Facing an idle construction scene and gaming board scrutiny of his financing, Detroit developer Don Barden last month surrendered a 75 percent interest in his Majestic Star
casino project in Pittsburgh to Walton Street Capital Fund 6, an investment firm headed by Chicago billionaire Neil Bluhm, and a consortium of affiliated investors.
In a hearing before the Pennsylvania Gaming Control Board, Barden outlined the equity deal, which is being arranged as part of an agreement to secure the final $120 million in financing needed to complete the $780 million casino. Barden will retain a 25 percent stake in his company, PITG Gaming, but he will have the right to repurchase a larger stake in the future.
Bluhm, who also is the lead investor in Philadelphia’s stalled SugarHouse casino project, will personally own less than 1 percent of the Pittsburgh project-which satisfies a provision of Pennsylvania gaming law that prevents one casino owner from owning more than one third of a second gaming venture.
Barden’s commitments made when he was awarded the city’s sole slot license-in a surprising victory over deep-pocketed rivals Harrah’s and Isle of Capri-will be fulfilled under the new ownership, Bluhm has indicated. The casino will provide the $7.5 million over 30 years to help finance a new hockey arena for the Pittsburgh Penguins, and financial contributions will be made for inner-city development. A 1,000-seat outdoor amphitheater, boat docks and other improvements to the Ohio River waterfront, which Barden had sought to delay, also will go forward as originally planned.