinnacle shares were trading at $30.91, down $2.95 or 8.71 percent, on the New York Stock Exchange. On Nov. 17, Pinnacle purchased the Sands casino and adjacent land in Atlantic City for $275 million from investor Carl Icahn. Pinnacle lost its bid on Dec. 20 to open one of two slots-only casinos in Philadelphia when the state awarded the licenses to Sugarhouse Casino, a project headed by Chicago investor Neil Bluhm, and Foxwoods Casino Philadelphia, operated by Connecticut’s Mashantucket Pequot tribe.
—Bloomberg News, Jan. 5, 2006

The Philadelphia Contenders
Donald Trump submitted an elegant proposal for a casino on the site of the old Budd railroad car factory in Northwest Philadelphia. Two other organizations came up with plans for slot parlors on the west bank of the Delaware River—Pinnacle Entertainment and Planet Hollywood. All three were blown off by the Pennsylvania Gaming Control Board. The two winners:

* SugarHouse, the baby of Chicago real estate mogul Neil G. Bluhm, is to be situated on the Delaware River, just north of the Ben Franklin Bridge. Included will be a 500-room hotel, outdoor dining and boat slips.

* Foxwoods is also slated for the banks of the Delaware. Its investors represent a blue ribbon roster of Philadelphia’s power elite—men and women of enormous influence, wealth and political connections. Without question, they’re going to lose their shirts and bras by creating a monumental real estate debacle. Among the roster of greedy ghouls bent on destroying South Philadelphia:

Edward M. Snider—Chairman/part-owner, Comcast-Spectacor, whose holdings include the Philadelphia Flyers hockey team and the Philadelphia 76ers basketball team.

Billy King—President and general manager, the Philadelphia 76ers basketball team.

(The current won-lost record of the 76ers (9-25) is an indication of the caliber and business acumen of Ed Snider and Billy King.)

Ronald Rubin—Chairman, CEO and trustee, Pennsylvania Real Estate Investment Trust, and a major financial supporter of Pennsylvania Governor Ed Rendell and State Sen. Vincent J. Fumo (D. Phila.).

Melissa Silver—Daughter of Lewis Katz, a partner in the New Jersey Nets basketball team.

Garry Maddox—Eight-time Gold Glove Phillies center fielder and hero of the 1980 World Series, CEO of A. Pomerantz & Co., a furniture company, and board member of the Federal Reserve Bank in Philadelphia.

Quincy Jones—Recording industry celebrity and winner of 26 Grammys.

Dawn Staley—Temple University women’s basketball coach and three-time Olympian chosen to carry the American Flag in the 2004 summer games opening ceremony.

Sylvia DiBona—Widow of G. Fred DiBona Jr., former Independence Blue Cross president and CEO.

Foxwoods will be situated on 16.5 acres of vacant land on the Delaware River, adjacent to one large shopping mall and across the street from several others. The final complex—156,000 sq. ft. with an eight-story parking garage for 5,400 cars—will house 5,000 slot machines.

The $560 million project is expected to create 950 jobs and annually generate a city tax revenue of $25.3 million and a state tax revenue of $185.5 million.

The Problem: You Can’t Get There From Here
At the end of this story is a map of the area showing the locale of Foxwoods.

The vast blank areas around the Foxwoods property represent shopping malls, strip malls, businesses, condos and office complexes, where thousands of neighbors come every day to live, shop, dine and work. Here are more than 60 retailers, restaurants and workplaces ranging from small convenience shops, gas stations, a tanning parlor and bookshop, to giant box stores such as Lowe’s, IKEA, Best Buy, The Home Depot and Wal-Mart.

To the east of Foxwoods is the Delaware River. No entrance and no exit is possible unless you swim.

To the west of Foxwoods is a vast warren of tiny one-way streets with parked cars in front of row houses. This is the South Philly made famous by Sylvester Stallone’s training runs in “Rocky.” At every corner is either a stop sign or a traffic light.

