Carl Icahn announced he will sell his closed Taj Mahal casino in Atlantic City to Hard Rock International for an undisclosed price.
The property closed in October in the midst of a bitter labor dispute. Icahn acquired the property—along with the also closed Trump Plaza casino—out of bankruptcy court. Icahn had planned to invest about $100 million into the property, but was unable to settle a dispute over health benefits with city’s main casino union, Local 54 of UNITE HERE.
Trump Taj Mahal was opened in 1991 under the ownership of now President Donald Trump, who lost his equity in the property over a series of four bankruptcies, and handed over management of the property to the new owners more than 10 years ago.
Icahn also owns the Tropicana casino in the resort and Icahn said he had decided that owning one casino in the Atlantic City market was best for his company. He added that he had lost about $300 million since acquiring the Taj Mahal last year.
“We are extremely happy with our ownership of the Tropicana Casino and Resort, and after considerable analysis and deliberation we determined that we only wanted to own one operating casino property in Atlantic City,” Icahn said in a press release. “A sale of the Taj Mahal therefore represents the optimal outcome for us. We wish Hard Rock and its partners the best of luck with the Taj Mahal.”
The sale now opens the way for Hard Rock to operate a casino in New Jersey. The company had proposed building a casino at the Meadowlands Racetrack in northern New Jersey, but state voters in November overwhelmingly rejected a referendum to expand casino gaming outside of Atlantic City. The measure would have given Atlantic City casino operators an edge in any North Jersey casino bidding process, so if Hard Rock qualifies, it should have the inside track should a second bill be approved by the legislature and voters.
Jeff Gural, Hard Rock’s partner in the Meadowlands and principal owner, believes it bodes well for North Jersey casinos.
“I think it can only help us down the road at the Meadowlands because I am sure the politicians and local leaders are appreciative that Hard Rock stepped up to buy (the Taj Mahal) and reopen it as opposed to leaving closed or tearing it down,” Gural told the Associated Press.
Hard Rock International will be majority owner of the Taj Mahal in partnership with two local investors– New Jersey developers Joseph Jingoli and Jack Morris. The group says it will invest more than $300 million to purchase, renovate and re-open the casino.
“We are excited to be part of this revitalization of Atlantic City creating thousands of jobs to help local employment,” states Jim Allen, chairman of Hard Rock International. “We are 100 percent convinced Hard Rock Hotel & Casino Atlantic City will be a success.”
Jack Morris, CEO of Edgewood Properties, one of the two other investors said the group hopes to be part of revitalizing Atlantic City.
“Both the Morris and Jingoli families are honored and excited to partner with Hard Rock International in the rebuilding of Atlantic City,” Morris said in a press release. “This is a once-in-a-lifetime opportunity to be a part of revitalizing one of our nation’s most iconic destinations. Atlantic City has a rich and dynamic history and we are so proud to help recapture that greatness.”
City officials also reacted positively to the news.
“Having professional investors like the Hard Rock International group invest in the Taj Mahal will reinvigorate that end of the boardwalk, which includes the Showboat and the Steel Pier,” said Atlantic City Mayor Donald Guardian in a press statement. “This is also great news for the entire South Inlet and all the projects going on there. All the pieces are coming back together one by one. In addition to Stockton and South Jersey Gas opening up next year, we hope that 2018 will be banner year as we continue to rebuild Atlantic City.”
Icahn said the sale does not include any financing.
It’s still unclear, however, whether the Icahn labor dispute will linger. Hard Rock operates its two Florida tribal casinos with no unions. Other casinos in the U.S. are only operated by or branded Hard Rock, so it’s also not certain what the overall policy of the company is.
The president of Local 54 seemed to reflect that concern.
“Our members sacrificed much at this property, but we never wavered in our core belief that workers deserve a good quality job, not simply any job,” said union president Bob McDevitt.
The union’s intransigence caused Icahn to cancel plans to keep the property open and invest $100 million in upgrades. While 1,000 union workers lost their jobs, another 2,000 workers unaffiliated with the union were also laid off.
Fate of Trump Plaza
The deal does not include the closed Trump Plaza casino, which generated some headlines before the Taj sale was announced.
According to the Press of Atlantic City, Icahn has had and engineering team studying the possibility of razing the facility.
“Carl Icahn brought in an engineering team to determine what the cost would be to demolish the plaza and the old Holiday Inn,” Atlantic City Mayor Donald Guardian told the paper. “I believe that they are vetting that now.”
The casino, which opened in 1984, includes 614 rooms and a 60,000-square-foot casino, seven restaurants, a health club and a 750-seat showroom, all on a narrow 2.6-acre plot, the Press said.
However Guardian said no decision has been made on what to do with the property’s 2,600-spot parking garage. The garage sits at the main entrance to the city adjacent to the city’s entertainment arena Boardwalk Hall.
Icahn did not comment on the story.
Like most things in the resort, tearing down the Plaza would be complicated as heating and cooling pipes for Boardwalk Hall run through the former casino.
“We have a power plant on Atlantic Avenue, and it goes down and connects Claridge to Bally’s to Wild West to Caesars to Trump Plaza to Boardwalk Hall to Caesars Pier,” Guardian said. “If they take out Trump Plaza, there is no cooling or heating for Boardwalk Hall or The Pier. That becomes a big issue.”
Guardian, who also sits on the casino reinvestment Development Board that operates the city’s tourism district and Boardwalk hall, said options include building another power plant for about $13 million or rerouting the pipes for $2.7 million.
“We have to make sure we are out in front of it,” Chris Howard, executive director of authority told the paper. Howard said CRDA has not been given a firm timetable on when or if the Plaza will be razed.
In another matter, a fight is still brewing over signs that have been removed from the closed Trump Taj Mahal.
Lettering that spelled out “TRUMP” showed up on eBay attracting a top bid of $7,500. The auction was removed, however, after a dispute arose over ownership of the sign.
That’s led to a Philadelphia recycling company suing the casino over ownership. According to the Associated Press, Recycling of Urban Materials for Profit claims two of their employees paid $250 for two Trump signs to a worker removing them from the closed casino last month.
However, the casino claimed the signs were stolen, prompting eBay to stop the auction. The company, which goes by the acronym RUMP, is asking a court to determine the rightful owner. The firm estimates the jumbo signs are worth upward of $100,000, the AP said.
