While acknowledging that the current Baha Mar crisis is not his fight, former owner of the Cable Beach properties Phil Ruffin told National Review he always thought the multi-billion-dollar Baha Mar project was too big for The Bahamas and was not surprised to learn the developer is seeking bankruptcy protection.

“I predicted it when they said they were going to build a $3.5 billion project,” said Ruffin, who sold the Crystal Palace and Nassau Beach properties to Baha Mar CEO Sarkis Izmirlian more than a decade ago, paving the way for the birth of Baha Mar.

“I never believed that it would work. It’s just too big. It was too grandiose to ever really have a chance.”

Ruffin owns Treasure Island in Las Vegas and was a client of Prime Minister Perry Christie when he practiced law.

The American investor spoke to National Review from his Las Vegas office after we contacted him for his thoughts on the Baha Mar debacle that has left the project at a standstill and more than 2,000 Bahamian employees in limbo.

“I think it looks like it’s going to be a $3.8 billion project and whoever designed that, I guess it was a developer; it could never sustain $3.8 billion,” he said.

“So the bankruptcy was inevitable, because even if it opened, it could not service that debt. So that’s a big problem, and I assume it’s in bankruptcy now. I don’t know why they filed in Delaware. They should have filed, I assume, in The Bahamas.

“I think maybe it’s back in The Bahamas right now and it’s in good hands with Perry.

“And I’m sure he’ll do the right thing, try to figure that out. The good news is the structure exists now and the hotels are there and no matter who owns it, who buys it out of bankruptcy, the hotels will be there and [they] will employ a lot of people. It might not be the original developer; it may be, but it may not be that Sarkis group.”

Baha Mar filed for bankruptcy protection in the United States one month ago today. Its lender, the Export-Import Bank of China, has already pumped most of its $2.4 billion loan in the project.

But Izmirlian is reportedly seeking an additional $600 million to complete and operate Baha Mar.

Baha Mar has also sued its contractor, China Construction America. Since the bankruptcy filing, the crisis has produced a cloud of depression over The Bahamas and a complex legal web has been spun.

Know the developer

Ruffin has been watching developments a decade after his decision to sell made Baha Mar possible.

We asked Ruffin what lesson he thinks the government can learn from this situation.

“They should know the developer better and his experience,” he said.

“All these lawsuits flying back and forth, that’s not good. I assume the lesson is you have to deal with people that know what the hell they are doing.”

When Izmirlian first discussed his idea for the mega resort at Cable Beach with Prime Minister Perry Christie during Christie’s first term in office, he had no experience in hotel development or operation.

What he had was a big dream. He also had the prime minister’s favor, eventually securing $1.2 billion in concessions from the Bahamas government.

In 2005, when he signed a heads of agreement with the Bahamas government, he said his vision for the Cable Beach strip began when he moved to The Bahamas with his family 15 years earlier.

He pledged, “This will be the best resort development in the world.”

Christie — who is Ruffin’s former attorney — was thrilled by the prospect of a development that promised to create thousands of jobs for Bahamians.

Back in 2005, when Baha Mar was still being conceptualized, government officials spoke of the project creating 9,000 new jobs over a three-year period.

But the deal depended on Ruffin selling his interests in Cable Beach.

In October 2004, Baha Mar completed a purchase agreement with Ruffin to acquire Wyndham Nassau Resort and Crystal Palace Casino and the Nassau Beach Hotel.

The purchase preceded the acquisition of the government-owned Radisson Cable Beach Resort and surrounding government properties.

In his interview with National Review, Ruffin admitted he regretted selling the properties.

“Yes, many times,” he said when asked.

“We’re here in Las Vegas and we sold a property that I owned that had no debt for $1.24 billion and we would have certainly invested in The Bahamas with that money.

“We bought the Treasure Island with it, but I like The Bahamas. We were doing very well there. The employees were very happy, I believe, in that we knew how to operate in The Bahamas.

“A lot of people think that it’s difficult to operate there; I don’t. I think it’s quite accommodating. We’ve never had trouble with the government.

“They’ve always been very positive with me, and so it has been a positive experience. If I had to do it over I wouldn’t have sold it.”

Asked if he has any current interest in investing in The Bahamas again, Ruffin told National Review, “We’d like to get back in The Bahamas at some point, but we’d have to play that out, see how that works.

“If the Crystal Palace became available again, we’d certainly be a candidate. I don’t know if we would want to operate all of those hotels. We certainly would have some interest so we’ll just follow it and see what happens.”

But he said it would be “insanity” for him to eye a $4 billion investment.

“We wouldn’t do that,” Ruffin said.

Too aggressive

We also asked him whether he is disappointed to see what developed at Cable Beach.

Ruffin responded, “Yes. I’m disappointed.

“I love The Bahamas and I love the people. I was there for 12 years and we had great experiences. We have many, many friends there, and I think that it was just too big a project and I hope that whoever takes it back over can make it work, but we’ll have to see.”

Ruffin said he thought the Baha Mar group was too aggressive.

“I think that they should have started out a little bit slower,” he said.

“When they bought me out, I thought they were just going to revamp the Crystal Palace and maybe the Nassau Beach Hotel and make it like a One and Only project and then buy the [Radisson] next to it and have a modest investment, but nothing like $3.8 billion.”

He noted, “I don’t think they had any hotel experience and [any] gaming experience. I just think they overshot their mark. You’d never put a project that size in The Bahamas. It’s just too big.”

Ruffin said he thinks Baha Mar could be successful if it is able to eliminate a lot of its debt.

“Someone will operate those hotels. But they can’t sustain that kind of debt,” he said.

“I don’t know exactly how much debt they’ll end up with, but it is too big a project for Nassau.”

He also noted that Baha Mar might be challenged competing with Atlantis on Paradise Island.

“Atlantis is a world class product,” Ruffin pointed out.

“It would cost you a fortune to redo that today and it’s established. There’s a lot of acreage, a lot of beachfront and it would have been tough to compete against in any case, and so adding all of those hotel rooms was probably not the right choice.

“They overshot by a long way. They should have phased it in a little bit, not taken on quite so much debt. I know they’ve probably lost a lot of money in the deal. They’re probably good people, but sometimes you’re too ambitious in what you think the outcome might be.”

He said he is confident that Christie will help broker an agreement to get Baha Mar operational.

Ruffin also said, “I think the property should be back in the hands of The Bahamas, not in Delaware... I believe that Perry was right in letting the project go forward because he wanted the hotels, he wanted the employment, and they’re off right now, but they’ll be back when someone takes that over who knows what the hell they are doing.”