The owners of Hollywood Park have named a new casino manager, the first significant step in an ongoing – but still tenuous – effort to revitalize the casino and turn the area around it into a $2.1 billion mixed-use development.
The proposed management change came to light in a Feb. 4 notice to casino employees, who were told they’d be laid off in March when the contract with current manager Century Gaming Management LLC of Los Angeles ends.
San Jose casino owner Eric Swallow, whose LAX Property LLC is seeking approval to run the casino going forward, said in a statement that the layoff notices were a legal requirement and that his company plans to retain many employees and honor existing union contracts.
He also said he is seeking approval for “a significant and long overdue revitalization of the Hollywood Park Casino.”
Renovations to the casino, which is more accurately a card club under limits imposed by California law, were initially planned as the first phase of the massive Hollywood Park Tomorrow project proposed by land owner Stockbridge Real Estate Funds and developer Wilson Meany, both of San Francisco.
Their plan calls for demolishing Hollywood Park’s horse-racing track to make way for 3,000 mostly for-sale homes, a hotel, parks and a whopping 620,000 square feet of retail space – a bit more than at Caruso Affiliated’s Grove in the Fairfax district.
That redevelopment, however, is still some time in the distance. Track officials recently announced they will host races at least through December, meaning any construction can’t start for at least another year.
Even then, there are obstacles to a project of the scope envisioned.
“I think that’s an anchor around this project’s neck,” Larry Kosmont, chief executive of downtown L.A. development advisory firm Kosmont Cos., said of the huge retail component. “The market for existing retail is, at best, sideways. An expansion is probably a nonstarter in today’s economy.”
Officials at Hollywood Park Land Co., the local Stockbridge entity that owns Hollywood Park, declined to comment. Inglewood’s mayor and city manager did not return calls for comment, though a city planner said no construction permits have been issued for work at Hollywood Park.
Stockbridge bought Hollywood Park, including the casino and race track, for about $260 million in 2005. After years of planning and public meetings, the mixed-used development, called Hollywood Park Tomorrow, was approved by city officials in 2009. Since then, track officials have been hesitant to schedule horse races more than about six months advance, but nothing much has happened.
“The last time I heard anything was just before the ink dried on the development agreement,” said Don Del Rio, owner of Inglewood flooring contractor American Quality Floors and founder of the Inglewood Contractors Association, a group created in part to help local contractors get in on the Hollywood Park project.
“I’m hoping that project does go forward, but right now they’re really tight-lipped,” he said.
With a still-slow economy and a plan loaded with for-sale homes rather than much hotter rental units, it’s no mystery why the development has stalled.
Kosmont said he sees the residential side of Hollywood Park Tomorrow, not retail, driving the project. He speculated that bringing in a new casino manager is less about getting the bigger project going and more about bringing in more cash as Stockbridge waits for the economy to improve.
“The existing revenue is important when you’re carrying a large piece of property,” Kosmont said. “You want to take care of and nurture your existing revenue.”
But Peter Belisle, who oversees the Southwestern United States as market director for real estate firm Jones Lang LaSalle Inc., said renovating the property now could help build demand for eventual retail development.
A stronger driver of that demand, though, will likely be renovations at the nearby Forum, which was purchased in June by New York stadium operator Madison Square Garden Co. The company is planning to spend $50 million to turn the aging facility, located just north of Hollywood Park, into a concert and events venue to rival Staples Center.
“Development in that area has to respond to the demographic that’s going to the new Forum – pre- and postevent, like L.A. Live,” Belisle said. “That’s really a critical-mass mover.”