The Albatross

St. Louis has a long and tortured history with the Admiral, home of the President Casino, but the city is about to gamble another $3 million to keep it afloat. It's a risky bet.

On the day of the referendum, April 5, President Casinos' stock closed at $17.87 per share. One day later, it dropped to $12.50. By the end of the year, it was down to $8.

For the city, the vote against games of chance meant that negotiations for casinos, hotels and dolphin shows went from a rolling boil to a slow simmer. Then, as talks wore on, broke off and wore on again, more and more casinos saturated the national market, and the riverboat-gaming industry started a slow, anticlimactic decline.

Despite the failed referendum, the Admiral opened in late May 1994. Without slot machines, the boat missed out on almost 70 percent of its intended income, and for the next six months, Connelly claimed, the Admiral lost an average of $1 million per month. A second referendum was held in November, though, and after voters approved games of chance, the Admiral almost immediately tripled its attendance.

But by then it was too late. At the end of the company's fiscal year in February '95, it reported a net loss of $58 million. Stock prices for the company plummeted nearly 63 percent, from $16.75 in February 1994 to $6.25 in February 1995.

In order to shore up its financial mudslide, the company decided the Admiral needed more parking and more foot traffic and, in late 1995, asked the city of St. Louis to allow it to move the boat north to Laclede's Landing. At the time, the Bosley administration was negotiating with one of the last casino developers still willing to talk -- a group called St. Louis Entertainment Ventures, which wanted to open a casino just north of Eads Bridge on the Landing -- and in early 1996 told President Casinos that a $5 million deposit would be required before the Admiral could be moved.

Some say Bosley's requirement was retaliation for Connelly's support of Villa against Bosley in 1992. Others say it was because the Gaming Commission wouldn't approve the Entertainment Ventures project with the Admiral so close. For his part, Bosley told the media that the city just wanted to make sure President Casinos had the financial solvency to sustain the move.

Whatever the reasons for the request (Bosley could not be reached for comment), President Casinos didn't accept the challenge and asked the city to build it a parking facility instead. The city declined. The next year, in 1997, Bosley lost his re-election bid in March to Clarence Harmon; by August, Entertainment Ventures had withdrawn its proposal. The Admiral was alone on the riverfront now, but it still had no parking.

Despite Harmon's apparent friendliness toward helping the Admiral stay afloat, the Admiral was collecting 18 percent less in gross revenues from its customers than it had the year before. It wasn't alone. The Casino Queen's wins were down 11 percent, Station Casino St. Charles was down 14 percent and the Alton Belle was down 21 percent. The gambling business had clearly peaked.

By the end of fiscal year 1997, President Casinos reported a net loss of $8.8 million, and gaming analysts were predicting that many of the smaller riverboat casinos that had gone public early in the 1990s would soon fall. "The saddest of these stories is President Casinos Inc.," a September report by the International Gaming and Wagering Business publication stated. "PREZ, which traded at $30 a share in 1993, now trades at slightly more than 40 cents."

In 1998, the company filed a lawsuit against the city claiming that the city's share of the tax on adjusted gross receipts -- $4.1 million since its opening -- was not being used by the city "in providing necessary services for the public visiting an excursion gambling boat" as required by state law. This caused the company "irreparable harm," the suit claimed, because it "decreased business, revenues and the potential for a perception that the public safety is not being adequately protected."

The city denied the allegations and claimed all of the money had been spent on safety purposes "in proximity" to the boat's location. The city then theorized that "the plaintiff is guilty of unclean hands in bringing this action in that plaintiff seeks to use the instant action for an improper use i.e., to obtain leverage in an unrelated dispute with defendant City over plaintiff's request that the city provide additional parking for plaintiff's customers."

Then, in late 1998, the final blow came when President Casinos was de-listed from NASDAQ because its tangible assets didn't meet the market's minimum requirement of $4 million for listing. The once-high-rolling company was now being traded on the Over the Counter Bulletin Board at around 50 cents per share. At the end of the 1998 fiscal year, the company posted another $14 million net loss. It hadn't shown a profit since 1994.

This January, the Board of Aldermen passed an ordinance allowing the city to subsidize the Admiral's move with $3 million. The city will give the boat $600,000 up front and will make annual payments during the next eight years, up to $3 million. The loan will be repaid from the Admiral's admission tax.

In exchange for the loan, President Casinos agreed to drop the lawsuit it filed against the city in 1998.

"The city benefits to a tune of about $6 million a year on the rents and taxes the Admiral pays," says Ald. Phyllis Young (D-7th), who sponsored the ordinance, "so we feel it's in our best interest to make them better operators and to give them a better location."

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