Hard Rock International’s plans to bring a massive integrated resort (IR) to Athens, Greece, may be faltering. The original plan had the government providing financial assistance. But it is now requesting that Hard Rock and its partner, Gek Terna, contribute more to the project.
The project’s financial situation has taken a turn for the worse compared to the previous agreement with Hard Rock and Gek Terna. A report in Data Journalists suggests 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 on top of the initially agreed upon €250 million (US$275.37 million). The two companies have reportedly expressed their intention to abandon the project if an appropriate resolution is not reached.
All or Nothing
The motive behind the desire to keep Gek Terna and Hard Rock involved in the project is apparent. This venture holds the potential for Greece to amass over €6 billion (US$6.6 billion) within three decades on gross revenue taxes alone. The government expects the IR to yield at least €200 million (US$220.3 million) a year for the budget for the next 30 years.
The large resort will contribute €1.1 billion (US$1.21 billion) in Social Security contributions, according to projections. 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 go to local fees and taxes.
In addition, Lamda Development anticipates a substantial revenue boost. It’s in charge of revitalization efforts in the Hellinikon region of Athens, and is the concessionaire of the land where the IR will stand.
Concerns about the accuracy of the projections have created a lack of faith among some investors, including certain banks that had previously agreed to back Hard Rock and Gek Terna. As they pull back, what’s left is a void that the two companies are expected to fill.
There’s another option reportedly on the table. Greece has a government-controlled recovery fund, from which it could pull as much as €450 million (US$495.67 million).
However, this could lead to problems. The recovery fund is part of a European Union-led initiative to help Greece recover from its economic disabilities and COVID-19. Using some of the money to build a casino might not go over too well, especially as the country deals with multimillion-dollar losses from raging wildfires and other economic turbulence.
Turning to Political Allies
The project has been fraught with problems since it was first schemed. An initial bidding war led to a battle between Mohegan Gaming and Entertainment (MGE) that ended in court.
MGE won the preliminary approval, which Hard Rock challenged. However, it wasn’t necessary, as MGE eventually backed out, citing concerns over the financial requirements. It then gave its planned share of the participation to its local partner at the time, Gek Terna. That’s when Hard Rock took over.
Perhaps the IR can find relief halfway around the world in the U.S. Michael Karloutsos is a businessman and the son of Greek Orthodox priest Alex Karloutsos, who allegedly helped put the initial deal together.
The elder Karloutsos was previously heavily involved in U.S. religious circles, as well as politics. That paved the way for his son to carry on the family tradition.
Michael Karloutsos has alleged ties to Hunter Biden, son of President Joe Biden. He was also once briefly the “acting deputy chief of protocol” for former POTUS Donald Trump.
Hard Rock didn’t respond to a request for comment.
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