Billionaire Carl Icahn has said he may save the bankrupt Taj Mahal casino, but tied any possible move to receiving major union concessions at the property. Now, it appears he wants many of those same concessions at his Tropicana Casino Resort in the city as well.
Officials for the city’s main casino workers union told reporters that the Tropicana is demanding major union givebacks in upcoming contract negotiations to avoid that casino closing as well.
Atlantic City has already seen four casinos close this year and the Taj Mahal could be to fifth if it closes as scheduled in November. The Tropicana had not been rumored to be close to closing.
Bob McDevitt, president of Local 54 of the Unite-HERE union, told the Associated Press that Tropicana has said “major reductions” in what the casino called “bloated union contracts” are needed to “avoid the fate of other failed casinos” and thousands of job losses.
Tropicana officials declined comment on the report, but Icahn and Taj Mahal owner Trump Entertainment have been seeking a long list of similar concessions in its potential bid to save the Taj Mahal, which is in bankruptcy.
They also want concessions from the casino workers’ union at that casino, steep tax breaks from Atlantic City and Atlantic County and $25 million in funds from the state Casino Reinvestment Development Authority.
At the Taj Mahal, Trump Entertainment wants many employees to forego health insurance from the company and to instead seek healthcare insurance through the Affordable Healthcare Act. They also want to end the casino’s pension plan in favor of a 401K plan.
According to bankruptcy filings from Icahn—who holds the mortgage on the Taj Mahal—the union is willing to move to a 401K plan, but not jettison health insurance.
McDevitt, however, said the loss of healthcare benefits at the Taj would be a 35 percent reduction in workers compensation and that Icahn is seeking to exploit the closing of casinos in Atlantic City to take healthcare away from Tropicana workers as well.
Union workers at the Tropicana have already switched from a pension to a 401K plan.
Icahn says he needs all of the concessions at the Taj Mahal.
“Notwithstanding the fact that putting more money into the Taj is a questionable business decision, we share the company’s desire to see the Taj Mahal remain open and preserve the jobs of the company’s employees,” Icahn attorney Allan Brilliant wrote in a letter to Trump Entertainment Resorts. Failing to get the concessions “would make it impossible to operate a viable company at this time.”
Late last week, a Delaware bankruptcy judge turned down a request from Trump Taj Mahal to stop contributing to the union’s pension fund. Judge Terry Gross said he did not have the power to permanently change contract conditions but he did scheduled an October 14 hearing when he could revoke the entire contract, which he says is within his authority.
But Icahn’s Taj Mahal offer may face another stumbling block. According to the AP, a proposal made by Trump Entertainment—only informally agreed to by Icahn—calls for Atlantic City to reduce the tax assessments of the closed Trump Plaza and the Taj Mahal from $248 million and $1 billion, respectively, to $40 million and $300 million, respectively.
City officials have already said they can’t afford to do that.
“Given the difficult economic situation in Atlantic City, we are not in a position to accept these requests,” Atlantic City Mayor Donald Guardian said in a press statement.
The city has seen a huge decline in its ratable base as casino revenue continues to decline in the city and is facing major tax increases for residents. Guardian has already announced plans to cut $40 million from the city budget in the next four years and cut 300 employees from the city workforce.
“The heavy concessions requested for the Trump properties, including the Taj Mahal, are not acceptable,” Guardian said. “Everyone needs to pay their fair share of taxes, including the casinos.”
The city has already said it will seek to recover $20 million the Taj Mahal already owes the city in taxes. CRDA officials have not commented on the asked-for $25 million payout.
Trump Entertainment, however, has also said it needs all of the concessions—including first lien debt forgiveness from Icahn who is owed about $286 million—to keep the Taj Mahal operating after November.
The Trump Entertainment plan requires Icahn’s lender affiliates to invest $100 million in the property and take control of the company.
Meanwhile, the company that owns the Trump trademark is continuing its court action to have the name stripped from the casinos. The company has asked the bankruptcy court to allow it to continue its lawsuit.
Donald Trump—who owns less than 10 percent of Trump Entertainment—has said the casinos have been mismanaged and now hurt his brand.
Trump has also hinted that he may make an offer to bailout the Taj Mahal himself, but no details or report of an offer have emerged.
