Tag Archive: Borgata

More Reveling in Revel But Not in AC

A bankruptcy judge today approved the sale of Revel Casino for $110 million to Brookfield Asset Management. However, it will take time for Revel casino to re-open, Brookfield has only two casinos and cannot meet its payment debt on one of them, and chances for Revel’s success are not good. In the meantime Atlantic City and County are in a depression. Standard NJ jobless benefits now last only 13 weeks, with a possible extension of seven weeks. In the meantime Governor Christie is slow at developing a plan to strengthen the local economy and help the jobless. So there will be reveling in Revel but not in AC.

AC’s Mayor Don Guardian explains a key problem. “That $5 billion that people spent in Atlantic City [now reduced to $2.8 billion] on gaming is now being split by 30 casinos in Delaware, Pennsylvania and New York, when just six years ago it all belonged to Atlantic City.” As a result Revel is more likely to cut into revenue from local casinos than it is to gain new income from gamblers elsewhere who now have facilities close by. Also, NJ internet gaming, which has started slowly, is likely to grow and to eat further into on-site gambling. Back in June Moody’s changed its outlook on the U. S. gaming industry to negative from stable.

Brookfield is not the answer. It is a $200 billion asset manager with a focus on property, renewable energy, infrastructure and private equity, but has only two faraway casinos – providing a weak database on which to construct an effective marketing program. “In an August filing with securities regulators, the company said it did not have the money to make an interest payment due that month [on its Hard Rock casino in Las Vegas], and was trying to work things out with its lenders.” Its other casino is in the Bahamas. Brookfield will have a huge advantage in assuming debt of only $110 million as opposed to the $2.4 billion construction/development cost. However, it will require additional funds to relaunch the facility. The building is huge, has an extremely high monthly maintenance cost, will need remodeling to correct past mistakes, and will face stiff competition particularly from Borgata.

The answer for a county reeling in pain includes two over-arching needs: 1. “To become more of a resort, less dependent on casinos, and more reliant on its beaches, restaurants and entertainment venues” and 2. “Broaden the area’s economic base – diversifying the local economy, recruiting successful businesses from outside, nurturing the growth of existing local businesses (especially those with export potential), and helping the unemployed acquire new skills, retrain, and/or providing them relocation assistance.” Below the fold, from a variety of points-of-view, is a list of proposals for consideration.

 

The NJ Casino Windfall Is Dead. Long Live Atlantic City! – Part II

Atlantic City, once called Absegami, inhabited by Indians, high sand dunes and black snakes, has had its ups and downs. Now it is a casino town suffering the slings and arrows of an over-saturated northeast gaming market (See Part I) and facing the likely closure of three more casinos with over 6,000 employees to be let go within four weeks.  

SNAPSHOTS OF PEOPLE AND PLACES

Beginning at the southern-most casino on the boardwalk Saturday I passed the Atlantic Club which closed in January, terminated about 2,000 jobs, and left the area around it emptier and quieter with less business for the shops. Caesars purchased the property to reduce local competition, with the plan that it would not be used as a casino.

Moving north, next is the Tropicana, purchased cheaply by Carl Icahn with no debt and operating successfully through a good mix of services for the wealthy and not so wealthy and the older and younger clients. It also gets healthy income from its non-casino shops, entertainment and other services.  

Next comes Trump Plaza which plans to close in a few weeks and let go 1,000 employees. Along the side of the casino where workers come out to take a break, I talked with a number of them. A man in a suit (a sign he is on a salary, whereas others typically are hourly workers) said he was going to be transferred to the Trump Taj Mahal. A kitchen employee said there would be too many people chasing the same jobs so he was going to leave the area. A cocktail waitress, who gets no severance, said she had worked there 25 years, has two children and a small 401 (k) plan. She will wait a while and see if she can find a job. A bar tender who has been there over ten years says AC has to be more family-friendly and offer young people more nightlife (dance clubs with DJ’s.) He adds that the tips are good in season, but he is going to Florida where he thinks he has better prospects. A waiter says 95% of the employees are totally dependent on their wages and will have a tough time getting re-employed. A chef in his top hat with a wife and three kids thinks he will find a job if not in AC then in a casino in a neighboring state. A restaurant supervisor has a wife and a mortgage and is not optimistic, but will try first to find local work. These employees are not overtly angry but rather resigned to what is about to happen, with a feeling that they are not being treated fairly.

More snapshots below the fold