In the early 1970s, the city of Baltimore, like many American cities of the day, was concerned about urban decay. Many of its most affluent and influential citizens were leaving for the suburbs, abandoning the poor and destitute gathered around a decaying city core. For Baltimore, the answer was to redevelop its waterfront as a tourist attraction, creating what we now call a “multi-use” area of shops, bars and restaurants, hotels, and upscale housing in a safe and clean environment. The company the city turned to was a homegrown real estate developer, the Cordish Company.
“Most people didn’t even know there was a waterfront in Baltimore,” says David Cordish, who was running the business founded by his grandfather in 1910. “Baltimore city, back in the ’70s, was a disaster. There is no other way to sugarcoat it. We hadn’t had a new hotel built in 40 years, and five had closed. We hadn’t had a new office building in the same amount of time. So a public-private partnership was formed and the program was to start from the waterfront, which at that time was abandoned piers and banana boats.”
Cordish and the city worked together in a partnership that developed the “Inner Harbor,” a revival of an area that had consisted of abandoned warehouses, collapsing piers and sunken vessels.
“The first thing we did,” explains Cordish, “was to install bulkheads in the entire area and develop a master plan. We brought in people who would develop different plots and fill in where there were no developers.”
The turning point was luring the National Aquarium, expanding the “public” portion of the equation to the federal government.
The results completely transformed Baltimore, changing its image from a gritty, run-down Eastern port to a hip tourism destination. The opening of the original retro baseball stadium, Camden Yards, a decade later spread the development across a wide swath of downtown, creating a template that countless other cities have copied over the years.
For Cordish, it attracted national attention at the highest level. He was hired by President Jimmy Carter to chair a federal program, the Urban Development Action Grants, which would fuel the development of other afflicted cities with an $800 million budget. The appointment continued through the administration of Ronald Reagan, and Cordish became something of a rock star in development circles.
“I had taken a leave of absence for that time,” he says. “When I got back, the phones didn’t stop. And it would be mayors, governors, senators, redevelopment directors who called us to ask for help.”
Today, the Cordish Company is a vibrant mix of development expertise, with divisions covering gaming and lodging, shopping centers, entertainment and mixed use, residential and student housing, sports-anchored developments, office complexes and much more. And despite his 70-odd years, Cordish says his team is young.
“My sons are all heading a division and most of our executives are in their 40s,” he says. “So they understand the culture today and how to best develop for success.”
Unlike other shopping center and entertainment developers, Cordish owns some of the retail and dining outlets, particularly the “Live!” venues that feature dining and entertainment. Cordish says that division employs more than 10,000 people.
“It gives us an understanding of what our tenants are facing,” he says. “It gives us quality control, and it allows you to fill in amenities where the marketplace, for whatever reason, might not understand. So, if we want to have a 2,000-seat live performance hall, and there’s nobody in the tenant world interested, we just do it ourselves. And that’s what led us into the gaming. It’s the perfect complement to gaming. And we know how to do it, we know how to operate it.”
The Cordish Treatment
Just some of the cities that have benefited from the Cordish magic are Louisville, Kansas City, Philadelphia, Omaha, St. Louis and Houston. There are many others.
The Cordish formula was to blend retail and dining with entertainment, creating an excitement and a center of attention within each of the cities.
But it wasn’t until the company got involved with the Seminole tribe of Florida that Cordish experienced a “revelation.” The company developed and built the two Hard Rock casinos, one in Tampa and the other in Hollywood, that duplicated the Cordish formula of dining, retail and entertainment, but added the gaming element.
Joe Weinberg is president of the gaming and lodging division for Cordish. He says that the Hard Rock developments weren’t that much of a departure from what the company did normally.
“Looking at gaming as one component of an overall resort entertainment district,” says Weinberg, “was something that really came naturally to us, and something we were uniquely qualified for, because we had more expertise than most in those areas, for many decades.”
