St. Petersburg City Council heard an update on the historic, culturally significant, and often embattled Manhattan Casino as the city’s operating lease with the Callaloo Operations Group approaches its five-year termination date and discussed paths forward after issuing a notice of default to its operators in December.
During Thursday’s council meeting, Joe Zeoli, the city development administrator, gave a presentation on the Manhattan Casino. Built in 1925 as the Jordan Casino, Zeoli gave a short history of the historic structure on 22nd Street South in the heart of the Deuces, ending with the city’s purchase of the site in 2002.
Callaloo was given a five-year lease by the city in 2017, which will last until November 2022. On the first floor, there would be a restaurant, lounge, and business space, with an attractive event hall on the second level, according to the deal. Vincent Jackson, a former Buccaneers star, was a key member of the original Callaloo Group, and his death in February 2021 prompted modifications to the company’s structure.
Who Manages the Casino?
The Urban Collective LLC, 642 MC LLC, Mario Farias, and Seamless Unlimited LLC have joined the new Callaloo Operations Group, with the Urban Collective taking over as managing member in September 2021. Three months later, the city sent the organization a notice of default owing to missed payments.
City personnel spoke with members of the Urban Collective multiple times over the last several months, according to Zeoli, and a look at the Callaloo Group’s financial information “helps to define the problem.” He then showed how, since August 2021, the group’s spending has been around $40,000 more than its revenue. Gross earnings, on the other hand, rose dramatically in February, resulting in a net profit loss of just $3,046 for the month.
Zeoli informed the municipal council that the organization had lately made significant changes to its operations. He said that on the casino’s first level, Urban Collective altered its food delivery approach, resulting in a considerable shift in the cost of commodities that stabilized and enhanced revenues.
Trevor Mallory, representing the Urban Collective, told the council that it was no secret that the organization intentionally accepted prior debt because of the building’s significance to the surrounding neighborhood.
Mallory said that all seven members of the Urban Collective were aware that hospitality companies do not normally make a profit for the first two or three years of existence, so the group worked to keep the building afloat while also providing employment possibilities.
Have the Changes Worked?
The organization concluded the initial concept didn’t work in the final five to six months, according to Mallory. During that period, contracted vendors pocketed about $100,000 of the group’s $180,000 in earnings and income needed to maintain the firm, he alleged, departed the premises with suppliers who paid little rent. According to the city’s lease, the company must also retain a minimum of 25 workers, which will slice into profits even more.
The organization has discontinued its incubation program for whole enterprises and is now entirely focused on individuals. Those people are currently Urban Collective employees. He attributed the modification to a significant reduction in the company’s net profit loss.
When prior debt is taken into account, Mallory estimates that Callaloo has paid the city around five months’ rent in the six months after Urban Collective took over. He feels the organization has grasped the proper way to make the Manhattan Casino a success, despite the fact that it took six months.
What Happens if the Lease is Terminated?
Terminating the leasing deal with Callaloo, according to Zeoli, would have a number of negative consequences for the city. Loss of contractual events, a short time to transition to municipal personnel taking over operational responsibility, capital expenditures to replace furniture and equipment, and “unknown collectability of unpaid rent payments” are among them.
The city might also renegotiate the agreement and seize control of the event space on the second floor. Callaloo, on the other hand, has resisted such a modification, claiming that it would be a logistical nightmare. Zeoli demonstrated that keeping Callaloo for the rest of the period will result in the fewest negative consequences for the city — a loss of rent money.
Zeoli suggested amending the lease agreement to eliminate rent obligations and replace them with performance objectives such as guaranteed payments to third-party suppliers and employee salary and tax withholdings.
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