Management Team Quits Deal to Run Bell Card Club

With city officials close to completing their purchase of the California Bell Casino, a management group that agreed to handle day-to-day operations has suddenly pulled out of the deal.

The breakdown of the 4-month-old pact with California Casino Properties Inc.--led by several veteran casino operators--was announced this week after the management group failed to make a good-faith deposit of $1.2 million, City Administrator John Bramble said. The deposit was supposed to have been made by March 15.

‘Didn’t Want to Go Forward’

“They kind of backed out of the deal,” Bramble said on Tuesday. “They just felt that given their financial position, they did not want to go forward.”

City officials had been on the brink of scheduling a bond issue that would have raised an estimated $7.1 million to pay off the beleaguered card club’s creditors and a block of limited partners, Bramble said. The bond issue was the last hurtle in the city’s 18-month effort to take over the club so it might again provide a steady flow of tax revenue, he said.

“It was technically a default,” Bramble said. Members of the management group forfeited a $10,000 deposit after claiming that the signed operating agreement would not prove as profitable as they had hoped, Bramble said.

“(The breakdown) was pretty much on friendly terms,” Bramble said.

City officials said they intend to proceed with the casino purchase. But they acknowledge that the transition will probably be delayed by at least two months as they search for a new club operator.

“If we are not back to square one,” Mayor George G. Mirabal said, “we are pretty close to it.”

Meanwhile, casino attorney Howard Manning said the club’s current owners are “disappointed that this (takeover) process is taking so long.”

He said the general partners--California Bell Club Management--are considering keeping the club if the city cannot close a deal soon.

“The time has dragged on quite a long time,” Manning said. “This is to the detriment of the club. The question as to what lies in the future for the California Bell Club has had a negative effect on the club’s operation.”

Mirabal said that city officials have begun negotiating with three other management groups.

“We want to move on this fairly quickly,” Mirabal said.

“We’re just as strongly resolved today as we were a year ago,” Mirabal continued. “You cannot ignore how lucrative the tax is on the casinos.” He declined to name the other management groups, but said they were not from any of the other, more profitable casinos in neighboring cities.

Mirabal said California Casino Properties backed out of the pact largely because of a “black cloud hanging over the head” of pai-gow , a high-stakes Asian game that generates as much as 25% of the revenue of area card clubs, but that may soon be outlawed by the state.

Bob Bernstein, an attorney for the management group, declined comment this week. But at a recent City Council meeting, the lawyer said his clients were concerned about the uncertain future of the controversial Asian game.

Pai-gow and two similar Asian card games are played at all seven Southland card clubs, but their legal status has been challenged in the courts by the Los Angeles County Sheriff’s Department.

Deputies contend that the games violate the century-old state gambling law because they allow the dealer to enjoy a slight advantage over the other players.

A coalition of city managers from Bell, Bell Gardens, Huntington Park, Commerce and Gardena--where the clubs are located--are supporting a bill that would update the state law, outlaw pai-gow , but permit the other games, Asian poker and super pan 9.

Officials of California Casino Properties also expressed fear that rising bond interest rates would have lowered the group’s profit margin, city officials said.

The operating agreement called for the $7.1-million bond issue to be paid back from the club’s gross receipts. The management group would have received a percentage of whatever was left--so the higher the bond interest, the smaller their profit.

Profits Are Down

And these days, the California Bell Casino’s profits are far from what they used to be. The club opened to standing-room-only crowds in 1980 and once generated about $2 million in annual tax revenues and fees for the city.

But in recent years, other casinos have opened in Huntington Park, Commerce and Bell Gardens, giving the Bell club stiff competition. Now, the city receives only a small fraction of that $2-million high, Bramble said.

The Bicycle Club in Bell Gardens, the largest card club in the state, is less than two miles from the California Bell Casino, located in the industrial section of the city.

California Bell operators have complained that the glitzier Bicycle Club, run by Cathedral City Mayor George Hardie, has lured thousands of gamblers from the California Bell Club.

City officials moved to take over the Bell club in September, 1987, after it became mired in a series of financial and legal problems as well as a bitter dispute between shareholders.

Officials agreed to pay the club’s general partners the $7.1-million to be raised by the sale of development bonds.

But officials have run into several snags in their attempt to find a suitable management team to handle day-to-day operations.

Negotiations between the city and Southwest Gaming of Las Vegas fell apart last year after that management group became involved in a criminal profit-skimming investigation that also touched some of the Bell club’s general partners.

On March 3, several members of Southwest Gaming were charged with conspiracy to commit grand theft and attempted grand theft, said Los Angeles County Deputy Dist. Atty. David Conn.

Casino operators Don Speers, Michael Riordan, John Vukasian and James Salerno were arraigned in Los Angeles Municipal Court and released on an unspecified amount of bail, Conn said. Southwest Gaming acted as a consultant to the Bell Club, casino attorney Manning said.

No charges have been filed, however, against the general partners of the Bell casino, Conn said. The investigation is continuing, he added.