Posted on: August 10, 2023, 07:59h.
Last updated on: August 10, 2023, 07:59h.
Hard Rock International’s plans for bringing a massive integrated resort (IR) to Athens, Greece, may be in jeopardy. The original plan had the government providing financial assistance, but now it is requesting that Hard Rock and its partner, Gek Terna, contribute more of their own funds.
The project’s financial situation has worsened compared to the previous agreement with Hard Rock and Gek Terna. A report by Data Journalists reveals that the banks willing to finance part of the project have requested an additional €120 million (US$132.18 million) from the two entities.
This is in addition to the originally agreed upon €250 million (US$275.37 million). If an appropriate resolution is not reached, the two companies have indicated that they may abandon the project.
All Or Nothing
The motive behind keeping Gek Terna and Hard Rock involved in the project is clear. This venture has the potential to generate over €6 billion (US$6.6 billion) in gross revenue taxes alone for Greece within three decades. The government expects the IR to contribute at least €200 million (US$220.3 million) annually to the budget for the next 30 years.
The large resort is projected to provide €1.1 billion (US$1.21 billion) in social security contributions. It will also generate €800 million (US$881 million) in income tax and an additional €500 million (US$550.75 million) from VAT. Another €600 million (US$660.9 million) will come from local fees and taxes.
Lamda Development, in charge of revitalization efforts in the Hellinikon region of Athens and the concessionaire of the land for the IR, anticipates a substantial revenue boost as well.
However, concerns about the accuracy of the projections have led to a lack of faith among some investors, including certain banks that had previously agreed to support Hard Rock and Gek Terna. As they withdraw their support, the two companies are expected to step in to fill the void.
There is reportedly another option on the table. Greece has a government-controlled Recovery Fund, which could provide up to €450 million (US$495.67 million).
However, this could pose problems as well. The Recovery Fund is part of a European Union-led initiative to help Greece recover from its economic disabilities and COVID-19. Allocating some of the funds to build a casino may not be well-received, especially as the country deals with significant losses from wildfires and economic turbulence.
Turning to Political Allies
The project has faced challenges since its inception. An initial bidding war resulted in a court battle between Mohegan Gaming and Entertainment (MGE).
MGE won preliminary approval, which was challenged by Hard Rock. However, MGE ultimately withdrew from the project due to concerns about financial requirements. It then transferred its planned participation to its local partner at the time, Gek Terna. This is when Hard Rock took over.
Perhaps the IR can find support halfway around the world in the US. Michael Karloutsos, a businessman and son of Greek Orthodox priest Alex Karloutsos, is said to have played a role in the initial deal.
Michael Karloutsos has alleged connections to Hunter Biden, son of President Joe Biden. He has also briefly held the position of “acting deputy chief of protocol” for former President Donald Trump.
Hard Rock did not respond to a request for comment.