Foxwoods will be situated on Columbus Boulevard/Delaware Avenue, a six-lane thoroughfare that has interminably long stoplights and is frequently glutted with traffic. On a typically busy afternoon, I’ve spent up to 30 minutes traveling one mile from Dock Street to Staples, which is across the street from the Foxwoods site.

Overhead and parallel to Columbus Boulevard is I-95, the main North-South Interstate Highway.

On the west side of Columbus Boulevard are two tiny entrances and two tiny exits for I-95, each allowing for the passage of one vehicle at a time; each situated at an interminably long light.

The nearest subway stop is 1-1/2 miles away.

In the words of The Philadelphia Inquirer:

This site has the Yogi Berra problem: Nobody would go there because it’s too crowded. Thanks to previous ill-planned developments, this area already features regular jams of visitors and shoppers stewing in their vehicles.

Foxwoods is projected to draw 6 million visitors per year or 16,600 people a day. The Orth-Rogers Associates, Inc. “Final Report on Foxwoods” estimates that 26,000 gamblers will arrive on Fridays and 39,900 on Saturdays. This is a guess. The numbers could be double—or one-half—the estimates.

Whatever the case, thousands of cars trying to enter and leave via single-lane feeds to and from I-95 will turn the neighborhood into a giant bumper-to-bumper parking lot with no one able to get in or out for hours.

City buses and excursion buses will be useless—gridlocked and unable to move.

Add to the mix the usual number of flat tires, overheated engines, fender-benders and road rage incidents, and a traffic nightmare of epic proportions will be created.

Slot players are hardly likely to stop off at Super Fresh to do a little food shopping, pick up building supplies at Lowe’s and The Home Depot, or browse for sailing books and charts at the Pilot House. They come to gamble. Period.

Regular customers of these 60 stores will go elsewhere rather than spend hours in a car.

With no customers, the stores will close. The 950 new jobs at Foxwoods will be offset by more than a thousand jobs lost at the shuttered businesses.

The cost of lost shopping convenience to many thousands of South Philly residents (myself included): Priceless.

Gamblers with cash in their pockets—and horny for action—will not sit still in stalled traffic for hours. Instead, they will tool along I-95—thirty minutes north to the slots at Philadelphia Park or forty minutes south to Delaware Park. These racetracks have easy access and plenty of free parking.

With gamblers opting for other venues, Foxwoods will go out of business. This entire once-thriving area of South Philadelphia will become a dead zone.

It’ll be presided over by the perfect symbol of government-sponsored corporate stupidity—the fastest ocean liner in the world—the S.S. United States, a giant red, white and black rusted carcass moored across the street from what was once the grand shopping and eating experience of IKEA.

Three miles north of Foxwoods, on Delaware Avenue, the SugarHouse casino complex will rise, replicating the disastrous Foxwoods scenario.

The only sick satisfaction will come from knowing that the greedy goofball investors will take a half-billion dollar bath.

Takeaway Points to Consider:

* Is the prospect of being rich beyond the dreams of avarice worth diminishing the lives of thousands of people and destroying a community?

* Shortly after winning the license, Foxwoods Chief Development Officer, Gary D. Armentrout, sent a four-paragraph form letter to South Philadelphia residents. He states that he looks forward to “meeting with you to establish Foxwoods Casino Philadelphia as the kind of responsible, contributing neighbor South Philadelphia deserves.” The letter contained no street address, no PO Box, no phone number, no fax number and no Web address.

* No street address, no PO Box, no phone number, no fax number and no Web address is a clear signal that Foxwoods has zero interest in being a good neighbor or opening dialogue with the community. This is a juggernaut, pure and simple—a done deal.

* When sending a letter, always give an opportunity to reply. Otherwise, you’ll never know whether your words had any effect or even if the letter was delivered.

* Smart investors do exhaustive research on every facet of a proposition before risking a penny.

