BILOXI — A sign still welcomes passers-by to the future site of Margaritaville Casino & Resort in Biloxi, but most people agree the project doesn’t have a chance of getting built any time soon.
“Odds that this project gets built in the next five to 10 years are slim to none,” said Joel Simkins, senior vice president of Macquarie Capital USA.
When announced in 2007, Margaritaville — a joint venture of Harrah’s Entertainment and entertainer Jimmy Buffett — was expected to cost more than $700 million and open by spring 2010.
But shortly after the announcement, the economy went south and Harrah’s, the world’s largest casino resort company, found itself teetering on the edge of bankruptcy.
Analysts place at least part of the blame on investors’ decision to take the company private in Jan. 2008 at a cost of $30.7 billion, including debt and transaction costs.
The timing severely restricted cash flow just as the recession hit its largest gambling and resort markets.
The company formally sidelined the project later in 2008.
Harrah’s spokeswoman Jacqueline Peterson said June 23 that the project remains on hold. The company has not scaled down the project from its original $700-million estimated cost.
The decision to delay Margaritaville is likely one reason Harrah’s avoided bankruptcy, said Dennis Farrell, managing director of gaming, lodging and leisure for Wells Fargo Securities.
The company continues to labor under significant debt. As of March 31, it had $19.3 billion in long-term debt, regulatory filings show.
The company says it remains committed to building Margaritaville, but posted on its website “at this time, we do not have a date for when construction will resume.”
As originally conceived, Margaritaville would have been developed on 46 acres along U.S. 90, the former sites of the Grand Casino and Casino Magic. Harrah’s-owned Biloxi Grand Casino reopened after Hurricane Katrina across the street in its renovated Bayview Hotel property, which survived the storm. It would have had about 100,000 square feet of casino floor, 250,000 square feet of retail space and almost 800 hotel rooms.
Real estate giant Simons Property Group, which owns or operates millions of acres of retail space worldwide including the 2.3 million square-foot Houston Galleria, was to handle the retail development.
At the time of its announcement, the project was heavily touted as part of the coast’s revitalization after Hurricane Katrina.