Atlantic City Casinos Want to End Marketing Coalition

Atlantic City’s casinos want to end their $30 million subsidy to the Atlantic City Alliance, the city’s marketing arm that has brought major concerts and events to the city along with a major advertising campaign. When the alliance was formed, the subsidy was split among 12 casinos, but four casinos have closed—and a fifth closing is imminent—making the Alliance too expensive they say.

The casino-funded marketing group behind the city’s “Do AC” campaign could be disbanded if Atlantic City’s casinos have their way.

Casino executives who sit on the board of the Atlantic City Alliance have voted to ask the state Legislature to close down the group, which costs the city’s casinos $30 million annually.

“Although we felt the ACA did a good job given the tough environment they operate in, $30 million is tough to pay when revenue is in decline and your clients are going to other markets,” said Tom Pohlman, general manager of Golden Nugget Atlantic City.

When the alliance was formed three years ago, 12 city casinos contributed to its $30 million annual budget. But four city casinos have closed this year and a fifth—the Trump Taj Mahal—is scheduled to close next month.

That has put too much burden on the remaining casinos, officials said.

“It was $30 million divided by 12. Now it’s $30 million divided by seven or eight,” said Tom Ballance, who serves as the ACA’s chairman and is also the president and chief operating officer of Borgata Hotel Casino & Spa.

Borgata, the city’s most successful casino, pays about $7.5 million annually to the ACA, the highest amount of any casino, Ballance said. Pohlman said Golden Nugget pays about $2 million, but said he is concerned that the amount will go up substantially next year to compensate for the closed casinos.

The idea of disbanding the alliance had been discussed at a recent summit meeting called by New Jersey Governor Chris Christie on helping the struggling resort. Part of the discussion has involved helping casinos financially in the wake of falling revenue brought on by casino competition in other states.

Ballance said resort casinos can’t afford the alliance payments, especially since city casinos may face a total $175 million to $180 million in alternative tax payments and redevelopment taxes proposed by a governor’s advisory commission.

The commission studying Atlantic City’s future released a report recommending diverting the alliance’s funding to a proposed public-private development corporation that would oversee new development projects.

“Atlantic City Alliance marketing has increased awareness and interest in Atlantic City, but return on investment is below expectations and does little to affect urgent structural needs of the city,” the report said.

Still, there is no guarantee the legislature will disband the alliance.

“I can’t say with any certainty it will happen at this stage of the game. We requested it at the summit,” he said.