Barden Companies, Inc. - Company Profile, Information, Business Description, History, Background Information on Barden Companies, Inc.



400 Renaissance Center, Suite 2400
Detroit, Michigan 48243
U.S.A.

History of Barden Companies, Inc.

Barden Companies, Inc., is a holding company whose subsidiaries prima rily operate gambling casinos and develops real estate. The firm owns the Majestic Star floating casino in Gary, Indiana and Fitzgeralds c asinos in Tunica, Mississippi, Black Hawk Colorado, and Las Vegas, Ne vada. Other Barden companies include real estate developer Waycor Dev elopment Company; Barden International, which pursues business ventur es in Namibia; and Barden Entertainment, which markets a video jukebo x. Headed by African American entrepreneur Don Barden, Barden Compani es is one of the ten largest black-owned firms in the United States, according to Black Enterprise magazine.

Beginnings

The different enterprises that make up Barden Companies are the brain child of Michigan native Don Barden. Born in 1943, he was the ninth o f 13 children and grew up poor on a nine-acre farm in the Detroit sub urb of Inkster, Michigan. He learned the value of hard work and deter mination from his father, who worked at the Chrysler auto plant and r epaired cars on the side, and his mother, who helped the family raise animals and grow vegetables for food. When he finished high school, Barden scraped together enough money to begin attending Central Ohio University, but he was forced to drop out after a year when funds ran low. He moved in with an older brother in the city of Lorain, Ohio, near Cleveland, and took a series of jobs ranging from cafeteria mana ger to assistant to the president of a shipbuilding company. In 1966 Barden took $500 he had saved and opened a record shop called Don nie's, and also began to promote concerts, work as a disc jockey at p arties, and release records on his own small label.

With record sales slow due to competition from discount department st ores, in 1968 Barden sold his store and started a public relations an d marketing firm. He had once briefly published a small newspaper wit h a partner, and now he started a weekly called the Lorain County Tim es. In 1971 Barden found out from a military recruiter that recruitme nt offices would soon be moving out of post offices into spaces of th eir own, and he quickly decided to buy a building and lease it to the military. After submitting a successful bid for office space, he rec eived a $25,000 bank loan and bought the building. Two years late r he sold it for $50,000, and then bought another building for &# 36;85,000 from Ohio Edison, which he leased back to the utility. By 1 975 the real estate business had grown such that he was able to begin construction of a new $1 million building.

The early 1970s also saw Barden win election to the Lorain city counc il and start working for a Cleveland television station, where he ser ved as host of a talk show and as a weekend news reporter. After usin g his political connections to ensure that 4 percent of the new cable television systems in Lorain and neighboring Elyria would be owned b y minorities, he invested $2,000 in each. Two years later he sold his stakes for $200,000, and immediately began laying plans to b uy cable franchises of his own. In 1981 he formed Barden Communicatio ns, Inc., which bid on cable franchises in seven cities around the Un ited States.

Wiring Detroit For Cable in the 1980s

Barden first won the right to provide cable service to 10,000 househo lds in his old hometown of Inkster, and after successfully connecting them on time and within budget, he was able to secure franchises in nearby Romulus and Van Buren Township. After these were established, he turned his attention to winning the franchise for Detroit, with 37 5,000 households. When bidding was put off until December 1982, it ga ve Barden more time to prepare, and he spent $500,000 to create a n eight-volume proposal, which was declared the winner the following year.

Barden moved to Detroit in late 1984 and immediately began the compli cated process of laying out the cable system. To help fund the massiv e undertaking, he partnered with Toronto, Canada-based Maclean Hunter Ltd., a conglomerate with interests in cable television, magazines, and newspapers. Maclean arranged to provide $100 million in finan cing, and took a 49 percent ownership stake in the system.

In 1986 the five-year wiring process began. More than 100 miles were laid underground, at a cost of $350,000 per mile, with the rest s trung across utility poles for $20,000 per mile. During this time Barden sold the Romulus and Van Buren systems while he continued to expand his real estate interests, founding Waycor Development Co. in 1988 to build the $61.5 million Wayne County Detention Facility i n Hamtramck. Later projects included an apartment complex in Detroit and a Department of Veterans Affairs clinic in Canton, Ohio. Another business that attracted Barden's attention was radio, and in the late 1980s he won licenses to build stations in several states. He would go on to build or acquire five stations in the Chicago, Illinois metr opolitan area.

