Offering a commitment Tuesday night to pursue economic growth among minorities and to de-couple itself if necessary from the ONE Central transportation hub, Hard Rock explained to Chicago residents why it should be the casino operator endorsed by Mayor Lori Lightfoot for the coveted downtown license.
Hard Rock was one of three finalists picked last month by Lightfoot along with Bally’s and Rush Street, and it was the first to make its community presentation. Bally’s will discuss its Tribune proposal at its proposed site — the Tribune Publishing Plant — on the Near North Side Wednesday evening, and Rush Street will discuss its Rivers 78 proposal in the South Loop area near its proposed site Thursday evening.
“Hard Rock Chicago has been designed with the future interests of those who live in and visit in this great city,” said Jim Reynolds, an Englewood native and founder of Loop Capital, a primary private investor in the proposal. “A project of this scope, magnitude, and civic importance demands an unprecedented level of commitment and stakeholder involvement.”
Hard Rock CEO Jim Allen touted his company’s strength as a gaming operator capable of bringing its global brand to help create an entertainment district in the third-largest city in the United States. The capacity audience of nearly 400 at the Howard Washington Library, however, had a local hyperfocus on ONE Central, with an overwhelming majority who submitted comments and made statements expressing opposition to that part of the proposal.
The city is projecting annual tax revenue of approximately $200 million from the downtown casino, with that money earmarked by Illinois state law to address funding shortfalls in Chicago’s fire and police pension plans. The state could also receive approximately $200 million annually in tax revenue, which would nearly equal the $248.7 million in taxes generated through all 11 of the state’s venues in 2021, with their $1.2 billion in gaming revenue.
Hard Rock promoting 50% minority ownership
— Joanie Lum FOX 32 (@JoanieLum) April 6, 2022
Interspersed around Hard Rock’s three primary speakers — Reynolds, Allen, and Landmark Development President Bob Dunn — were videos promoting Hard Rock that incorporated the musical heritage of the city; computer-generated renderings of how the casino floor, entertainment venue and exterior of the district would look; and testimonials from local minority business owners expressing how a casino would help the local economy.
Reynolds, a Chicago resident with extensive ties to the African-American business community, suggested Hard Rock’s level of minority ownership at the general partnership level offered something distinctive and important for the city, which has a minority majority in terms of population.
“This is something that we have never seen with big projects in this city — minority involvement at the highest level of these projects,” he explained. “There is not, in the state of Illinois, a casino that has minority involvement in the general partnership. That’s where all the decisions are made. That’s where most of the fees are generated and paid to. When you think about the opportunities that have been given to minorities — black and brown and women — in this state, they have all been in the limited partnership range.
“Which means you have no voice in the decision-making. You have no influence on the decision-making. And you pay fees to the general partners. … We will have 50 percent of this entity controlled by Hard Rock and 50 percent controlled by minorities. What that means is there will be no contracting, significant employment, jobs, decisions made on this entity, on this business, on this casino, that does not involve the influence of involvement of minorities.”
Allen noted the Hard Rock Cafe opened in 1986 on the Magnificent Mile was the company’s seventh location, and the iconic brand can now be found in more than 70 countries worldwide. Allen said Hard Rock, more than a casino company, is an “entertainment company.” He spoke of promoting Chicago within Hard Rock’s global marketing strategy, something Allen claimed the other two finalists cannot do.
The Hard Rock CEO addressed concerns about funding for the $1.7 billion project, bluntly telling the audience, “I assure you, the funding is there.” He noted Hard Rock has had an investment grade rating from multiple bond credit rating services over the past 10 years.
“We left our ego out. … We are in 70 countries around the world. We are celebrating our 50th year. We didn’t have that kind of success if we were not respectful to local culture, local currencies, local languages. And certainly, an amazing city like Chicago hopefully will allow us the next opportunity to prove that we are a tremendous entertainment partner.
“This project is designed to be about entertainment, it’s not slots in a box. It is one-point-seven billion dollars committed that we already have done.”
The ONE Central ‘millstone’
He said it out loud. “Whether we are paired with #OneCentral or not…” Hard Rock says they still deserve this #Chicago #CASINO I ask again: why is One Central eon this list? Is this a way to back door a mega development that otherwise hasn’t addressed the city’s many concerns?
— Marj Halperin (@marjhalperin) April 5, 2022
Connected to Hard Rock’s casino proposal, ONE Central is a project that would be a multimodal transportation hub for the city. It would incorporate Chicago’s bus and train transit, the Metra Rail system that serves the surrounding suburbs of the city, and create a tram-like loop that would operate in the entertainment district.
The biggest controversy surrounding ONE Central is its need for $6.5 billion in state funding — yet to be approved by Illinois legislators — as part of a public-private partnership that the state would ultimately control. Yet Landmark Development President Bob Dunn went to notable lengths to point out the Hard Rock proposal can proceed as its own entity without ONE Central, which one resident labeled a “millstone” during the public question-and-answer session.
“Hard Rock Chicago is in no way tethered to the development or financing of the broader ONE Central project,” Dunn said, acknowledging the constant inquiries from the public. “They are distinct projects. That’s important because we’ve spent months working with Hard Rock, working through the design, the engineering, the financing, the operations.
“We’ve put together a plan that gives this project the ability to move rapidly to become a reality. It’s among the city’s highest priorities. And we’ve focused a great deal of attention on that, because of all the things that surround the site — a massive amount of parking, a road and rail network that is already in place and established, utilities, infrastructure. It gives us the ability to bring the Hard Rock Chicago to the city now and not be dependent on a ONE Central or any other form of financing or any other variable that often times can stand in the way of making a project like this a reality.”
A wide-ranging Q-and-A session
The question-and-answer session with the public covered a broad range of subjects, with most of it involving ONE Central. There were also questions about incorporating local restaurateurs into the dining options and one regarding bird collisions, given that the proposed structure will have reflective glass. To the latter point, Dunn was on the design team for US Bank Stadium in Minneapolis, which had similar issues after opening, and said it was possible to work on the design plan to mitigate that impact.
Dunn pointed out there have already been some alterations to the original designs, with the casino and hotel buildings in the project shifted as far east as possible to extend the buffer with local neighborhoods. He added the South 18th Street area is “well-served” as part of an urban setting to help mitigate transit issues.
Though Allen envisioned a 30-month timeline from ribbon cutting to opening, the city noted in its analysis that Hard Rock may be promoting too “aggressive” a timeline given the approvals required from Metra, the Metropolitan Pier and Exposition Authority, and the Illinois Department of Transportation, in addition to aspects the city must OK. If Lightfoot chooses to recommend the project, approval would still be required from the Illinois Gaming Board.
The $248.7 million in tax revenue from casino gaming in 2021 does not include sports wagering, which provided an additional $78.8 million. That combined total was still less than half the $717.7 million in tax receipts generated by the nearly 42,000 video gaming terminals (VGTs) statewide last year.
Photo courtesy of HR Chicago RFP submitted to the City of Chicago