Trump Entertainment Resorts succeeded last week in having a bankruptcy court judge cancel the Taj Mahal’s contract with the city’s main casino workers union. The company—along with billionaire Carl Icahn, who has offered a potential plan to keep the casino open—say that the Taj cannot remain viable while paying expensive pension and health care obligations.
Lawyers told U.S. Bankruptcy Judge Kevin Gross that Trump Entertainment has to break the contract with Local 54 of UNITE HERE, the city’s largest casino union, or the business will not survive. Lawyers said that the cash situation for the company is so tight, it has been selling slot machines, mattresses and televisions from its closed Trump Plaza property to operate.
“We are proud of our efforts to keep the Taj Mahal open, to deliver our loyal customers a continued first-class gaming experience and to have the ability to save 3,000 jobs in a very difficult Atlantic City economy,” said Robert Griffin, CEO of Trump Entertainment. “We look forward to working with our elected officials. With bipartisan leadership we believe we can take a collective step toward a brighter future in Atlantic City.”
The company says it must cut expenses by $14.6 million annually to survive.
Trump Entertainment had already set November 13 as the likely closing date for the casino and notified it’s about 3,000 workers they could soon be out of jobs. A final decision on the closing was delayed until Gross ruled, but Trump attorney Kris Hansen says the notices will not go out now.
“We are not going to tell them we are closing on Monday,” he said. “We are going to scrape together our cash.”
Icahn owns the Taj Mahal’s $286 million in debt. Under a deal proposed by Trump Entertainment and Icahn, he would trade the debt for ownership of the casino and invest $100 million into the property.
But the deal has even more strings attached than just demanding the union concessions. Icahn also wants major tax breaks on the city, county and state levels and is also looking for an influx of state aid funds.
However, city and state officials have already rejected any tax breaks for the casino. Trump Entertainment originally sought to have Atlantic City lower its property tax assessments by nearly 80 percent and have the state contribute $25 million in tax credits.
The company has since revised its plea for state aid and is now seeking $175 million in relief through a five-year PILOT program—payments in lieu of taxes—and the receipt of two types of state economic grant not usually available to casinos: the Economic Redevelopment Grant and the Urban Revitalization Grant.
The state legislature would have to approve such a plan, but Senate President Steve Sweeney—also a union president in New Jersey—said there is no chance that he would approve.
With the cancellation of the union contract, workers will give up their pension and health insurance. The casino would provide $2,000 stipends to workers who would seek their own coverage under the Affordable Care Act.
The company wants to replace pension payments with a 401K plan.
That has brought about massive opposition from Local 54, which has specifically targeted Icahn. Icahn also owns the Tropicana Casino Resort in the city, and is also looking to do away with health benefits there.
“The decision today will certainly enrage the workers who have relied on and fought for their health care for three decades,” Bob McDevitt, president of Local 54, told the AP. “We intend to continue to fight this both in the courts and in the streets.”
The union also charges that Trump Entertainment wants to further cut workers’ pay by ending paid lunch breaks and bumping employee classifications into lower wage brackets.
The union charges that Icahn is trying to get a competitive advantage in the city by stripping workers of basic compensation. The union held a protest in the city—blocking city traffic—which drew the support of Sweeney, who engaged in a war of words with Icahn.
Sweeney accused Icahn of betraying workers while Icahn charged that Sweeney was actually betraying Atlantic City by entertaining plans to build more casinos in the northern part of the state, surely a death knell for Atlantic City casinos, without some sort of compensation.
McDevitt took a personal stab at Icahn.
“Tropicana’s major owner wants you to believe that the demand to take away workers’ health insurance is necessary because of the financial situation at the Taj Mahal and in Atlantic City,” he says. “We believe it has nothing to do with either. He has a long history of eliminating, reducing or freezing worker benefits which sometimes saddles government agencies with the burden of cleaning up the mess.”
Trump Entertainment officials have also accused the union of showboating and purposely slowing negotiations.
Trump Entertainment plans to appeal to a committee set up by Governor Christ Christie to appeal for assistance. Jon Hanson, a close advisor to Christie who chairs the New Jersey Gaming, Sports and Entertainment Advisory Commission, said the committee will “listen” but the Trump situation is not its top priority, according to the Atlantic City Press.