* Smart real estate investors operate on the age-old, three-word dictum: “Location, location, location.”

* Never build a business that’s based on fitting 10 pounds of manure in a five pound bag.

Web Sites Related to Today's Edition:

Foxwoods
http://www.foxwoods.com/

Philadelphia Park & Casino
http://www.philadelphiapark.com/

Delaware Park—Racing—Slots—Golf
http://www.delawarepark.com/
 
12

COMMENTS

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Most Recent Comments:
Kathleen Brackeen - Posted on January 15, 2007
My suburban St. Louis neighborhood had a similar but much smaller prospective nightmare a few years ago. Our subdivision backs up to a small strip mall containing a gas station, a few fast food joints, a tavern, a bowling alley, a banquet hall and several other small business. An out-of-business health club in the strip had been converted into a night club for teens (under 21). The parking capacity allowed for 70 cars. The building could accommodate 1000 patrons. The first few weekends the club was open we experienced traffic jams and cars parked throughout the adjacent residential areas. The homes directly behind the club were almost vibrated off their foundations due to the volume of the music. Many of the club's patrons were under 16, so their parents drove them. Due to the convoluted driving access to the club, kids were being dropped off in the median of the 4-lane road in front of the strip mall. So, a quiet residential neighborhood had a weekly onslaught of unsupervised teenagers, vehicles and loud noise--none of which was designed to improve the quality of our community. Remarkably, the neighborhood was able to act quickly. We banded together and took the club's ownership to court citing safety, nuisance and capacity issues. The banquet center provided the facility for a fundraiser to offset legal expenses. And ultimately we prevented the night club from operating. A huge benefit of the situation was a coming together of the residents of the surrounding subdivisions. The Foxwoods development looks like a done deal, so irate neighbors probably can't do anything. But, sometimes the little guy can stop an ill-conceived project.
Paul Bobnak - Posted on January 11, 2007
I predict much of the same will happen in the Poconos, where Louis DeNaples, a very well-connected "businessman" won the license to turn the former Mt. Airy Lodge into a casino. The local country roads, which are congested enough during the morning & afternoon rush hours, will likely get much worse. Taxes, which are already skyrocketing thanks to a big influx of ex-pat New Yorkers & North Jerseyites, will increase even further to pay for additional infrastructure, police, fire protection, etc. This is not progress!
John - Posted on January 11, 2007
This is a classic example of bad money driving out good money and an inevitable result of legal off-track betting. I'm not a gambler, but enjoyed my Vegas experience. Too bad they didn't let Vegas stay in Vegas.
Bob - Posted on January 11, 2007
Some people just do not get it - they will do anything for money - all while hiding behind the "hey, we're not making them come here" mantra. C'mon, this is putting an oasis in the desert. Until our country recognizes the true costs for making money, such "smart" investors will continue to feed on the weak and vulnerable. They simply do not care about the person before or after he/she walks into their business. I once worked in management for such an organization and I am ashamed to list it on my resume.
Mark Harman - Posted on January 11, 2007
Denny-
As I read through the email "tease" regarding the Foxwoods casino my thoughts turned immediately to personal experiences in the "horse business." In one form or another I've been involved in selling Thoroughbred horses for more than 30 years. It has been painful to watch the "sport of kings" lose so much of its appeal and stature in our culture over the past 3 decades. I am not a bettor and truly appreciate thoroughbred horse racing for its beautiful complexities.

Racing's efforts to remain viable as a business has been for the most part in recent years focused on finding ways to tap into the vast amounts money generated by "the slots." If the Thoroughbred Industry does not do a better job at identifying what IT has to offer the world in the form of entertainment and THEN somehow begin promoting IT in NEW and EFFECTIVE ways... then we'll most certainly see a sure and steady decline in thoroughbred racing and breeding.

