Bellicose Bumpkin

The Whittlesey Agreement
Some time back, I got a copy of the Whittlesey agreement. This was the agreement negotiated by professional gaming attorney Dennis Whittlesey for which he was paid (I think) somewhere near $200K. Given that the whole idea of the casino is dumb, hiring Whittlesey was one of the few smart things that the town did. If you’re going to jump off a cliff, you might as well buy a good parachute.

Whittlesey spent nearly a month talking to department heads, figuring costs and impacts, figuring out what would silence CFO, and crafting an agreement that was probably 15-30% more than we could expect to receive. This of course is negotiation 101 and is designed to give room to deal and give concessions to the other side – in this case Sol Kerzner and Len Wohlman – the dual exhaust holes pushing the tribal donkey forward. This agreement would have given Middleboro somewhere around $32M according to my calculations. Keep in mind that this was a starting point that would have been negotiated down somewhat to a more reasonable number for both sides.

Once presented with the Whittlesey agreement, the tribe put on a big public show:

Glenn just cares about civil jurisdiction… uh-huh.
Let me tell you folks. It is doubtful that convicted rapist and serial liar Glenn Marshall was worried about “civil jurisdiction over non-tribe members”. Since this clause never made it to the final agreement – I don’t think anyone can argue with that. He was worried about the fact that this agreement would have paid Middleboro over $32M per year. Or more specifically, the casino investors were.

Over $32M per year. Hmm,, hasn’t CasinoFacts.org been saying all along that the town should have gotten north of $20M dollars? Well, they were right.

Of course Whittlesey claimed that this was just a wish list and a starting point for negotiation. Bull. This agreement is very similar, and in in some ways not quite as good, as an agreement Whittlesey has just negotiated for Shabbona, Illinois for a class 2 bingo hall.

The Healey legacy
So what went wrong? Middleboro messed up. They approached the tribe with no public discussion and the BOS allowed Jack Healey to negotiate an agreement that paid us only $7M plus infrastructure. By the time Whittlesey came along, the expectation had already been set, and for all I know maybe a gentleman’s agreement had been in place all along. That $7M has not changed since the very beginning. Where did it come from? Why $7M? Maybe because $7M is around twice our current commercial tax revenue? Maybe because it would sound so good to say that we were getting twice as much from this one facility. Didn’t Wayne Perkins say that the Mashpee Wampanoag came with an offer?

Shabonna hired a professional to negotiate for a class 2 bingo hall and had the tribe pay for Whittlesey’s services. The Middleboro BOS allowed Jack Healey to do it, then hired Whittlesey, paid him ourselves to the tune of $200K, and then didn’t use his agreement. Repeat after me. Stooopid.

Adam was right
I have a clear memory of the meeting where Amelia Bingham warned the BOS that they had better find out more about the morally challenged Glenn Marshall. Adam Bond to his credit had done some research and mentioned several firms that specialize in this sort of work. He also managed not to laugh when Marsha suggested we might find such an expert in town. It was Adam that brought in Whittlesey. At this same meeting, Adam pointed out, and rightly so, that once you set the bar, it is very hard to change it. Well he was right. Jack set the bar so low – just $7M – that the tribe’s lawyers must have been holding in their guffaws until they went out for drinks and spent the next 6 hours slapping one another on the back and laughing their arses off about what a bunch a backward rubes we were.

At the point where the Tribe rejected the Whittlesey agreement, Middleboro should have held the line and told them to walk. That in fact is what I recommended at the time. Instead, we rolled over like a bunch frightened children and accepted a slight increase over the incredibly poor agreement negotiated by Jack Healey. If we had stuck to our guns, they would have come back to the table.

The deal we should have received
So brace yourselves, here are the highlights of the Whittlesey agreement along with my estimate of the value.

