Wednesday, March 9, 2011

Gaming the taxpayers with ersatz capitalism

Hired guns Deloitte & Touche prepared an economic impact report for Paragon's proposed casino at BC Place. The numbers give an optimistic view of financial benefits that might arise but, as with all projections created to sell a project, the constructed situation is unlikely to unfold. Uncertainty is the only certainty in prediction making and the consultants remind us by attaching disclaimers, although not prominently.

A sampling of Delitte & Touche reservations:
  • The hypotheses represent plausible circumstances but need not be and may not have been fully supported.
  • A detailed feasibility review/analysis has not been undertaken, nor should one infer that such a study has been undertaken.
  • Information furnished by others … has not been verified in all cases. No warranty is given as to the accuracy of such information.
  • We have not audited or otherwise verified the capital cost estimates associated with this project.
There is double counting of benefits because they report expected revenue generation of the new facility without deducting revenues of the facilities it would replace. The Globe and Mail had earlier noted that Paragon does not presently have the financial capacity to complete this half billion dollar project:
"Paragon Gaming Inc. will count on its relationship with provincially owned PavCo to help bankroll its proposed $450-million Vancouver casino, says Paragon president Scott Menke.

"Paragon will put up some of its own money as equity but will have to turn to capital markets to line up about $350-million worth of debt financing for the rest, Mr. Menke said on Tuesday."
No doubt PavCo will provide sufficient funds if Paragon cannot. Apparently, what this connected company does have in abundance is major influence with the BC Liberal Government and PavCo. Should we wonder why this generosity was not provided to a Vancouver company? No, we don't have to wonder. RossK explained it at The Gazeteer.

Read more at Vancouver Not Vegas.

United Here Paragon Gaming, Vancouver
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  1. Excellent post Norm. A "must share"!

  2. Remember how media and Liberal opposition went on endlessly about Fast Ferries and the lack of a detailed business plan before the project was set in motion.

    Do you suppose they will emphasize this statement of Deloittes:

    A detailed feasibility review/analysis has not been undertaken, nor should one infer that such a study has been undertaken.

    Yet, the half billion dollar stadium renovation is underway, the plans for a mega-casino proceed. Strange double standard, eh?



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