The Seminole experience opened Cordish’s eyes to gaming and its potential in this business.
“With our naiveté coming into the gaming business,” says Weinberg, “the Seminole Hard Rocks have become the most profitable gaming enterprise in the United States—more profitable than Caesars or MGM or Wynn or Sands. So, that definitely gave us a little bit of confidence in our perspective on the industry, that there was something to it.”
Following the Seminole projects, Cordish was contracted to build and manage Indiana Live!, a racino at Indianapolis Downs. (The casino recently changed its name to Indiana Grand, since Cordish owns the “Live!” brand.) Weinberg says the company learned another lesson there: it’s better to be owners than managers.
“The project was quite successful, on an operating basis,” he says, “both in terms of the margins, and one of the highest wins per unit in the entire Midwest. But the facility had taken on too much debt, unrelated to the actual casino itself, and so subsequently got into some issues with the amount of debt it was carrying.”
Cordish explains that the debt was a result of a $250 million license fee charged by the state, the highest in gaming history.
“Market surveys had said we would have 47 percent of the market, and Hoosier racetrack (also home to a casino) to the north, which is in a very nice area, more population, would have 53 percent,” explains Cordish. “But once we opened, it was reversed. We got 53 percent and they have 47. So that’s six points, because of what we did, how we built and designed that property. Our win per day was excellent—well up into the 300s. But it can’t sustain where you spend $250 million for a license.”
The split from the owners of the racetrack and casino was ugly, and is still getting resolved.
“What I learned is I’d better look more closely, because their problem becomes your problem,” he says.
Taking the lessons learned in Florida and Indiana, Cordish bid on a state-owned casino at Kansas Speedway.
“We beat out companies like Las Vegas Sands, Mohegan Sun, Pinnacle and Golden Gaming,” boasts Cordish. “Not bad for a small company.”
But in the planning process, Cordish was approached by officials of Penn National Gaming, who made him an offer he couldn’t refuse.
“They’re great Americans, and we wish them well,” he laughs. “They’ve done a nice job with the whole thing, and we couldn’t be happier for everybody involved.”
Ironically, Penn National became Cordish’s competitor in an area where he’s very well-known—Maryland.
In a state where a company can own only one casino, Penn National won the state’s first license, for a casino in Perryville, near the Delaware border alongside busy I-95. But the company later reached an agreement with Magna Entertainment, the owner of the Laurel Park in Pimlico racetracks. And, since Cordish had already won the license for the Anne Arundel County area, Penn was blocked from establishing gaming operations at Laurel Park. The company then erected a series of legal challenges, including a referendum, which Cordish won.
Cordish says expansion of the company is on the agenda, but it has to be the right situation. He’s eyeing the situation in Massachusetts but has not committed to any group or location.
Cordish is candid about one area and one specific property where he would be interested.
In Atlantic City, the Cordish Company built probably what has been the most successful development of the last 10 years, the Walk outlet mall. Despite many skeptics, the Walk has become one of the most successful outlet malls on the East Coast.
“It’s also a perfect example of what we do as a company,” says Weinberg, “and how we have a little bit different perspective on these developments, both gaming and non-gaming. Atlantic City is a market where everybody said non-gaming would never work. Before we got there, there were three public real estate companies that had started and never got out of the gates on that project. But because of our understanding of these markets and how you design the right product for the right market, we were the first ones to look at that Walk project and say, ‘Let’s build the city that should exist in Atlantic City.’ Everyone before us was looking at building a mall.
“We wanted to take advantage of the street grid within Atlantic City. Nobody thought people would walk the streets in Atlantic City, because of safety reasons. But because we work in cities, we understood that safety is a factor of the numbers of people around you. The more people you have around, the safer the location is going to be. So by building that project within the street grid in Atlantic City, and putting the right product in place, it worked for Atlantic City. So we have an understanding from a design perspective, from a product perspective and an operational perspective of what belongs in what place. It’s a very unique perspective that we have on all of our projects.”
