Monday, March 27, 2017

Parkscope Report: The Sordid History of Atlantis Bahamas (Pt. 1)

Universal Studios has pushed hard in recent months the specific nomenclature of "Water Theme Park" for the upcoming Volcano Bay. This has, in turn, led to much discourse on social media about the term, what it means, and whether or not it is even a thing that exists. Those against the term suggest that no water park meets the criteria of Disneyland with having multiple themes, and thus it is not an actual thing. Proponents often point out that having multiple themes is not a requirement for a theme park: merely that there is a theme at all is sufficient. While these ultimately very important battles rage on outside the realms of public understanding or care, the reality is that this discussion could have easily taken place and been concluded eons ago. There is an "immersive" water park outside the Disney bubble already in the hemisphere to visit. In fact, it is relatively easy to go to using one of Disney's own methods of cash extraction: cruise ships.

Before I review my experience there, I think it would be good to explain the history behind Atlantis Paradise Island and how it came to be that the present-day most expensive water park in the world exists on a tax haven off the coast of Florida. Why? Well, it's actually kinda interesting. A lot more so than the story of the guy who's orange groves Universal and Disney bought out.


(Sir Harold Christie)

In 1922, Harold Christie had set up H.G Christie, a real estate firm in Nassau, Bahamas. A lifelong resident, Christie reportedly grew up impoverished [1], but went about selling real estate to non-residents and came to the conclusion that by asking his commission be paid in land rather than money, he would be able to amass a fortune in holdings. Christie recognized somewhat early on that the Bahamas had some key aspects which made it highly appealing: it was a tax haven while still part of the British Empire. There was and is no capital gains tax, inheritance tax, personal income tax, or gift tax on the island chain. It also had geographic proximity to the US which made it an appealing stop for tourists. Christie used these to his advantage, pushing the Bahamas into the global consciousness and associating it with fun and sun. For this, he was rewarded with knighthood.

One of the parcels of land he would come to sell was a significant island near to the capital of Nassau. Hog Island, as it was known then, first appears in historical record in - what else? - litigation. Thirty-two acres of the island had been owned by an individual named John A. Burrows, and upon his death in 1913, it was to be divided amongst children and grandchildren per his will [2]. This section of land was first sold to a non-resident in the 1930s, and became the holiday estate of Axel Lennart Wenner-Gren. Wenner-Gren had an illustrious career, patenting vacuum cleaners and becoming the owner of Electrolux, To theme park fans, he's most well known for the company that was based on his initials: ALWEG. Yes, this is the guy who's company built the original Disneyland Monorail.

(Huntington Hartford)

Wenner-Gren received an offer in 1959 to buy the land from another insanely rich individual, Huntington Hartford. Mr. Hartford was the heir to the riches of A&P Supermarkets and rather than operate the company, chose to sell it and invest in minor things like oil shale. As you might expect, he was among the richest men in the world, and could do things like buy an island in the Bahamas, construct a golf course on it, and have consensus top ten all time golfer Gary Player be the course's pro. Rich as he was, that he was an inheritor and not a great businessman himself is illustrated by the actual acquisition of the land. The terms of the sale were drawn up on the back of a dinner menu and signed by the parties. However it was later determined that the menu contract lacked sufficient information and terms, and was ruled null and void. Hartford and his lawyer were forced to re-negotiate the price.

(Britannia Beach Hotel, now colored pink and named the Coral Towers)

Together with an expat by the name of James Crosby, Hog Island became Paradise Island under Hartford's ownership. Crosby's company, the Mary Carter Paint Company gobbled up 75 of the island's territory in 1966, and construction began on the first tower, completed in 1968. By this point, the company was leaving the paint business and entering real estate, leading to the renaming to Resorts International and with it, a push for casino gaming. The casino business was not entirely a new discussion in The Bahamas; it was actually Sir Harold Christie who had first heard the pitch way back in the 1940s. In that case, the pitch came not from businessmen, but from Lucky Luciano. It has been theorized that the non-committal of the Bahamanians to the idea of the casino contributed or directly led to the murder of gold magnate Sir Harry Oakes [3] in 1943.