Not all of Barden's ventures were successful, however. His attempt to turn the vacant Stouffer's Northland Hotel in Southfield, Michigan i nto a senior citizen's housing center was abandoned after he spent &# 36;1.5 million to buy it, and another $1 million was invested in a Pontiac, Michigan savings and loan which was later taken over by th e Resolution Trust Corporation.

By 1992 Barden's Detroit cable system was fully operational and had a ttracted 120,000 subscribers. The entrepreneur already had other proj ects on the drawing board including Cable Cheque, which would offer c able subscribers discounts on their bill when they purchased certain products, and a low-power cellphone-like device, which he had allocat ed $1 million to develop. Barden Communications now employed 332, and had taken in $91.2 million in its most recent fiscal year. I n 1992 the firm was named Company of the Year by Black Enterprise magazine.

Move Into Gambling in 1993

In 1993 Barden partnered with St. Louis-based President Riverboat Cas inos to work on obtaining a license to operate a casino in Gary, Indi ana, where boat-based gaming had just been legalized. The deal was to be a 50/50 partnership, but when President began having financial pr oblems, Barden took full control. A new company, Barden Development, Inc., was formed to oversee this new business.

In the fall of 1994 Barden sold the Detroit cable system to Comcast, Inc., after partner Maclean Hunter had been acquired by the cable gia nt. His take from the deal was $105 million, and he funneled some of the proceeds into his new gambling boat project, which had recent ly been given the go-ahead. By now Barden had also acquired a stake i n University Communications, Inc., which marketed a computer-based le arning and communications system to schools and corporations.



In the fall of 1995 Barden reached an agreement with Trump Indiana, I nc., to form a 50/50 joint venture called Buffington Harbor Riverboat s LLC that would develop a dock, restaurants, and parking for the gam bling boats each planned to operate. In June 1996 the Majestic Star C asino opened on a leased boat, which would give way the following yea r to a new 40,000 square foot, $50 million vessel that featured 1 ,550 slot machines and 70 table games. The firm sold $105 million in secured notes to fund the expansion, which included significant d evelopment in the dock area, whose cost was shared with Trump.

The year 1996 also saw a new business unit called Barden Internationa l reach an agreement with the government of Namibia to build a $1 5 million plant in that country to convert General Motors vehicles fr om the American standard left-hand drive to Namibian right-hand drive . An initial $31 million contract was signed with the Namibian go vernment for conversion of 823 vehicles including Chevrolet pickup tr ucks and Bluebird buses. Barden was also named General Motors' offici al distributor of cars and trucks to the country. His wife Bella Mars hall, an attorney who had served as Detroit's finance director, was a ppointed president of the new unit.

Back in the United States, Don Barden was already working on an even bigger venture. Casino gambling, as recently as the late 1970s legal only in Nevada, had lately been touted around the country as an antid ote to joblessness, and in 1994 the beleaguered citizens of Detroit h ad voted to allow it after a casino was opened just minutes away in W indsor, Ontario, Canada. Once Michigan voters approved the plan in la te 1996, Barden launched a public campaign to win one of the three pe rmitted licenses. Competing against ten others, he made it to the sem i-final round of consideration, but in November 1997 was declared out of the running. Unhappy with the decision, which awarded casinos to two major gaming companies and the Sault Ste. Marie Band of Chippewa Indians, Barden sought a new vote on the licenses, arguing that Detro it, which was more than three-fourths black, should allow at least on e casino to be owned by an African American-controlled firm.

A referendum on the awarding of casino licenses was set for August 19 98, and to bolster his chances Barden brought in a new business partn er: superstar Michael Jackson. The pair proposed a billion-dollar cas ino, hotel, and theme park complex on Detroit's waterfront, and Jacks on also flew with Barden to Namibia to promote his newly-opened plant there. The effort to win a license was unsuccessful, however, with B arden winning only 45 percent of the vote. Also in 1998, the entrepre neur sold the five radio stations he owned in the suburbs of Chicago.

In 1999 Barden filed a federal lawsuit against the state of Michigan and its gaming control board along with Detroit, its mayor, and its c ity council, which alleged that the casino selection process had unfa irly given other bidders preferential treatment, but a judge ruled ag ainst him in July. Detroit's MGM Grand casino opened a week later in a $225 million temporary location, and the other two followed sui t over the next year and a half. The year 1999 also saw the sale of B arden's educational software business.

