On second thought, I shall just let the Detroit Free Press tell the ongoing tale of how Matt Cullen is is being forced to dissolve Gilbert's thiefdom in Detroit.
Detroit JACK layoffs another clue Gilbert is winding down casino empire
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| Matt Cullen |
Bedrock announced at the end of August that Cullen would become CEO of the real estate firm after serving as head of JACK Entertainment, the casino arm of Gilbert's family of companies. JACK exec Mark Dunkeson also joined Bedrock as president and chief operating officer, and four other top execs from JACK made the switch to Bedrock as well.
And then just this week JACK Entertainment filed a so-called Warn Notice with the State of Michigan warning of the pending closing of its JACK home office in Detroit with the layoff of all 92 employees. The layoffs will begin in November and run through early 2020, the notice said, as the JACK central office shuts down permanently.
Closing JACK's central office and transferring JACK's top echelon to Bedrock marks a dramatic change from not long ago when Gilbert was assembling a casino network that spanned four states.
In 2013 he bought Detroit's ailing Greektown casino after its bankruptcy. In 2009 he successfully promoted a referendum to bring casinos to the state of Ohio and later opened gaming halls in Cleveland and Cincinnati. There was a racino track (a combined casino and horse racing track) in nearby Kentucky, as well as a partial interest in a casino in Baltimore.
But that gaming empire didn't last long. In 2018, Gilbert announced he was selling Greektown Casino in Detroit for $1 billion. This year, he announced the sale of the Cincinnati casino for $745 million, and the Kentucky track is tied in with that. Cullen said this week in a phone interview that the sale should close this month or next.
JACK is in similar talks over its Baltimore location, Cullen said, adding that Gilbert may sell the physical properties housing his Cleveland casinos to others but will hold on to the operating arms there.
So what once looked like a growing part of Gilbert's wide-ranging mortgage, sports and real estate empire now looks like almost an afterthought.
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"It's definitely changing, right?" Cullen said in a phone conversation with the Free Press this week. Employees at JACK "are going in one of two different directions with JACK. They’re either moving on to the Cleveland projects for a long-term play there with growth. And myself and Mark Dunkeson will remain involved to some extent, but obviously now will turn most of our attention to Bedrock."
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| Starring Dan Gilbert |
What this reshuffling of leadership means in the context of Gilbert's broader business strategy is hard to say. Gilbert's many business operations, from his Quicken Loans mortgage lender to his Cleveland Cavaliers NBA team, are privately held. Neither Gilbert nor his top aides like Cullen are given to revealing too much about their strategy.
But it's fair to make some educated guesses. It is widely thought among local real estate professionals that Gilbert's outsized ambitions for his downtown Detroit projects ran into some hard realities about cost and budget.
As outlined last year by Bedrock, four of the firm's biggest projects downtown were to cost an estimated $2.15 billion, create more than 7,000 permanent jobs and add 3.1 million square feet of new office, retail, residential, hotel and civic space to the downtown core. Those projects include the Hudson's site, the Monroe Block, the Book Tower and the addition to One Campus Martius, the former Compuware headquarters.
In recent months, though, construction costs have risen sharply due to shortages of skilled workers and other factors. While work continues at the Hudson's site, Book Tower and One Campus Martius, work at the Monroe Block has been delayed pending a redesign of the project.
Whether cost overruns or other challenges led to the departure of former Bedrock top execs Jim Ketai and Dan Mullen, who both left recently for opportunities outside Gilbert's network, is hard to say. But so many changes at the top seem to hint — I'm guessing here — that Gilbert thought a change in Bedrock's leadership could bring in the many projects in a timely and cost-effective way.
Whatever the motivation for the leadership changes, casinos that once seemed a growing part of Gilbert's family of companies have been relegated to the second tier. It's real estate, not casinos, that holds the attention of the A-Team now.
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