Resorts International, while just as hooked on expansion of gaming as the mob (less as a method of laundering money, more because it was profitable) looked to convince the public by finding legitimate businessmen to promote its developments in places like Nassau and Atlantic City. Still, this was not a traditional hotelier, and legalized gambling was in its infancy in America. Most of the known people with high level of knowledge about operations of casinos were at tables themselves, in federal penitentiaries from RICO investigations, or dead following the Cuban revolution. Even while trying to show themselves to be entirely clean, the New Jersey Casino Control Commission managed to unearth evidence that Crosby had paid bribes to the country's Prime Minister in order to obtain the license held by the Bahamian Club. In order to fulfill the desires for the resort, that entire building was picked up and moved to Paradise Island, thus taking with it the license. The name is still attached to a restaurant that operates today in the conference center/Beach Tower complex.

(Atlantis Beach Tower in the Merv Griffin years)

Enter the future 45th president of the United States. In 1986, with costs mounting on the Taj Mahal Casino in Atlantic City, James Crosby died on a NYU Medical Center operating table at the age of 58, throwing Resorts International into total disarray. Donald Trump, another child of privilege (his dad was a real estate developer who once tried to pave Coney Island NY) entered a fierce bidding war to take over controlling share of Resorts International in the aftermath of Crosby's death. Unable to drum up external funding for completion of the Taj Mahal, Trump stated he would pay for it himself if he was given 100% ownership of the organization. [4] TV mogul Merv Griffin saw an opportunity as well, and exceeded Trump's bid by nearly 160%. Lawsuits followed, and when the smoke cleared, Merv Griffin owned Resorts International, and Donald Trump owned the Taj Mahal.

In a matter of months, Merv Griffin's new resort empire began to crumble. The purchase was financed with junk bonds and interest payments to investors stopped coming. 13 months after settling with Trump, Resorts International entered Chapter 11 bankruptcy, with bondholders ultimately assuming control of the company in exchange for debt forgiveness. Paradise Island was to be sold to drum up cash. At this point, the history of Atlantis includes a future US president, a Prime Minister, a mob boss, vacuums, Disney's monorails, fracking, and an all-time great golfer. The next sale of the resort couldn't be to a run-of-the-mill developer. That would be too boring. It had to be someone with panache. Someone with confidence. Someone with money. Someone who had protest songs written about his work.

Sol Kerzner made the decision in 1989 to buy Paradise Island out of bankruptcy and turn it into a shining light in the Caribbean. [5] Kerzner was not new to the idea of massive, themed, gambling & amusement resorts. He built one of the world's most famous in his home country in 1979. Kerzner was a Russian-Jewish immigrant to Johannesburg who, unlike every one else in this story up until now, actually grew up wanting to be in the hospitality business. He followed his family into management of hotels in South Africa and eventually proved to be the brightest and best of the bunch. Kerzner convinced South African Brewers (The SAB in modern day SABMiller) to go in on a whole hotel chain that he'd manage. Ultimately Kerzner constructed his crowning achievement: Sun City. With huge hotel towers, artificial lakes, a water park, casino, and arena, Sun City is renowned as one of the most gorgeous resorts in the world. And it was also segregated, just like all of South Africa at the time. As tremendous economic pressure was put on the apartheid government, "Sun City" became the theme to the world's frustration, featuring everyone from Joey Ramone, Afrika Bambatta, and Hall & Oates. Sun City, like the country it was in, fully integrated in 1994.

Kerzner saw the tremendous potential on Paradise Island and chose to buy it himself, developing an eponymous real estate company in the process [6]. From 1994 to 1998, the newly branded Atlantis became home to hundreds of millions of dollars in improvements, capping with the construction of the monumental Royal Tower, taking the somewhat dated and boxy 60s-style resort buildings and injecting the flair of Disneysea and Islands of Adventure into the resort. A $1 billion dollar expansion followed in 2007, adding yet more rooms, conference facilities, dolphin habitat, water park attractions, nightclubs, and more.

