Ilitch makes bid for MotorCity

[Allan]

Tuesday, February 15, 2005

Ilitch makes bid for MotorCity

Minority partners allege negotiations violate casino operating agreement.

Ilitch

By R.J. King and Joel J. Smith / The Detroit News

DETROIT -- A lawsuit filed Monday revealed that Marian Ilitch has been quietly negotiating to purchase a majority interest in downtown Detroit's MotorCity Casino.

A key figure in the Ilitch family business empire, Marian Ilitch owns a 25 percent stake in the casino and is in talks to purchase the 53.5 percent of the casino owned by Mandalay Resort Group.

MGM Mirage, which is planning a $7.9 billion merger with Mandalay Resort Group, confirmed that it is in negotiations with Ilitch after a lawsuit was filed Monday in Oakland Circuit Court by other minority owners of MotorCity Casino seeking to stop the $525 million deal.

If the merger between the two casino giants meets state and federal regulatory approval, the new combined company must sell either MotorCity Casino or the MGM Grand Detroit Casino. State law forbids one company or entity from owning more than one Detroit casino.

"MGM Mirage is negotiating with Marian Ilitch," said Yvette Monet, public affairs manager for MGM Mirage. "But there is no definitive agreement in place, and we are continuing discussions with other groups about a sale of one of the two (Detroit) properties."

The suit was filed by Atwater Entertainment Associates LLC, a group of 108 investors that owns 11.5 percent of MotorCity, and by Thomas Celani, who owns a 10 percent stake in MotorCity.

The lawsuit also names as defendants Mandalay Resort Group and Kirk Kerkorian, president, co-chairman and CEO of Tracinda Corp., the majority owner of MGM Mirage.

It claims Ilitch and the casino companies violated an operating agreement by secretly negotiating a deal to possibly sell the majority interest in MotorCity.

The 15-count complaint against alleges interference with contract, civil conspiracy and breach of contract among other alleged infractions. It seeks more than $50 million in damages.

"Marian Ilitch needs to come to the table as our partner," Vivian Carpenter, manager of Atwater Entertainment Associates LLC of Detroit, said Monday during a news conference outside the Ilitch-owned Fox Theatre in downtown Detroit. "We put in sweat equity and hard dollars to bring casino gaming to Detroit, and asked her to be our partner."

Carpenter said Ilitch is not authorized under the terms of the casino's operating agreement to strike a deal with MGM Mirage. A letter of intent to buy Mandalay's interest in MotorCity Casino was signed between Ilitch and MGM Mirage on Feb. 5, the suit claims. Mandalay ratified the letter of intent Feb. 8, the suit claims. A copy of the letter was not included in the lawsuit.

MGM Mirage and Mandalay could sell both casinos, but MGM Mirage officials said Monday that they plan to sell only one of the Detroit casinos.

Marian Ilitch co-founded and co-owns Ilitch Holdings Inc. in Detroit with her husband, Michael Ilitch.

Ilitch Holdings owns Little Caesar Enterprises Inc., Detroit Tigers, Detroit Red Wings, Fox Theatre and other companies. Michael Ilitch was not named in the suit, but Ilitch Holdings was named as a defendant.

Carpenter said Atwater Entertainment tried repeatedly to contact Marian Ilitch soon after MGM Mirage and Mandalay announced their proposed merger last summer. "(Ilitch) has refused to meet with us," she said.

If Marian Ilitch is successful in buying MGM Mirage's stake in MotorCity Casino, it would give her 78 percent ownership.

Tom Shields, a spokesman for Ilitch Holdings, said he could not comment on the lawsuit. "We're still looking at it and have no response at this time."

The lawsuit alleges the operating agreement of Atwater Casino Group LLC precludes Ilitch from negotiating a deal with MGM Mirage.

Atwater Entertainment "holds an express contractual right to veto the transfer proposed in the letter of intent agreement between Ilitch and MGM Mirage," the suit claims.

Detroit Mayor Kwame Kilpatrick said Monday the city has "no standing or no place in any of these issues at this point."

You can reach R.J. King at (313) 222-2504 or [email protected].

MotorCity Casino ownership

[SNWEB]

Expansion of the Ilitch Empire, whats new!

Maybe they will take over Detroit, maybe they will demolish the building for parking!

And please please take off that hideous picture!

[Allan]

Maybe they plan to let the casino get dilapidated, just like their other properties.

And no, I will not take off that hideous photo. It's a horrible photo...that's why I made sure to include it.

[Allan]

Wednesday, February 16, 2005

As developers, Ilitch family must endure a fickle spotlight

By Daniel Howes / The Detroit News

Quietly, as is its wont, the Ilitch Family is on the move again.

Mother Marian is negotiating to buy a controlling interest in MotorCity Casino, a move that's drawing a predictable lawsuit and charges of duplicity but would nonetheless cement her legacy as one of Detroit's pre-eminent high rollers.