Cordish sees more opportunities there. Although the company sold the first three phases of the Walk to Tanger Outlets, Phase IV of the Walk—an entertainment and dining hub—holds promise because of its proximity to one of the city’s struggling casinos.
“There’s no reason to be coy about it,” he admits. “We’ve been interested in Atlantic City for a while.
“When the Tropicana filed its bankruptcy, and was, in effect, taken over by the state and the gaming commission, they did an RFP and we were selected. But Carl (Icahn) came in and scooped it up. He’s a friend of mine. I don’t begrudge him. He bought the debt. And so, in effect, our bid was canceled. But I only cite it to you to show you my interest.”
Cordish says he’s had discussions with the Trump organization about buying Trump Plaza, but can’t yet come to an acceptable price. Cordish believes that if combined with the planning for Phase IV of the Walk, the Plaza could transform the center of the Boardwalk, giving him the casino he wants and making a direct connection to the Boardwalk for the Walk, which is now two blocks away.
“You can’t see the convention center from the Boardwalk, and vice versa. You have a wall of casinos, which wouldn’t be so bad, but you have a wall of casinos backed by a wall of garages. And so you have a disconnect. And if I had the Plaza, I would open that up so that literally you could see it from the Pier at Caesars, which needs help. You could see and walk all the way from the Boardwalk, into the Walk, to the convention center. They would all hook up, and that would be enormous. It’s an idea that I want to do, but you need to have a willing buyer and a willing seller, and they own the property and they have their rights.”
Weinberg outlines how any Atlantic City project would have to work.
“We’ve looked long and hard at the Atlantic City market, and it’s something that at the right time we might consider, but for us the numbers have to work,” he explains. “We don’t do it for the ego. We’re not a public company; we don’t have to do it to show any growth. So we do projects that we think make sense financially, and to which we can bring a strategic advantage.”
The Cordish Company is also involved in another gambling mecca, Las Vegas. The company has an exclusive contract to come up with a plan to develop the part of the old Union Railroad yards into an arena with an entertainment complex. While the question of a new arena has been nagging Vegas for years, with many plans announced and later scrapped, Cordish believes it will happen.
“I think we can pull it off, and I think Las Vegas can have professional teams in a new arena,” he says. “I think it’s got the population, it’s got the visitors. So, you know, in today’s economy it isn’t the easiest thing. But I think it’ll happen.”
Weinberg says the Cordish principle of cooperating with cities that want an urban revival has worked great.
“We look at it as a partnership with the local and state governments where we develop,” he says. “So for us, it’s important that we have buy-in from all levels of government before you do a project. We like to sit down, and make sure that our vision is consistent with the vision of the local governments. And we outline exactly what it will take to get a project completed, because, from our perspective, to just talk about it, or to have it go on and on for years and not happen, doesn’t do anyone any good.”
Cordish is also interested in Massachusetts. He says the company would ideally partner with the developer of the one racetrack casino permitted in the state, but is still trying to find the right situation.
Cordish is nothing if not patient. And that patience extends to an area of the world made for a company that brings such a wide variety of tourism options to the table: Asia.
“We have a background in all elements of development, so we do urban mixed-use developments, we do hotels, office, retail, entertainment, dining,” says Weinberg. “We have a division that owns and operates restaurants and live music venues around the country, in addition to the gaming. So we’re able to look at a marketplace and analyze it and understand which components make the most sense in each market, and how to maximize both the consumer experience and our return on investment in these projects, because we understand what mix of uses to put in what locations.
“We are aggressively looking at international opportunities. I don’t think it’s any secret that a lot of the potential growth in our industry is overseas. And so we’re looking very hard at Asian markets and other markets around the world.”
Cordish says it would be a mistake to minimize or underestimate his company.
“We’re in the game to stay,” he says. “We think we’re well-equipped. There are only a few of our competitors that have money like we do, and we’re very liquid.”