Prospective mold and corrosion are the likely fate of unfinished Baha Mar Resort, the $3.5 billion boondoggle that is probably the biggest megaresort flop of all time. (Only Fontainebleau on the Las Vegas Strip can hope to 
compare and it has just one hotel to Baha Mar’s four.) It’s a debacle 10 years in the making and could jeopardize the credit rating of the Bahamas, for whom it was supposed to generate 12% of the nation’s GDP. In a moment of prescience, the-CEO of Caesars Entertainment Gary Loveman pulled his company out of Baha Mar early. Whether he saw the trouble that was coming is anybody’s guess but he’s earned the right to say “told you so.”
Local tycoon Sarkis Izmirlian envisioned Baha Mar as a $900 million project. But his partners got cold feet early in the Great Recession, forcing Izmirlian to make a Faustian pact. China State Construction Engineering Corp. offered to finish the job and the Export-Import Bank of China (Exim) provided liquidity — on the condition that the work would be done by imported Chinese laborers and China State Construction could never be terminated, no matter what.
According to Bloomberg News, “Endless haggling complicated by language barriers ensued — about payments, invoices, workmanship, on and on. Deadlines were set and promptly broken. Emails flew back and forth to Beijing.” Faulty construction dogged Baha Mar. Izmirlian hired 2,070 hotel workers (at a cost of $4 million a month), while secretly plotting to file bankruptcy in Delaware. The latter’s courts kicked the matter back to the Bahamas, where Izmirlian saw his initial investment evaporate as liquidators took over Baha Mar. Exim is hunting for a new operator, possibly Fosum Group, which also owns a piece of Cirque du Soleil, among other global investments.
By the way, there’s a moral in this for operators of casinos in Macao, should any of their competitors be nationalized. Center for a Secure Free Society boffin Frank Menendez says, “State-owned enterprises don’t function as competitive entities. They’re protected from failure.” In other words, China State Construction may have created a white elephant in the Bahamas but it’s going to get off scot-free.
* Online sports betting just got a little more difficult in Canada. Leading Internet gambling provider Betfair is shutting down access to Canadian punters. This action is attributable to two things. One, sports betting is illegal in the Great White North (although this hadn’t stopped Betfair before) and, secondly, Betfair is merging with Paddy Power and probably wants to clean up its act. Ironically, the move comes just as Quebec and a few other provinces are pondering legalized sports wagering.
Baha Mar is certainly a cluster F (not necessarily that it won’t operate well … some day). I think Sarkis Izmirlian sunk about $1 billion of his family’s money in the place? I also heard Sol Kerzner took a look at the place recently and passed. Now that would have been interesting!