Workers at Atlantic City’s Trump Taj Mahal casino found themselves on a rollercoaster last week as the fate of their casino hung in a series of announcements on possible deals—and deals falling apart—to save the property.
The casino was slated to close December 20, but will now stay open indefinitely as billionaire Carl Icahn is prepared to lend Trump Entertainment another $20 million to keep the Taj Mahal running until a “global settlement” can be found.
First reports had the casino solving its labor problems after Icahn and the city’s main casino workers union reached a deal to save 3,000 jobs at the casino.
The union—Local 54 of UNITE HERE—and the casino were expected to execute a new deal late last week. The union represents about 1,100 of the casino’s 3,000 workers.
But then came word from the union that the deal had fallen apart.
“We thought that we had come to an agreement with all parties that would resolve all of the issues with the Taj Mahal,” said union president Bob McDevitt on the union’s Facebook page.
“We signed it, and the Trump CEO signed as well. At noon today, we were told that Carl Icahn had gone back on his commitment and would not enter into the agreement,” the posting said. “This is what we have been dealing with for some time now at this property.
“We are disappointed that Mr. Icahn’s whims are going to add to the feelings of uncertainty and instability that the workers have had to live with and have to endure during this holiday season and beyond,” the post said. “We and everybody else thought we could start moving Atlantic City forward, but it is unfortunate that one person could put the brakes on all that.”
In a later report, however, McDevitt said that despite the lack of a deal, Icahn planned to let workers know he will keep the casino open indefinitely according to the Associated Press.
Icahn then released an open letter to Bob Griffin, CEO of Trump Entertainment, in a response to Griffin’s earlier request that Icahn keep the casino running until a complete deal to save the casino can be worked out.
Icahn repeated statements he’s made before that the Taj Mahal is a bad investment for him to begin the letter, but did say he would provide capital to keep the property open while negotiations continue
“Therefore, even though I have no assurance that the state will provide aid or that the union will drop its appeal, I will send you a commitment letter to provide you with up to $20 million of additional financing (in accordance with your budget and subject to the terms and conditions contained therein) to keep the Taj operating throughout the bankruptcy proceedings, and I will also commit to work collaboratively with the state, the city and the union to try to forge a global settlement that will bring real stability to the Taj and its employees,” Icahn wrote.
Icahn has said he will, not accept a deal unless the union drops its appeal of a bankruptcy judge’s ruling to void the casino’s union contract. While the signing of a new union deal would seem to make the issue moot, it is not clear if the union planned to drop the appeal under the proposed deal.
Griffin, in his request to have Icahn keep the casino open, said he was confident the company would win the appeal regardless. He has also asked for a $30 million loan from Icahn.
Icahn is also seeking tax breaks for the casino from the state and city.
But a potential plan to consolidate the city’s casino taxes—giving the Taj Mahal an about $8 million tax break—was delayed in the state legislature precisely because the Taj Mahal deal fell through.
According to the New York Post, which first reported the deal citing unnamed sources, the potential deal conceded to union demands on restoring former work rules after the casino previously reinstated healthcare and some pension benefits.
A key sticking point was management’s desire to outsource some casino jobs—a move the union saw as potentially setting a dangerous precedent as it heads into negotiations with several other city casinos this year.
Icahn has been seeking to take over the property from Trump Entertainment through bankruptcy proceedings. Icahn controls $292 million of the casino’s debt. Under a bankruptcy plan, he would exchange that debt for ownership of the casino and then invest another $100 million into the Taj.
The plan has been marred, however, by disputes with the union, especially after the bankruptcy judge voided the union’s contract with the casino. Trump Entertainment, as well as Icahn, wanted to stop pension payments to the union in favor of a 401K plan and cut healthcare benefits to workers, instead providing a stipend for workers to seek healthcare through the Affordable Care Act.
The union, however, appealed the ruling and has been in intense, and often testy negotiations ever since. The new deal as reported seemed to acquiesce to all union concerns.
The union’s only concession to Icahn would allow him to pay pension benefits to a plan only tied to the Taj Mahal—and possibly the neighboring Tropicana casino, which he owns—instead of one tied to several Atlantic City casinos, according to the Post.
During the negotiations, Icahn has also been seeking major tax concessions from the city and state. Though government officials repeatedly denied the request, a new tax plan emerged for the city that is now before the New Jersey Legislature.
The plan would have the city’s casinos collectively pay $150 million in payments in lieu of taxes and tie future payments to casino revenue. According to reports, the Taj Mahal would see a substantial break of about $8 million on its annual taxes under the plan.
The tax plan is seen as part of the tentative deal to save the casino that reportedly was brokered by state officials led by Jon Hanson, Governor Chris Christie’s key advisor on Atlantic City, and state Senate President Stephen Sweeney, who is another main sponsor of the legislation.
A vote on the tax plan, however, will now not take place until January, officials said (see story below).
