Sitting in his office in Chicago, Neil Bluhm, SugarHouse Casino's chairman, was so disturbed by the financial predictions coming from this week's hearings on a second Philadelphia casino that he flew in Wednesday evening to speak to the state Gaming Control Board himself.
"I felt I had to come down and tell them that if these numbers are right, they're going to have a mess on their hands," Bluhm said after Thursday's hearing.
Bluhm, a Chicago real estate investor who entered the casino industry more than 15 years ago, was referring to the projections of how much gambling revenue SugarHouse would lose if a second casino opened in Center City or South Philadelphia.
Backers of the Market8 casino proposal projected that about $100 million of its revenue would come from SugarHouse, which had $265.6 million in gambling revenue last year.
"Anything near the numbers that the proponents have used - we're using their numbers - would result in our property not being worth its debt, and that would result in severe financial problems when we have to refinance the debt," Bluhm said.
Bluhm's afternoon testimony was the second act of a relatively sobering day of presentations.
Bob Green, chairman of Greenwood Gaming & Entertainment Inc., which owns Parx Casino in Bensalem and is in a partnership with Cordish Cos. of Baltimore to build the proposed $425 million Live! Philadelphia near Citizens Bank Park, started off with a blistering assessment of the chances for success for Market8 and the Provence project as well.
Green, who lives in Center City, said it fell to him to bring the board "out of the realm of fantasy into the realm of reality." The two Center City proposals, one on Market Street between Eighth and Ninth Streets and the other on Callowhill Street west of Broad Street, would do little but siphon gamblers from SugarHouse, Green said.
"That will put SugarHouse and any downtown facility in financial jeopardy from Day One," he told the seven members of the board.
To back up his argument that South Philadelphia was a far better choice for a second casino, Green recalled the performance of Parx offtrack betting sites in Philadelphia.
He said that from the day it opened, the South Philadelphia Turf Club on Packer Avenue did twice as much business as the Center City Turf Club at 1635 Market St. without taking business from Center City.
"In my mind, there is absolutely no doubt that a South Philadelphia site will outperform a Center City site," Green said.
Live! Philadelphia officials projected that their proposal, for Packer Avenue between Ninth and 10th Streets, would generate $321.8 million in annual gambling revenue, compared with $311.8 million for any casino in Center City.
That's not much different, but Live! Philadelphia would rely less on taking revenue from existing Pennsylvania casinos, the company said. It would take $88.6 million from existing casinos, compared with the $119.2 million a Center City property would siphon, Live! said.
Market8 projected $518 million in annual revenue, with $114 million coming from existing casinos, mostly from SugarHouse.
The only tough questions Live! officials received from board members had to do with the project's ownership.
Bob Manoukian, a businessman based in London and California, owns 85.84 percent of Greenwood Gaming. Also through Greenwood, he would own 28.33 percent of Live! Philadelphia if it won the license.
A separate trust, with Manoukian as trustee, benefiting his three sons would own an additional 17 percent of Live! Philadelphia.
Though that equals 45.3 percent, it does not violate a provision in the Pennsylvania gaming law that limits individual ownership to one casino outright and one-third of another, Live!'s attorney, Alan C. Kohler, said.
That is because Manoukian does not own the equity in the trust. His sons own it, Kohler said.
The distinction is not so clear, said Cyrus Pitre, director of the board's office of enforcement counsel. "That's going to be an interpretation that the board is going to have to decide upon," Pitre told the board.
It's unknown how much influence Bluhm's predictions of doom - with the specter of bankruptcies - will have on board members' deliberations, which could start soon.
Bluhm's contention, delivered as an intricate financial analysis to the board, was that SugarHouse could lose 75 percent of its profit if the projections of revenue taken from SugarHouse by Market8 were accurate.
"Just because we knew that there was likely going to be a second casino when we bid for our license does not mean that you should automatically issue a new license here if it doesn't make economic sense," Bluhm said.
"All of what you have said makes perfect sense to me and probably all of us up here. It makes perfect sense. It's almost common sense," Commissioner Keith McCall said to Bluhm during the question-and-answer period.
Gregory C. Fajt, another commissioner, seemed to question Bluhm's plea that the board should wait to see how the market shakes out after SugarHouse expands and the impact of Internet gambling becomes clearer.
"What we know now is that we're in a tenuous market, but we also know that no casino's going to open for probably three years," Fajt said. "We're always trying to guess what the market is going to be two years out, 21/2 years out."