• Similar pre-trust tax payments
• $20M – 2% of the net win from class 2 and class 3 gaming
• $7M – (no increase due to CPI versus the 3.1 we have)
• $4M – All current and future local sales and use taxes such as a 4% hotel tax. This would not have been subject to comping.
• $1M – Personal property tax for all non-tribal entities such as vendors. Total guess.
• All infrastructure improvements(town and road)
• Excise Tax on non-tribal vehicles(vendors etc)
• Monthly payments for municipal services
• Pay for a full time planner and clerk prior to opening
• Any percentage to town from state compact deducted from our 2%
• Tribe will pay for a traffic impact analysis and mitigate all issues
• Pay full retail to Middleboro G&E rather than the favorable rate they got
• $520K – pay for 8 police officers and 2 cruisers – forever w/ cruiser replacement every 5 years.
• A portion of new police station
• The demands of the casino will require a town run ambulance service. The tribe will buy 2 ambulances and fund the training and salary of 12 fire/ems workers

According to my calculator, that’s $32.5M. And for those of you who believe this was just a starting point for negotiation, Whittlesey’s Shabbona agreement paid 2.5% of the net win versus our 2%. Surely there would have been some concessions. Whittlesey probably added in 15-30% wiggle room that he was prepared to give away – maybe $8M – which would have brought us down to about $24M – exactly what CFO has been saying all along

Where the BOS went wrong
If you are comfortable with a casino, and I’m not, this was Middleboro’s big chance to get some money that could really help the town. If nothing else it would have spared the town several dozen blogs from me complaining about how crappy our deal is.

Healey really blew this deal. And the BOS blew it when they didn’t hang tough after the Whittlesey agreement was rejected. I personally spoke to Adam a number of times where we both agreed that 2% of the net gaming revenue was about right. These conversations were before the Healey and Whittlesey agreements. Adam knew where the bar should be set. I was completely shocked when I saw the final agreement and was quite sure that Adam would reject it. Boy was I wrong.

Adam – why did you do it? The rest of the BOS didn’t do any homework and didn’t know any better. You did. You knew this deal was far less than what it was worth. I going to go on record as saying that if we had let Adam run this negotiation from the very beginning – before Healey ruined it we would have gotten a good financial deal even without Whittlesey. Adam is more than capable of taking a few IGA’s, picking various pieces and massaging them for the specifics of Middleboro. And he would started with an inflated amount that could be negotiated down until we were left with 2% of the gaming revenue and a few other perks.

The rest of the BOS probably still don’t know what an awful deal this is. They are clinging to the final agreement deluding themselves that it isn’t a terrible deal and hoping that we can make up the difference with ancillary development. Ask Adam guys. He’ll tell you that I’m right.

What we should do at this point is reject the deal outright, submit a complaint to the BIA that we were rushed and intimidated, and demand that we re-open negotiation starting with the Whittlesey agreement. Then we let them talk us down and maybe give up the $7M yearly payments. That will give us a nice even $25M and would be a fair deal.

Whittlesey rears his ugly head in Illinois
This just in from DeKabl County Illinois where our friend Dennis Whittlesey is trying to cut another “great deal” like he did for Middleboro. One local resident implored the local board to get another lawyer.

The Potawatomi tribe is trying to set up an electronic Bingo casino operation and is seeking authorization from the NIGC.

But here is the part that spells doom for this poor community:

Don’t do it … Don’t do it
It breaks my heart to see another community about to get hoodwinked the way Middleboro did. We had Whittlesey negotiate our agreement and I for one could not be more unhappy with the result. I don’t believe he was impartial. I believe that his whole goal was to get an agreement done at any cost. I maintain that our agreement is paying us about half of what a similar commercial facility would.

In short, from my perspective, – the deal stinks.

But back to the story. This tribe is so desperate they are willing to pay Whittlesey’s fees. People of DeKabl County Illinois – you are about to be shafted!. Do not go down this road – and if you do – get a lawyer with less “experience” and more interest in your community.

Have I told you lately that you’re a racist?
My experience with the Mashpee Wampanoag and Whittlesey was horrible. Check out this clip. As part of our “deal”, Whittlesey negotiated that we get a 4% tax on hotel rooms. In trying to sell this to the town, they told us that number would be $4M. They based this figure on 1500 rooms with an average occupancy rate of 90% at an average price of $200 dollars per night for 1 year(365 days). For the mathematically inclined, the formula is:

1500 X .9 X $200 X .04 X 365 = $3,942,000

The problem is, the agreement explicitly states that we do not get payment for comped(given away for free) rooms. Comping can run as high as 80% in Atlantic city and prbably 50% for the proposed Middleboro casino. This cuts that $4M in half.

Even worse – when one of the citizens pointed this out, Whittlesey accused him of getting the comping rates off the CERA website – a group that pro-casino people have been trying to paint as a racist organization – which they’re not.

Whittlesey clearly has expertise in this area – that’s not up for debate. As somebody who has seen the end result of the Middleboro deal – please don’t ask me for any references.