12 Investigates: Sale of Margaritaville in doubt over licensing dispute

12 Investigates: Sale of Margaritaville in doubt over licensing dispute

BOSSIER CITY, LA (KSLA) - The sale of the Margaritaville Resort Casino in Bossier City announced more than a year ago could be on the rocks, according to documents filed Wednesday morning in federal court by the company that owns the rights to the Jimmy Buffett-founded brand.

KSLA News 12's Victoria Shirley uncovered court documents revealing details of the sale that now might never come to pass and the dispute that threatens to undermine it.

That dispute centers on whether the company that owns and operates Shreveport-Bossier City's newest casino is legally bound by an agreement requiring it remain under the Margaritaville brand for the next 35 years - even if it's sold to a new owner.

Bossier Casino Venture LLC (BCV) signed a 40-year licensing agreement with Margaritaville in August 2011, two years before its much-anticipated opening next to the Louisana Boardwalk in June 2013.

Under the agreement, BCV was to make quarterly license fee payments to Margaritaville based on the percentage of the project's adjusted gross sales, with a minimum rate of $5 million per year.

BCV owned and operated the hotel in accordance with that agreement for 3 years, until they got an offer from Poarch Creek Indian Gaming to purchase the property for $335 million, according to court records.

Poarch Creek Indian Gaming (PCI) is an authority of the Poarch Creek Band of Creek Indians, which already operates 3 casinos in Alabama under their casino brand, Wind Creek. PCI made the offer on the condition that they would not have to operate it with any of the Margaritaville branding.

BCV signed off on the deal because they believed they had an "out" in their agreement with Margaritaville.

Margaritaville disagreed, arguing the hotel owner created their own interpretation of the agreement in order to get out of it.

"Bossier then took the position that the agreement permitted Bossier to exit the agreement at any time, provided that it made a $10 million payment, or the equivalent of two years' worth of minimum license payments, to Margaritaville," court documents state.

After BCV left $1.25M in quarterly fees due by April 30, 2016 unpaid, the disagreement escalated into arbitration.

Margaritaville maintains that not only does the agreement not allow for BCV to stop making payments, but that only they as license owner have the right terminate the contract.

The arbitration went on for nearly a year and included Margaritaville Enterprises co-founder and entertainer Jimmy Buffett himself responding to 42 written questions from BCV on Dec. 13, 2016. In all, five witnesses and three experts gave depositions and 175,000 documents totaling nearly 345,000 pages were produced during the process.

On March 28, the panel found Bossier Casino Venture in breach of their agreement with the Florida-based company, concluding that Margaritaville is entitled to a $10 million judgment against BCV plus interest "based upon Bossier's failure to make the quarterly payments."

It also threw out BCV's counterclaim that it was entitled to terminate the agreement based on alleged breaches of the contract by Margaritaville, concluding that "Bossier is not entitled unilaterally to cease using the Margaritaville IP or brand."

Furthermore, the panel found that BCV is contractually obligated to use the Margaritaville brand through the end of the 40-year agreement.

Attorneys representing the Margaritaville Casino Franchise also released a statement Wednesday afternoon confirming the findings of the arbitration panel and noting the panel also ruled that BSV was obligated to continue operating under the Margaritaville brand.

"Although Margaritaville did not receive all of the relief it requested, it is pleased with the panel's decision. Margaritaville is in the process of confirming the award in court."

The panel's decision in favor of Margaritaville would appear to be a deal-breaker for Porch Creek Indian Gaming based on the condition laid out in the purchase agreement that they must be "free and clear of any Margaritaville-related licensing obligations."

The change in ownership was originally expected to be finalized before the end of 2016.

It remains unclear whether the tribe's PCI Gaming Authority is still interested in purchasing the Bossier City hotel and casino.

"We have no comment regarding this situation," said Wind Creek spokesperson Magi Thomley Williams in response to a request for comment.

On Wednesday, Margaritaville filed a petition asking a federal court to confirm the award and enforce it.

"We sought certain relief in the arbitration, received that relief and are happy with the outcome," Margaritaville Resort Casino General Manager Barry Regula said in a statement in response to a request for comment on Wednesday afternoon.

Timeline of events:

  • May 25, 2016: Claimant’s Demand for Arbitration
  • November 30, 2016: Order denying Respondent’s request that the Panel compel Claimant to make Jimmy Buffett available for a deposition, but rather providing that Buffet be deposed upon written interrogatories
  • January 17-19, 2017: Arbitration Hearing held at Potter Anderson & Corroon LLP in Wilmington, DE. Each side offered documentary evidence, most of which was admitted. Each side called a witness and cross-examined the opposing witness.
  • February 6-7, 2017: Arbitration Hearing held at Potter Anderson & Corroon LLP in Wilmington, DE. Each side offered documentary evidence, most of which was admitted. Each side called witnesses and cross-examined the opposing witnesses.
  • March 28, 2017: Final award issued by panel

Bossier City invested $6.2 million in infrastructure construction and road improvements for the Margaritaville project, according to spokesman Mark Natale. The work included running water and sewer lines to the property, building a road to the property with two roundabouts and making improvements to the intersection of East Texas Street and Traffic Street.

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