Son Christopher, CEO of Ilitch Holdings Inc., is looking at a new line of business -- downtown development -- lest his family's business get "slumlord" permanently affixed to its corporate profile.

With Major League Baseball's All-Star game coming to Comerica Park in July and Super Bowl XL following at Ford Field seven months later, pressure is building on Ilitch Holdings to do something, anything, with the abandoned buildings and vacant lots it owns downtown.

Adding "developer" to a $900 million business empire that includes Little Caesar's Pizza, the Tigers, the Red Wings and other entertainment interests would inject Ilitch Holdings into a public limelight it typically shuns.

It would draw more criticism and rouse suspicions that the Ilitches are trying to put one over on the city, the historic commission, any victim you can name, because that's what Big Business mostly gets for investing its private capital in Detroit -- grief, meddling and ill-will.

Just ask Matt Cullen, quarterback of General Motors Corp's multi-billion investment in the RenCen and the riverfront. Or the Ilitches, who never tire of reminding folks that they invested in Detroit long before it became (quasi) fashionable.

That's a true and necessary statement, but it's not sufficient. Especially not in Detroit, where almost no good deed by business goes unpunished; where motivation morphs into alleged exploitation; where credit for past actions is trumped by the "what-have-you-done-for-us-lately" sentiment.

Still, you can't own the Madison-Lenox Hotel across the street from the Detroit Athletic Club or the United Artists Building on Bagley, a main approach to Grand Circus Park, and expect to do nothing with them for as long as the Ilitches have.

Christopher Ilitch says he gets that, if only because he's savvy enough to know that depreciating assets in prominent places don't generate any revenue (let alone profit) and they certainly don't generate any goodwill. Quite the opposite, in fact.

"We intend to do whatever we can do with our properties," Christopher Ilitch told me, "whatever is fiscally possible."

For him, renovating the ramshackle Madison-Lenox won't pay even if others (who don't own it) say it will. And, no, he won't sell it for the $1 million offered by the Downtown Development Company of Birmingham. That's a business reality that partner Kathleen Sinclair, whose firm offered to buy the property last week, concedes.

But here's another reality: Now that the head of Ilitch Holdings has announced his intention to get into the development business, the interests that love to take shots at the Big Bad Ilitches -- and the cooler heads who just want to see forward progress downtown -- will be watching.

Saying you'll do something is one step. Doing it is entirely another.

Daniel Howes' column appears Sundays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or [email protected].

[SNWEB]

Nice, finally some strong words against the Ilitches, long overdue.

Sad excuses by Chris about the ML and properties.

They will make more restoring the ML and using it rather than having a small parking lot....

[Allan]

For him, renovating the ramshackle Madison-Lenox won't pay even if others (who don't own it) say it will. And, no, he won't sell it for the $1 million offered by the Downtown Development Company of Birmingham. That's a business reality that partner Kathleen Sinclair, whose firm offered to buy the property last week, concedes.

<{POST_SNAPBACK}>

In other words, the only thing they will do with the M-L is let it rot away. They have been ordered to secure the building and keep it from further deteriorating, but they won't. The Ileeches seem to think they are above the law. Of course in many cases they are...have the Ileeches been fined for any of their buildings since the city stepped up code enforcement January 1? I know Higgins has, and it is only fair that the Ileeches and other downtown building owners receive the same treatment.

On second thought...this is Detroit. The city is corrupt and never plays fair, especially with the Ileeches, since they "restored" the Fox and used a large chunk of taxpayer money to build Comerica.

[SNWEB]

The Ilitches own the city! They make them fix up their buildings, the city painted the UA boards black, and I am guessing those barrels around where the bottom of the marquee fell are the city's. I have a great idea, when i go to Detroit Saturday I'm gonna take a picture of the barrel with the marquee in it and give it to Channel 4 waste watchers, make the Ilitches do it!

[Allan]

Apparently the Ilitches sold the Madison Lenox (I'm assuming to the Birmingham developer). Rhonda Walker on channel 4 will be doing a story about this, so keep and eye out for that.

[dnast]

I hope they did sell it to that company. Keep us updated on this.

[Allan]

I will most definately let you know about this as I learn more. I'm not sure when Rhonda is doing the story, but it'll probably be within the next week. Not that it matters for you anymore - you all don't get channel 4 up in Flint anymore. It was really annoying when I went to visit my parents last weekend...that other channel out of Saginaw they want us to watch has a horrible picture! Not to mention that I live closer to Detroit than I do to Saginaw.

[dnast]

Yeah, I'm going to miss watching the same show on two different channels, hehe. I hate the fact that this happened right after they bought rights to show some Pistons games

[Allan]

Yeah, my brother is a pretty big basketball fan, so he was pretty bummed out when that happened. That other station out of Saginaw has the worst picture of any channel on my parents' TV. It is so bad that my dad is bought a high definition tuner so that they can get the high def out of Detroit. He was going to buy one anyway, but this just gave him more of an incentive. Haha.