Fitzgeralds Casinos Acquired in 2001

In 2000 Barden began working on a deal to buy three casinos from the bankrupt Fitzgeralds Gaming Corp., which were located in Tunica, Miss issippi, Black Hawk, Colorado, and Las Vegas, Nevada. The $149 mi llion deal was completed in December 2001, just after the September 1 1 terrorist attacks had devastated the travel industry, and Las Vegas in particular. Barden put up $14 million of his own funds and so ld $135 million in bonds, which he raised on a ten-day tour to 40 institutional investors in 12 cities. The Tunica casino was the most profitable, being the premier gambling facility in its region, while the Black Hawk and Las Vegas properties were smaller players in thei r respective areas. After taking control Barden moved to diversify th eir workforces by hiring blacks and women for prominent jobs in each. The casinos, in particular the Las Vegas one, would be marketed incr easingly to African Americans, trading on Barden's status as the firs t black casino owner in the United States and now the only one with a Las Vegas property.

In 2002 Barden formed new companies called Barden Technologies and Ba rden Entertainment. The former would develop computerized voting mach ines, while the latter made a video jukebox for use in bars and casin os, with initial deployment in Barden's own facilities.

In June 2003 Barden's various enterprises, now known collectively as Barden Companies, were once again chosen as Black Enterprise magazine 's Company of the Year. The firm was ranked sixth on the list of top 100 industrial/service firms owned by blacks, with total revenues of $347 million (95 percent of which was now derived from gaming). I n October the company was refinanced through the sale of notes worth $260 million, and the firm also boosted its credit line to $8 0 million.

A short time later the underperforming Las Vegas Fitzgeralds casino w as incorporated as a separate entity within Barden Companies. The fir m had recently spent $2.5 million on upgrades to the 638-room pro perty, and was working on expanding the Black Hawk Fitzgeralds and ad ding a new blues club/restaurant, Koko Taylor's Blues Café, to the dock area of the Majestic Star Casino.

The energetic Barden was now serving as vice-chairman of finance for the presidential bid of congressman Richard Gephardt of Missouri, tar geting donors in the black community. He had earlier helped raise fun ds for the presidential campaign of Bill Clinton.

In the spring of 2004 Barden bid on a license for a horse-racing trac k in the Detroit suburbs, but his effort proved unsuccessful. The yea r also saw his Namibia operations taken over by another firm, after B arden International gave up its GM distribution contract. There had b een complaints that the vehicles chosen for conversion were unsuited to the rough terrain, and some had gone unsold. Barden remained commi tted to seeking other investments in Namibia after the sale, however.

In 1997 the Lac Vieux Chippewa Indian tribe filed a lawsuit against D etroit's winning casino bidders that put roadblocks in the way of per manent casinos, and then in 2002 Barden had agreed to help the tribe build a casino if they won a license. They were ultimately denied one , and in 2004 agreed to settle their claims against two of Detroit's three casino owners for $79 million, to be paid out over 20 years . Barden expected to receive half the total, but when the tribe stopp ed making payments to him, he sued them. In October 2005 a judge awar ded him $33 million, slightly less than the claimed amount.

In November 2005 Barden announced a $253 million deal to buy Trum p Indiana, Inc., which owned a floating casino in Gary and a 300-room hotel. It would give Barden two gambling boats there as well as full ownership of the dockside restaurants and parking that Trump had sha red with the Majestic Star. After the acquisition both vessels would be upgraded and a portion of the new one would be given over to smoke -free gaming. Barden had also recently purchased a 3.8 percent stake in Detroit's Greektown Casino, which he planned to sell to the casino 's majority owners, the Sault Ste. Marie Tribe of Chippewa Indians, f or $16 million.

Nearly 25 years after Don Barden entered the cable television busines s, the firms that made up Barden Companies, Inc., continued to grow u nder the leadership of their founder. The planned acquisition of Dona ld Trump's floating casino in Indiana would increase his gaming holdi ngs to five properties, and Barden also appeared resolute in his goal of someday owning a gambling facility in his hometown of Detroit.

Principal Subsidiaries: Barden Development, Inc.; The Majestic Star Casino LLC; Barden Nevada Gaming LLC; Majestic Investor Holding s LLC; The Majestic Star Casino Capital Corporation; Majestic Investo r Capital Corporation; Buffington Harbor River Boats LLC (50%); W aycor Development Company; Barden Entertainment, Inc.; Barden Interna tional, Inc.; Barden Technologies, Inc.; Gary New Century LLC.

Principal Competitors: Harrah's Entertainment Inc.; MGM MIRAGE ; Boyd Gaming Corporation; Trump Entertainment Resorts, Inc.; Isle of Capri Casinos, Inc.

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