If you haven't managed to keep track to this point, Paradise Island has been owned by:

-some guy named John A. Burrows
-that guy's immediate and extended family
-Maybe Sir Harold Christie?, the man that developed The Bahamas
-Axel Lennart Wenner-Gren, AKA Mr. ALWEG
-Supermarket scion Huntington Hartford
-Some conglomerate that made paint
-Some conglomerate that used to make paint which had Donald Trump as primary shareholder but wanted to build casinos
-Merv Griffin, the guy that came up with Wheel of Fortune
-Some people that bought bad bonds
-Sol Kerzner, the guy that built Sun City and Mohegan Sun

The Atlantis of today is monstrous in size and acts as the second largest employer in the nation of The Bahamas. As has been the case since the day the first casino license was handed out, Bahamian residents are forbidden to gamble inside this palace to sin. All bets are placed by tourists who occupy the nearly 5,000 rooms and arrive by cruise ship seeking somewhere safe and clean to tour.

Looking to restructure debt incurred during the financial crisis, Kerzner sold Atlantis Bahamas to Brookfield Asset Management (BAM) while retaining the contract to manage the properties under Kerzner International (and subsequently inviting lawsuits from furious hedge fund managers. As wild as all these previous owners have been, BAM is not particularly exciting, but poetic. Brookfield possesses a mammoth 226 billion in property acquired via cash from US and Canadian pension plans. In a strange sort of way, it is millions of former social servants, autoworkers, and machinists that own Paradise Island today and they don't even know it.


[1] While not impossible for Sir Harold Christie to have grown up poor, I shant mince my words. The Bahamas, like virtually all of the Caribbean, has historically favored whites who's families operated commerce during the slavery years of the 16th-19th centuries. In the Bahamas, the government was white majority until the late 1960s. He would have had much more access to influence important individuals. He may also have had significant holdings of land from his family, as land claims were passed from generation to generation and are/were not racially specific. Christie's son took over the business from him following his death and is still involved in real estate sales in the islands.

[2] Cited from: Katheder, Thomas. "Purchasing Real Estate in the Bahamas." The University of Miami Inter-American Law Review (1997): 197-252. For what it is worth, this was produced by the general counsel for The Walt Disney Corporation, potentially after the acquisition of what is now known as Castaway Cay (referenced inside). The litigation actually took place in the 1960s following Mr. Burrows' sisters passing away. They had tracts on the island as well and claims to their land were put forth at that point. Those have long since been developed.

Oh, and John A. Burrows? Well, there's not a ton out there to work with to help us understand who he or his family was. There are many, many Burrows in The Bahamas, and a great many of them are of African ancestry. A John A. Burrows was elected to be a pastor in the Abaco Islands as reported in the May 1901 edition of "The Missionary Herald of the Baptist Missionary Society."

[3] Oakes was found battered to death, strewn with feathers, and partially immolated. Multiple books and films about the murder and attempted framing of Count Alfred de Marigny have been produced since. Theories about Oakes actual murderer range from the Duke of Windsor (King Edward VII, who abdicated the British throne in 1936) to the Mafia to even Sir Harold Christie himself.

[4] Or did Trump intentionally look to take total control of what would likely be an incredibly profitable enterprise? Well, in any case, it didn't go the way he wanted.

[5] Kerzner also played an important role in the evolution of an industry that has damaged Atlantis' status and caused Las Vegas to turn to nightclubs: the Indian Casino. Kerzner was the force that helped make Mohegan Sun in Uncasville, CT a reality after the runaway success of Foxwoods (now MGM Grand), also in Connecticut. Mohegan Sun has since expanded beyond the reservation in Eastern CT into the Poconos with an eye to Massachusetts and South Korea.

[6] Kerzner International and Sun International are his two main real estate companies, and aside from the fact that they exist and have separate websites, there's not a lot to tell you about how precisely they operate. Since selling Atlantis in 2012, Kerzner has managed to bring this story somewhat full circle, constructing a casino with his Sun International subsidiary/company/whatever it is inside Trump Ocean Club, a 70 story hotel/condo tower in Panama City, Panama.

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