You mentioned the situation in New York. I suggest that one look west to California where 3 of the 5 most important race tracks are either on their way to being shut down and the property developed for other more financially sound businesses or certainly "at risk." One of many wonderful quotes attributed to Albert Einstein is worth considering in the current context. ?No problem can be solved from the same level of consciousness that created it.? I continue to wonder if a lack of ?conscious? is one of the bigger issues affecting the fate of the Thoroughbred.

With best regards,
Mark Harman
Andy Catsimanes - Posted on January 11, 2007
Gambling: The Opiate Of The Politicians
Joe Barcia - Posted on January 11, 2007
Philly is one of the oldest cities in America, the birthplace of our nation, and South Philly is its oldest faqmily neighborhood. Is it so surprising that these greedy vulchers would prey on the most aged and venerable among us?
Erik - Posted on January 11, 2007
First off, I'd like to offer my condolences to S. Philly. I'd hate to have a casino in my neighborhood.
In your diatribe you seem to have skipped over the traffic mitigation part of Foxwood's offer which includes a proposed highway ramp and other traffic improvements. I guess it is easy to dismiss that aspect as it doesn't support your argument. Also, I'm pretty sure that these folks know what they are doing, and are going to make a boat load of money on this deal. Look at their track record. Who would build a casino in the middle of the CT woods? No one will go there to gamble. Oh, wait a minute, Foxwoods did that, and quite successfully too.
- Posted on January 11, 2007
I am so sorry to hear this. Once again, corporate greed triumphs over all. As a person who has lived in South Florida for most of my life, I have seen first hand the ramifications of overdeveloping and building in the wrong place (homes built on the coast will inevitably blow away with hurricanes, for example). The results are disastrous more often than not, with hindsight being 20/20.
Denny, you are on point with everything you mentioned about traffic, overcrowding and the death of local business. These casinos do not attract people who care about the neighborhood you live in. They come in, party, make a mess and leave. And you are correct, Mr. Armentrout has no concern whatsoever for anything you or your neighbors have to say about this project. I have to laugh at the names developers give their environment destroying projects, such as "The Preserve" as they raze every tree and wetland in sight; or "Foxwood." I see neither foxes or woods anywhere near this corporation. Best of luck, I hope they enjoy their half billion dollar bath.
Lou Schuyler - Posted on January 11, 2007
It's good to see that nothing changes there.In my misspent youth, I was anumbers runner in S. Philly. Iremember the argument for the state lottery-that it would put the numbers racketeers out of business. (It just gave them another source of revenue-with no tax consequences)Ah well, I chose to go straight...and become a copywriter. Much more fun and I get to live in Florida. As you said,
"Everyone makes their choices."
Trish - Posted on January 11, 2007
Avarice--what a great word to describe much of the business environment today. In fact your tale of the casino echoes something currently happening in the mall world with the Mills Corporation, owner of 38 malls, who may be filing bankrupty eminently. Jan 9 NY Times article contains the following quote: "The internal audit, prepared with the assistance of the law firm of Gibson, Dunn & Crutcher, said that the ?overall culture and ?tone at the top? were heavily focused on meeting external and internal financial expectations? and that adequate controls did not exist." In plain English this means the guys at the top were padding their own pockets while they let the properties languish which is costing the merchants in those mall considerably, not to mention the communities who gave tax breaks, etc. to the developers. While I think it would a just punishment for those responsible to spend the rest of their lives working for minimum wage, communities are still left with an empty, degenerating property and loss of jobs.
Drayton Bird - Posted on January 11, 2007
What a glorious, coruscating piece. Much more fun than direct marketing.

By the way, re the message from the buffoon Armentrout, try talking to anyone at Dell or AOL.

My favourite example, from Sydney, a telephone anwering message - in English: "This the Olympics answering line. If you speak English press 1; if you don't speak English,
press 2.

I still recall with amazed disbelief my stay in Philadelphia at the old Parker-Spruce hotel 10 years ago.

My sons had a group and were put up there by their VERY dodgy record label, whio informed them it was where "all the old jazz legnends stayed" - "but don't any more," added my son Phil.

