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With the convention-center hotel deal, the city may have helped a Texas billionaire sock a $250 million screw-you to Gaylord CEO Colin Reed

Southern Inhospitality

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Only a little while ago, Mayor Karl Dean was in a tight spot. His new convention center was about to turn into an embarrassing white elephant. The economy was in such bad shape no one would finance an adjacent hotel to lodge conventioneers — an essential ingredient in the project's success.

That's when, seemingly out of nowhere, Dallas tycoon Robert Rowling rode to the rescue. From his father's oil and gas business, the 56-year-old Rowling (rhymes with bowling) has amassed a $4 billion fortune, and he isn't reluctant to spend it. His TRT holding company owns Omni Hotels, Gold's Gym and Waldo's, a chain of Mexican dollar stores. Forbes magazine has listed Rowling as the 189th richest person in the world.

His motivation to do what no one else in the business would do — i.e., build this hotel in Nashville — is stirring talk among curious insiders. Some of them think Rowling may have an added incentive to strike ground in Music City: a delicious opportunity to annoy his one-time nemesis, Gaylord CEO Colin Reed.

A year and a half ago, as the largest single shareholder in Gaylord, Rowling tried to undercut Reed to assume a greater role in the company's management. Among other things, he accused Reed of flying too much in the Gaylord jet to his farm and vacation home.

"We are convinced that Gaylord has lost its way, and we therefore believe it is time for a change at the company," Rowling wrote then in a letter to shareholders.

Neither Rowling nor Reed would talk with the Scene, but both have claimed in public comments that they've patched up their differences. Rowling has resigned from Gaylord's board of directors, purportedly to avoid any conflict of interest in Nashville now that he's building a hotel here. Gaylord, meanwhile, put out a press release in which Rowling and Reed went out of their way to coo lovingly at each other. Reed also insists Rowling's Omni Hotel won't compete much at all with Gaylord's Opryland Resort & Convention Center.

Still, it's an interesting dynamic. Reed opposed Metro's rather desperate original plan to publicly finance the hotel's construction and put the city in the hospitality business. He said a publicly owned hotel would compete unfairly with Opryland.

Now Rowling is the one building the hotel with Metro's help. To add insult to injury, he's glomming onto the city's country music brand — once almost the exclusive province of Gaylord.

"A lot of it seems to be ego-driven backbiting with the [Dean] administration kind of playing Rowling off Colin Reed," says one Metro Council member, who asked not to be named for fear of offending anyone with a lot of money.

Another insider says: "Nobody's said it publicly of course, but it looks like Omni came in here with such a good deal in Nashville just to screw with Reed. The fact that Rowling owns it is going to stick in Colin Reed's craw. At the end of the day, Reed's just going to have to eat it."

From the beginning, Rowling seemed eager to help Nashville out of its quandary. The letter containing his initial inquiry seemed to fall from the sky into the mayor's lap. It arrived as a complete surprise to city officials. Would they like to talk to Rowling about building a fabulously swank Omni Hotel next to the convention center?

"It was essentially a cold call," says Dean's press secretary, Janel Lacy. "They sent us a FedEx package in the mail."

Rowling didn't have to ask twice. The next thing the city knew, he was standing with Dean before Nashville's assembled media to announce their deal. The Metro Council was briefed on it last week. At a time when almost no one anywhere in America is building hotels — credit is a little tight, as they say — Rowling is paying cash to build this one. And he says it's all because Nashville is such a swell place.

"In these economic times, as precarious as they are, to put it in perspective, there's probably not another place in the United States or the world where I'd be willing to write $250 million worth of checks to build a hotel right now," Rowling told reporters.

True, it's a sweet arrangement. Metro will give Rowling's Omni $103 million over the next 20 years, with the cash coming from the seemingly bottomless pot of tourism taxes supposedly generated by new convention business. In addition, we'll cough up another $25 million in tax-increment financing to help Omni buy the hotel land. Plus we're giving Omni a fat property-tax break, amounting to two-thirds of what Rowling would owe.

So essentially, he's building this hotel at half price. At no added cost, this deal comes complete with city tourism officials working like little dogs to fill up Rowling's rooms with conventioneers.

And there will be no messy public debate. The council has little choice but to approve all this, having already OK'ed the convention center financing package in January. Without the hotel, no one thinks the convention center will work financially, and failure would leave taxpayers holding the bag.

"We're got a gun to our head," one council member says privately.

But for all its benefits, analysts puzzle over Rowling's willingness to do this deal in this economy.

"You've got a major hotel player who has part ownership of another hotel company, and they're going to be operating hotels in the same town. What's going to happen as a result of that? I'd have to think on that a little while. It's curious," Nashville-based hotel consultant Drew Dimond says.

"I was talking about it with my wife this morning. It is a great deal for the city. I see these kinds of deals all over the country, and usually the city is ponying up and betting the future. But this is very little risk to the taxpayers. It's a big surprise."

There's an understatement. Watch the project's development to see just how much Gaylord likes surprises.

Email editor@nashvillescene.com

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