Cordish's Confidence

The Developer wants to build a casino at Arundel Mills, but he doesn't need to

It’s a weekday morning and David Cordish should be nervous, frustrated.

The night before, the Anne Arundel County Council failed to vote on whether to allow zoning changes that would let Cordish build a $320 million slots casino next door to one of the region’s most successful malls.

The developer plans to build a 215,000-square-foot entertainment complex adjacent to Arundel Mills called Maryland Live!, with retail, live entertainment, restaurants and 4,750 slot machines, by far the largest gambling facility planned for the state.

Just before that fruitless County Council meeting, a state commission had awarded Cordish a gambling license, signifying that the state considers his firm, the century-old Cordish Co., financially stable and legally clean enough to go ahead with the casino.

But without the zoning change, the casino as planned doesn’t fly. For at least the third time since March, when the zoning bills were introduced, Cordish’s play to cash in on Maryland’s fledgling gambling industry, made a reality by a statewide referendum just over a year ago, has been pushed back.

But today, if Cordish is frustrated, he shows no sign of it. He sits comfortably in a modern-looking office chair, hands cradled behind his head, and smiles frequently. He shows off framed pictures around his office of himself with various celebrities (Bill Clinton, Barack Obama, Beyoncé), and jokes about beating tennis colossus Roger Federer in a friendly match they played this year, a week before the U.S. Open.

The phone rings, and Cordish, 69, rises with a sprightly hop to take the call, standing at his desk, which looks out from his corner office in the Power Plant, a building that he redeveloped more than a decade ago, on Baltimore’s Inner Harbor.

“Yeah, we had a good victory at 5 o’clock [last night],” he tells the person at the other end of the line. “Picking up that license was huge.”

More than anything, it’s David Cordish’s confidence in the face of uncertainty that has defined the prominent, well respected and politically connected developer as of late.

In the last year and a half, he has closed on a series of major deals, including winning a bid to build a professional sports arena in Las Vegas, an entertainment district in San Francisco, and a plan to redevelop the site of Philadelphia’s Spectrum sports arena.

There have been setbacks as well. For several months, Cordish was seen as the leading bidder to buy the Tropicana Casino & Resort, a highly visible property that had fallen on hard times, with its parent company in bankruptcy protection.

Cordish made two offers: $700 million in cash and securities, backed by investment bank Goldman Sachs & Co., and a revised offer of $575 million, all cash. The cash offer was effectively a muscle-flexing exercise, meantto show how much money Cordish could mobilize at the drop of a hat, but the bankrupt casino’s main creditors, a group led by corporate raider Carl Icahn, saw the offer as an insulting lowball. They took the casino to auction in September and bought it for about $200 million, piling the purchase price on top of a $1.4 billion mortgage the Icahn group already owned.

The company doesn’t see these big-ticket plays as setbacks.

“We bid continually on things where someone puts up a better price, and we let it go, or the asset deteriorates,” said Jonathan Cordish, one of David Cordish’s three sons and president of the family-run company. “In this case, the underlying asset had deteriorated. We’re not interested in a bidding war.”

To hear David Cordish say it, he does not need the Arundel Mills deal to go through either, not for his conscience and not for his bottom line. But the company said publicly, Maryland Live! would be the company’s biggest investment in Maryland in a century of doing business here.

‘Logical growth’
Jonathan Cordish says that the company’s approach to casino investment is the “logical outgrowth” of its real estate philosophy from the start: invest conservatively, don’t overload projects with debt, and rely on presigned tenants as revenue drivers.

“We entered the casino business 11 years ago with a developer’s mindset,” he said. “What gaming has evolved into is a critical need to differentiate yourself and maximize revenue through other revenues streams, other amenities. ... We have a rule: We’re the source of equity. When you’re writing all the checks ... you’re going to treat the project with the utmost care.”

The Cordish Co. was founded in 1910 by Jonathan Cordish’s great-grandfather, Louis Cordish. His son, an attorney named Paul, inherited a business that functioned
largely as a holding company for a mid-sized portfolio of residential and retail properties. Paul Cordish remained active in the company until he died in 2003 at age 94.