The lobby was full of people buying crack and/or selling themselves.

I believe it's now become a boutique hotel. I wonder if they have any sex and drugs there now?

Click here to view archived comments...
Archived Comments:
Kathleen Brackeen - Posted on January 15, 2007
My suburban St. Louis neighborhood had a similar but much smaller prospective nightmare a few years ago. Our subdivision backs up to a small strip mall containing a gas station, a few fast food joints, a tavern, a bowling alley, a banquet hall and several other small business. An out-of-business health club in the strip had been converted into a night club for teens (under 21). The parking capacity allowed for 70 cars. The building could accommodate 1000 patrons. The first few weekends the club was open we experienced traffic jams and cars parked throughout the adjacent residential areas. The homes directly behind the club were almost vibrated off their foundations due to the volume of the music. Many of the club's patrons were under 16, so their parents drove them. Due to the convoluted driving access to the club, kids were being dropped off in the median of the 4-lane road in front of the strip mall. So, a quiet residential neighborhood had a weekly onslaught of unsupervised teenagers, vehicles and loud noise--none of which was designed to improve the quality of our community. Remarkably, the neighborhood was able to act quickly. We banded together and took the club's ownership to court citing safety, nuisance and capacity issues. The banquet center provided the facility for a fundraiser to offset legal expenses. And ultimately we prevented the night club from operating. A huge benefit of the situation was a coming together of the residents of the surrounding subdivisions. The Foxwoods development looks like a done deal, so irate neighbors probably can't do anything. But, sometimes the little guy can stop an ill-conceived project.
Paul Bobnak - Posted on January 11, 2007
I predict much of the same will happen in the Poconos, where Louis DeNaples, a very well-connected "businessman" won the license to turn the former Mt. Airy Lodge into a casino. The local country roads, which are congested enough during the morning & afternoon rush hours, will likely get much worse. Taxes, which are already skyrocketing thanks to a big influx of ex-pat New Yorkers & North Jerseyites, will increase even further to pay for additional infrastructure, police, fire protection, etc. This is not progress!
John - Posted on January 11, 2007
This is a classic example of bad money driving out good money and an inevitable result of legal off-track betting. I'm not a gambler, but enjoyed my Vegas experience. Too bad they didn't let Vegas stay in Vegas.
Bob - Posted on January 11, 2007
Some people just do not get it - they will do anything for money - all while hiding behind the "hey, we're not making them come here" mantra. C'mon, this is putting an oasis in the desert. Until our country recognizes the true costs for making money, such "smart" investors will continue to feed on the weak and vulnerable. They simply do not care about the person before or after he/she walks into their business. I once worked in management for such an organization and I am ashamed to list it on my resume.
Mark Harman - Posted on January 11, 2007
Denny-
As I read through the email "tease" regarding the Foxwoods casino my thoughts turned immediately to personal experiences in the "horse business." In one form or another I've been involved in selling Thoroughbred horses for more than 30 years. It has been painful to watch the "sport of kings" lose so much of its appeal and stature in our culture over the past 3 decades. I am not a bettor and truly appreciate thoroughbred horse racing for its beautiful complexities.

Racing's efforts to remain viable as a business has been for the most part in recent years focused on finding ways to tap into the vast amounts money generated by "the slots." If the Thoroughbred Industry does not do a better job at identifying what IT has to offer the world in the form of entertainment and THEN somehow begin promoting IT in NEW and EFFECTIVE ways... then we'll most certainly see a sure and steady decline in thoroughbred racing and breeding.

You mentioned the situation in New York. I suggest that one look west to California where 3 of the 5 most important race tracks are either on their way to being shut down and the property developed for other more financially sound businesses or certainly "at risk." One of many wonderful quotes attributed to Albert Einstein is worth considering in the current context. ?No problem can be solved from the same level of consciousness that created it.? I continue to wonder if a lack of ?conscious? is one of the bigger issues affecting the fate of the Thoroughbred.

