Billionaire Carl Icahn is making good on his threat to close down the Trump Taj Mahal in the face of continued labor trouble, saying the casino will—ironically—shut its doors on October 10, eliminating another 3,000 jobs in Atlantic City.
The Taj Mahal has been the target of what is now considered the longest casino strike in Atlantic City history, as members of the city’s largest casino workers union walked out on July 1. The union—Local 54 of Unite HERE, which represents about 1,100 workers at the casino—has been seeking to restore health benefits that were stripped from workers by a bankruptcy court judge in 2014.
Icahn, however, has repeatedly said the property could only survive if the changes in health benefits it imposed on its employees were maintained. Local 54 had challenged those changes in court, but were turned away. Nonetheless, Icahn offered a plan where some health benefits could have been maintained, but the union turned it down and refused to put it to a vote of its members.
Icahn pointed out that the Taj Mahal has been losing money for several years, prior to his taking over, and he would close the property if a deal could not be worked out. That threat is now real.
Tony Rodio, president of Tropicana Entertainment, which runs the Taj Mahal, said management decided it can no longer operate a money-losing property in the midst of a strike.
“Currently the Taj is losing multi-millions a month, and now with this strike, we see no path to profitability,” Rodio said. “Our directors cannot just allow the Taj to continue burning through tens of millions of dollars when the union has singlehandedly blocked any path to profitability. Unfortunately we’ve reached the point where we will have to close the Taj.”
Icahn later told the Associated Press that he has lost nearly $100 million on the Taj Mahal in the past 18 months, including money he spent to keep it running during its bankruptcy before he officially owned it.
“It was a bad bet,” he said. “How much good money do you throw after bad?”
The closure also means that the last casino property in the resort bearing the name of Republican presidential nominee Donald Trump will close. Trump Plaza casino—now also owned by Icahn—closed in 2014. Trump divested himself of all but a small interest in the casinos in 2009 and lost all interests in the casino after Icahn took over the property from Trump Entertainment earlier this year. Trump’s Castle/Trump Marina was sold to Landry’s and converted to the Golden Nugget Atlantic City by new owner Tilman Fertitta.
With the Taj Mahal’s closure, Atlantic City will have seven remaining casinos, only four of which are located on the city’s Boardwalk. Four other Boardwalk casinos closed in 2014. About 8,000 jobs were lost when those casinos closed.
The strike by Local 54 has centered on health benefits. The union represents a wide variety of casino workers from bartenders to housekeeping staff, but does not represent dealers and casino floor personnel. Only about 1,000 of the 3,000 jobs were Local 54 members.
During a protracted bankruptcy procedure for the Taj Mahal, a judge ruled that the casino could cancel health and pension benefits for casino workers. The casino instead gave employees a stipend to seek insurance through the Affordable Care Act.
The union quickly appealed the ruling—an appeal it eventually lost—and set off an almost two-year feud with Icahn that has included numerous protests. In July, the union voted to strike.
Icahn reportedly offered to restore health insurance to Taj Mahal workers, but at a level less than what workers at the city’s other seven casinos receive. The union rejected the offer.
“I would never have thought Carl Icahn was so one-dimensional,” union president Bob McDevitt said in statement on the union’s website. “The great deal-maker would rather burn the Trump Taj Mahal down just so he can control the ashes. For a few million bucks he could have had labor peace and a content workforce, but instead he’d rather slam the door shut on these long-term workers just to punish them and attempt to break their strike.
“There was no element of trying to reach an agreement here on Icahn’s part.” McDevitt said. “It was always ‘my way or the highway’ from the beginning with Icahn. It is the epitome of the playground bully, who picks up his ball and announces he is going home because nobody else would do it his way. It is truly a shame that such an unscrupulous person has control of billions of dollars.”
In a letter to employees, Icahn disputed McDevitt’s claims.
“We suggest you ask Local 54 leadership several questions that continue to perplex us,” he wrote. “Why have they incited you, the union workers at the Taj, to destroy your jobs and your livelihood rather than accept the prior offer that we made at McDevitt’s suggestion. That offer was negotiated with McDevitt at length and McDevitt and his team knew full well that it was our best and final offer. Even more perplexing, knowing that this was our best and final offer and that the consequence of rejection could be a strike, which would be tantamount to kicking a sick man when he’s down, why didn’t Local 54 leadership even allow its workers the opportunity to vote on this offer and thereby have the decency to allow them the opportunity to decide their own fate?
“McDevitt now spews out bombastic rhetoric demanding that Icahn Enterprises continue pumping tens of millions of dollars to cover losses at the Taj, although he knows full well that we made our best and final offer which he himself negotiated and believed was acceptable. Icahn Enterprises is a business with shareholders and legal duties to those shareholders. It is one thing to fund losses when a path to profitability exists; but, to burn tens of millions of dollars when there is no hope is just foolish.”
According to the AP, an exact shutdown date for the Taj Mahal has not yet been set. McDevitt said 60-day warning notices to employees are required, making early October the soonest the casino can close. According to the Press of Atlantic City, all scheduled headline entertainment acts at the casino for September and October have been cancelled.
McDevitt said union members will continue to picket the casino as the closing approaches. The October 10 closing date satisfies the 60-day notice that large companies are required to give employees when they cease operations.
Many analysts expressed surprise at the closing, saying that Atlantic City’s casino market has seemed to stabilize at eight casinos after the casino closings in 2014. However, the Taj Mahal had never fully benefitted from that stabilization and its long bankruptcy and labor troubles appear to have done it in.
Rumors that the closing announcement was just a ploy to end the strike spread through the picket line. But Icahn’s letter shut the door to that possibility.
“The strike has been the latest and final nail,” the letter continued. “Icahn Enterprises was willing to endure a tough situation when we thought we could emerge successful. This is what we have done in many other situations—invest in companies that are down on their luck, turn them around, and create a success story. The Tropicana is just one such example of this successful model. It saddens us that we could not repeat it here. We believe that if the Local 54 employees had been allowed to vote, the outcome may have been different.”
Meanwhile, some national media outlets were trying to tie the closing of Trump Taj Mahal to Donald Trump’s presidential campaign. Trump has not owned any part of the casino since Icahn took over and before that only owned 5 percent. Trump has had no role in managing the property for at least seven years. Trump’s name remains on the property as a result of the latest of four bankruptcies, which required the name to remain in exchange for the 5 percent equity.