David Cordish, who grew up near Baltimore’s Druid Hill Park, attended City College, Johns Hopkins University and the University of Maryland School of Law. He took over the company in the early 1960s, and quickly set about developing suburban shopping centers in Harford, Cecil and Baltimore counties, as well as on the Eastern Shore, most of which the company still owns.

The turning point, David Cordish said, came later. From 1977 to 1980, he served as director of the Urban Development Action Grant program, a $4.6 billion development fund started by the Carter administration and run under the U.S. Department of Housing and Urban Development.

In this position, he traveled the country, meeting local politicians and evaluating projects seeking federal money, while at home in Baltimore, his real estate company remained active. On those trips, he said, he began to see the promise of “transformative” urban public-private development partnerships.

“One of the things that has helped is that public officials are not always comfortable with developers, and developers are not always comfortable with public officials, and I was thought of as both,” Cordish said.

Robert Embry, now head of the Abell Foundation, was at the time a deputy secretary at HUD. He appointed Cordish to the UDAG position because, he said, he wanted someone with private-sector experience. Embry and Cordish went to high school together and have vacationed together in <st1:country-region>Spain</st1:country-region> and <st1:country-region>Israel</st1:country-region>. Cordish was best man at Embry’s wedding.

“These were all people who were interested in cities,” Embry recalled. “It wasn’t something that people had been interested in before. The suburbs were just much easier to work in. [Cordish] became interested in trying to correct that inequity.”

The Charleston experience
Embry joined The Cordish Co. in 1980, after the election of Ronald Reagan. One of the first projects he worked on was a multimillion-dollar mixed-use development in the heart of Charleston, S.C., called Charleston Place.

The project was supported by Joseph P. Riley Jr., who has served nine consecutive terms as Charleston’s mayor since first being elected in 1975. Cordish met Riley as UDAG head, and says he was inspired by his leadership.

Riley described Cordish as a credible, friendly businessman who drives a hard bargain to get what he wants - usually a government subsidy on a project.

“When other mayors call me about him, I say, first of all, he is the best negotiator you’ll ever come across. I always say we’d be well served sending David to the Middle East,” Riley said this week. “What no city wants is a nice-sounding idea that isn’t successful. That’s the worst thing that can happen to a city, a business development that doesn’t work. And David Cordish will never let that happen.”

Charleston Place was one of the earliest in a series of highly recognizable Cordish  city projects spread all over the country, including in Atlantic City, Houston, St. Louis, Louisville and Kansas City.

In the 1990s, Cordish’s three sons, Jonathan, Blake and Reed, champion college tennis players and heirs to the family business, invented the Live! brand, an entertainment concept that Jonathan described as a “living room” to every city where it is built. Baltimore’s Power Plant Live!, with its outdoor stage, clubs, restaurants and open space, is typical: it’s clean, sleek and highly branded - a new sort of urban Disneyland for 20-somethings and music buffs.

They established branding agreements with NASCAR, Anheuser-Busch and Hard Rock Cafè, opening restaurants and clubs in their developments alongside other
retail. The brothers founded Entertainment Concepts Investors, a subsidiary company that develops in-house brands for restaurants and live music venues within Cordish-owned developments.

As the company grew (to more than 7,000 employees now, more than 250 of them in Baltimore), so did its horizons. In 1998, Cordish began investing in casinos, opening its first gambling facilities in cooperation with the Seminole Indian tribe in South Florida This year, the company opened its third casino property, in Indianapolis.

David Cordish said that a typical Cordish Co. project is backed by about 50 percent debt and 50 percent company equity. He said that his firm has no debt at the corporate level, and that, if necessary, it could build the $300 million Arundel Mills project entirely with cash.

Arundel thrills
Maryland voters approved slot machine gambling in a November 2008 referendum that changed the wording of the state’s constitution to allow for slots casinos at five
locations across the state.

And for now, Cordish is betting that the County Council sees it his way.

“Hopefully they are responsible council people,” he said. “For them to turn their backs on thousands of jobs, $36 million in [annual] revenues, it’s inconceivable. I just assume they’re going to do the right thing.”