Making the News

NJBIZ

Originally Published:Tuesday, August 4, 2009
http://www.njbiz.com/article.asp?aid=78818

Aching Atlantic City offers Trump a 'tough road' to casino revival

By Shankar P.
NJBIZ

Donald Trump has his task cut out in restoring the three Atlantic City casinos bearing his name after he won support late Monday from their owner for his bankruptcy restructuring plan, according to Harvey Perkins, a gaming industry expert and senior vice president of consulting firm Spectrum Gaming LLC, in Linwood.

Trump Entertainment Resorts Inc. on Monday picked Trump's plan over that of a group of its bondholders to meet a bankruptcy court deadline, but "Trump faces a tough road," given theoutlook for Atlantic City's gaming industry and the broader economic recession, Perkins said.

"It's the growing regional competition that is presenting a challenge to Atlantic City's gaming industry," he said, pointing to slot parlors in Philadelphia and possible casinos in the Catskills, Aqueduct and Yonkers, in New York. "Atlantic City's loss of monopoly has turned into a cadre of more convenient options for regional gamers."

Additionally, nearby Delaware is planning to bring sports betting, illegal in New Jersey, to the table; Gov. Jon S. Corzine has lent the weight of his office to a lawsuit seeking to overturn the federal ban that prohibits 46 states, including the Garden State, from offering sports betting.

In addition to the woes afflicting Atlantic City's casino industry, Trump faces formidable challenges in modernizing Trump Marina and Trump Plaza in particular; in comparison,Trump Taj Mahal was recently upgraded with new rooms, and the investment shows in its performance.

"Trump Plaza and Trump Marina are in dire need of capital and have been undercapitalized for years, and they are noncompetitive - look at their cash flows," Perkins said. "The market standard is now the Borgata in terms of looks, feel and consumer identification."

For June 2009, Trump Marina's casino wins fell 20.8 percent over that of a year ago, to $12.8 million - the second-worst decline after the Atlantic City Hilton, according to the New Jersey Casino Control Commission. In the same month, casino wins at Trump Plaza declined 18.6 percent over those of June 2008, to $17.6 million, making that the fourth-worst decline among the city's 11 casinos.

By contrast, Trump Taj Mahal had the second-best showing among all of the city's casinos. Its June 2009 casino wins declined only 8.1 percent, to $32.9 million, over those of a year ago, against the industry's average decline of 13.6 percent, according to the Casino Control Commission.

In the first quarter of this year, Trump Entertainment's losses incurred a $50.1 million loss, while combined, all of Atlantic City's casinos reported $322.7 million in casino wins in June, a 13.6 percent decrease over that of a year ago.

Trump's plan, which requires bankruptcy court approval, is to partner with Beal Bank, of Dallas, to buy Trump Entertainment Resorts and take it private with a $100 million capital infusion. It would mark Trump's fourth attempt to restore the company from bankruptcy since the early 1990s.

"My previous investment in the company was destroyed by excessive and restrictive debt," Trump said in a statement. "This reorganization changes all that. I am pleased that the reorganization affords me an opportunity to make a new investment and help revive a company that has borne my name, but not performed to my standards or been under my management."

E-mail Shankar P. at [email protected]

 

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