Atlantic City Unions, Politicians Battle Icahn and Trump Entertainment

Members of Atlantic City’s largest casino-workers union held a protest over Trump Entertainment’s plans to cut health and pension benefits to workers to save the bankrupt casino from closing. The protest, however, was aimed squarely at billionaire Carl Icahn who is negotiating to possibly step in and save the casino. Icahn also wants to take away health benefits from workers at his Tropicana Casino Resort in Atlantic City. State Senate President Steve Sweeney (l.) stepped in on the union side.

The battle to save Atlantic City’s Trump Taj Mahal from closing has become a battle between Atlantic City’s casino unions and the Taj’s possible savior, billionaire Carl Icahn, who also owns the Tropicana further down the Boardwalk. And joining in on the union’s side was a powerful ally, state Senate President Steve Sweeney.

Sweeney rejected Icahn’s call for state aid to save the Taj, attacking Icahn for his requests for union givebacks and city and state tax concessions.

Icahn and the Taj Mahal’s owner Trump Entertainment are seeking major concessions from the casino’s union workers including the end of their pension plan—in favor of a $401K plan—and the loss of health benefits. Without the concessions, the casino will close in November, they say.

The battle with Sweeney escalated early last week as word came out that state and local officials had worked to try and keep Trump Entertainment’s other casino property—the Trump Plaza—open, but a deal was nixed by Icahn. The casino closed last month.

According to the Press of Atlantic City, state lawmakers had worked on a plan to save Trump Plaza involving state funds. The casino closed last month putting about 1,000 workers out of jobs.

Sweeney specifically blamed Icahn for the plan failing.

“He’s personally the reason Trump Plaza closed,” Sweeney told the paper.

Sweeney said he and state Senator Jim Whelan drafted legislation that would have enabled the casino to tap into $40 million of state funds to update the property, but Icahn was not willing to put up a $25 million match.

“He would not let that happen,” Sweeney told the Press, saying that even when they proposed tapping into Casino Reinvestment Development Authority funding, Icahn would not sign off

“Icahn doesn’t want Trump Plaza open,” Sweeney said. “He doesn’t want the Taj Mahal open. So then he comes up with these ridiculous offers—that he’s going to strip all the benefits. Why doesn’t he tell people he’ll keep the place open if they’ll work for free?”

Icahn fired back and said Sweeney, the president of an ironworkers union, is “selling out” Atlantic City by supporting a casino in North Jersey, and that were it not for his investment, the Tropicana would have been one of the casinos to close this fall.

“On the one hand, we are to believe Senator Sweeney is Atlantic City’s staunchest defender, yet on the other hand, the same Senator Sweeney is off in north Jersey making plans to allow gaming outside of New York City, a concession that may mean the end of gaming in Atlantic City,” Icahn said. “Sen. Sweeney, what you are doing here is selling out the people you represent in a remarkable act of contortionism. Harry Houdini would be very proud.”

The conflict led to about 700 members of UNITE HERE Local 54—the city’s main casino union—to take to Atlantic City’s street, block traffic and protest the concession demands.

The union staged a “civil disobedience” march last week that blocked rush hour traffic and caused gridlock in the resort. About two dozen protestors were arrested and charged with blocking traffic and resisting police orders.

“With this issue, you cut Atlantic City by pushing its workers into poverty. It isn’t going to work,” Bob McDevitt, president of the local, said at the march. “That’s what Trump Entertainment and Tropicana are proposing. Icahn is trying to take advantage of the meltdown in Atlantic City and to scare all the workers.”

The marching workers chanted “No contract, no peace. No health plan, no peace.”

Icahn is also asking for workers at the Tropicana to give up health insurance. At both the Taj Mahal and Tropicana, the casinos want many of their workers to get health insurance through the federal Affordable Care Act. Workers at the Tropicana have already switched to a 401K plan.

Trump Entertainment is technically asking for the concessions from the about 1,100 workers at the Taj Mahal, but they are tied to a plan in which Icahn—the casinos largest debt holder at about $286 million—would swap the debt for ownership of the company and then pump about $100 million into the property.

Because of a clause in the union contract, any concessions granted to the Taj would automatically be granted to the other casinos in the city, something Local 54 would not accept.

Icahn has only informally agreed to the plan, but has also said he will need the union concessions as well as major tax breaks and state aid to step in and save the Taj Mahal.

Atlantic City Mayor Donald Guardian has already said that the city will not consider tax breaks for the casino.

Icahn, however, has said he’s amazed the union feels it’s his fault that the Taj Mahal may close.

“Find me someone who will put $100 million into a casino that’s losing $8 million a month with the storm clouds that are hanging over Atlantic City,” Icahn told the Wall Street Journal. “Obviously, management couldn’t find anyone, including the hedge funds who own the equity, to put in even $1.”

After the march, the union made a compromise offer to Trump Entertainment through bankruptcy court for reduced pension payments.

Robert Griffin, Trump Entertainment’s CEO, would not comment directly on the union’s new offer, but told the Associated Press that the company “will remain committed to negotiating in good faith.”

Yet Trump Entertainment had also petitioned the court to allow it to end pension payments immediately. A hearing is scheduled for October 14. 

Bankruptcy Judge Kevin Gross denied the initial request saying the company had not shown that it would suffer irreparable harm if the request was not granted and noted that the October 14 hearing is to determine if Trump Entertainment can terminate the entire labor agreement.

Gross said that under bankruptcy laws, a debtor can only terminate a labor agreement in its entirety. Gross, however, did not rule on arguments from the city’s union that since the labor agreement technically expired last month, the bankruptcy court has no jurisdiction and the matter must go to the National Labor Relations Board. Under federal law, the terms of the previous contract stay in effect until a new contract is negotiated.

Trump Entertainment officials have said the company is “cautiously optimistic” it will be able to get concessions from the city and state to help bail out the Taj Mahal.

However, with the city already refusing to give tax breaks and the company embattled with its unions, that optimism isn’t widely shared.

Judge Rejects Taj Plan

Meanwhile, in an earlier court action, the agreement between Trump Entertainment Resorts and Icahn to allow the Taj Mahal to continue to operate was rejected by Gross.

Gross’ ruling means the company and Icahn will have to negotiate a different plan. As a secured lender, Icahn could refuse the company access to the cash being held in collateral for the debts.

Gross sided with unsecured creditors who said it was too early in the bankruptcy process to adopt terms that could effectively shut out low-level creditors from payment.

Gross noted that while Trump Entertainment is cash strapped, The company and Icahn were spending freely in the proceedings.

“There is a lot of money flying around this courtroom,” Gross said.

Gross said Icahn needs to give Trump Entertainment more time to reorganize before setting conditions for cash use.

Icahn has been granting the company temporary permission to use the collateral cash to operate, a move approved by Gross. Trump Entertainment has spent about $10 million from those accounts.

Gross urged the two to revamp the cash arrangement to answer concerns from creditors.

Gross also pointed to terms in the agreement that granted blanket lawsuit immunity for Icahn’s advisers and others as a reason for the rejection.

Trump Name Comes off Plaza

Also, workers began taking the Trump name off the closed Trump Plaza casino last week, as Donald Trump continues to press his lawsuit to have his name removed from both of the Trump Entertainment properties. Though the company still bears his name, Trump has less than a 10 percent interest in the company.

He has sued to have his name removed from the two casinos saying that they have been allowed to deteriorate and now hurt his brand.

Officials said it would take a few weeks to completely remove the large Trump signs from the casino.