With best regards,
Mark Harman
Andy Catsimanes - Posted on January 11, 2007
Gambling: The Opiate Of The Politicians
Joe Barcia - Posted on January 11, 2007
Philly is one of the oldest cities in America, the birthplace of our nation, and South Philly is its oldest faqmily neighborhood. Is it so surprising that these greedy vulchers would prey on the most aged and venerable among us?
Erik - Posted on January 11, 2007
First off, I'd like to offer my condolences to S. Philly. I'd hate to have a casino in my neighborhood.
In your diatribe you seem to have skipped over the traffic mitigation part of Foxwood's offer which includes a proposed highway ramp and other traffic improvements. I guess it is easy to dismiss that aspect as it doesn't support your argument. Also, I'm pretty sure that these folks know what they are doing, and are going to make a boat load of money on this deal. Look at their track record. Who would build a casino in the middle of the CT woods? No one will go there to gamble. Oh, wait a minute, Foxwoods did that, and quite successfully too.
- Posted on January 11, 2007
I am so sorry to hear this. Once again, corporate greed triumphs over all. As a person who has lived in South Florida for most of my life, I have seen first hand the ramifications of overdeveloping and building in the wrong place (homes built on the coast will inevitably blow away with hurricanes, for example). The results are disastrous more often than not, with hindsight being 20/20.
Denny, you are on point with everything you mentioned about traffic, overcrowding and the death of local business. These casinos do not attract people who care about the neighborhood you live in. They come in, party, make a mess and leave. And you are correct, Mr. Armentrout has no concern whatsoever for anything you or your neighbors have to say about this project. I have to laugh at the names developers give their environment destroying projects, such as "The Preserve" as they raze every tree and wetland in sight; or "Foxwood." I see neither foxes or woods anywhere near this corporation. Best of luck, I hope they enjoy their half billion dollar bath.
Lou Schuyler - Posted on January 11, 2007
It's good to see that nothing changes there.In my misspent youth, I was anumbers runner in S. Philly. Iremember the argument for the state lottery-that it would put the numbers racketeers out of business. (It just gave them another source of revenue-with no tax consequences)Ah well, I chose to go straight...and become a copywriter. Much more fun and I get to live in Florida. As you said,
"Everyone makes their choices."
Trish - Posted on January 11, 2007
Avarice--what a great word to describe much of the business environment today. In fact your tale of the casino echoes something currently happening in the mall world with the Mills Corporation, owner of 38 malls, who may be filing bankrupty eminently. Jan 9 NY Times article contains the following quote: "The internal audit, prepared with the assistance of the law firm of Gibson, Dunn & Crutcher, said that the ?overall culture and ?tone at the top? were heavily focused on meeting external and internal financial expectations? and that adequate controls did not exist." In plain English this means the guys at the top were padding their own pockets while they let the properties languish which is costing the merchants in those mall considerably, not to mention the communities who gave tax breaks, etc. to the developers. While I think it would a just punishment for those responsible to spend the rest of their lives working for minimum wage, communities are still left with an empty, degenerating property and loss of jobs.
Drayton Bird - Posted on January 11, 2007
What a glorious, coruscating piece. Much more fun than direct marketing.

By the way, re the message from the buffoon Armentrout, try talking to anyone at Dell or AOL.

My favourite example, from Sydney, a telephone anwering message - in English: "This the Olympics answering line. If you speak English press 1; if you don't speak English,
press 2.

I still recall with amazed disbelief my stay in Philadelphia at the old Parker-Spruce hotel 10 years ago.

My sons had a group and were put up there by their VERY dodgy record label, whio informed them it was where "all the old jazz legnends stayed" - "but don't any more," added my son Phil.

The lobby was full of people buying crack and/or selling themselves.

I believe it's now become a boutique hotel. I wonder if they have any sex and drugs there now?