Entrepreneur Donald Trump, who helped transform Atlantic City from a dying resort town into the first legal casino mecca outside of Las Vegas, is back in control of the gaming empire that bears his name. The problems of the star of NBC's "The Apprentice" go beyond money, however.
According to media reports, Trump and BNAC, an affiliate of Beal Bank Nevada, agreed to buy bankrupt Trump Entertainment Resorts Inc. (TRMPQ) for $100 million. The operator of Trump Plaza Hotel Casino, Trump Taj Mahal Casino Resort and Trump Marina Hotel Casino will go private. Things, according to the self-confident Trump, could not be better.
"My previous investment in the company was destroyed by excessive and restrictive debt," Trump said in a press release. "This reorganization changes all that."
That is not the whole story.
Slot parlors in neighboring Pennsylvania and Connecticut are stealing away the day-trippers who used to flood Atlantic City casinos by the busload from New York City and Philadelphia. Year-to-date as of June, taxable gross revenue at New Jersey's casinos fell 18.2 percent to $1.87 billion, according to the New Jersey Casino Control Commission. Meanwhile, Pennsylvania's eight slots casinos saw revenue soar by 25 percent to $1.75 billion, while Connecticut's Foxwoods and Mohegan Sun casinos have joined forces to target Atlantic City gamers by advertising on billboards along the Atlantic City Expressway, the main highway serving the New Jersey city, according to The Press of Atlantic City.
It won't be easy for Trump to differentiate himself in this crowded market that keeps getting tougher as cash-strapped consumers demand steep discounts before they bet a nickle. His fellow casino magnate Sheldon Adelson is suffering because of the recession. Adelson's Las Vegas Sands Corp. (LVS) recently posted a second quarter loss, as did MGM Mirage Inc. (MGM), another debt-laden casino operator. The Donald's company has had its share of problems as well.
In February, the tycoon America loves to hate resigned from Trump Entertainment when bondholders demanded that the casino company file for Chapter 11 bankruptcy after missing a $53.1 million bond interest payment. Trump Entertainment received an extension on the maturity period of about $486 million in debt under the terms of the reorganization plan.
Coastal Marina L.L.C. recently sued Trump Entertainment for letting its Trump Marina property deteriorate so badly that it made a 2008 sale impossible.
"Trump Entertainment allowed windows at the hotel to leak, and didn't fix an air-conditioning system that was so bad some rooms couldn't be booked, according to the (Coastal) complaint," Bloomberg News reported. "The casino needed at least $50 million in repairs and upgrades."
Indeed, students at his self-named university, will no doubt be studying how the author of The Art of the Deal finesses his way out of the mess he has gotten himself into this time.