In Atlantic City, nothing is certain until it’s been completed. The same holds true for plans to turn the former Showboat casino into a college campus.
The plan by nearby Stockton University seemed a done deal, but now has been challenged by the neighboring Trump Taj Mahal, itself mired in a difficult bankruptcy proceeding.
Stockton University bought the Showboat last year for $18 million and announced plans to turn it into a satellite campus. Construction was set to begin and the university hoped to open the campus by summer.
But Trump Entertainment—owners of the property and now passing control to billionaire Carl Icahn—have invoked a 1988 legal covenant between the Showboat’s former owner, Caesars Entertainment, and the Trump Taj Mahal casino that the Showboat only be operated as a first-class casino resort.
Stockton president Herman Saatkamp told the Associated Press that the college was aware of the clause, but were assured the matter was being resolved. He said Stockton is trying to work out a deal with Trump Entertainment, but will sell the property quickly if one can’t be reached.
“Stockton tried to establish a full campus in Atlantic City six times during my tenure as president and got kicked in the teeth each time,” Saatkamp said. “This time, we were stabbed in the heart. Candidly, Caesars Entertainment was to resolve a 1988 covenant with Trump Taj Mahal, and we were led to believe that had happened. However, it did not, and Trump Taj Mahal does not want a university campus near its property.”
Trump Entertainment officials, however, said they notified Stockton and Caesars three months ago that it would not permit a college to operate next to the Taj Mahal. The company says that while it is in bankruptcy, it cannot waive its rights under the covenant “without receiving appropriate consideration.”
“In 1988 Showboat, Resorts and Taj all agreed to provide for a cluster of casinos at the north end of the Boardwalk … to create greater customer traffic for all three properties,” Trump Entertainment said in a press statement. “To that end, the three agreed that Showboat would always be operated as a first-class casino hotel.”
Trump officials say Caesars asked it to voluntarily waive the covenant to allow Stockton to operate a college campus there, but they told Caesars at that time it could not and would not waive its rights.
“The facts are that our company does not think having a college next door to the Taj is good for our company,” Trump Entertainment said. “Having kids under 21 who will attempt to gain entry to the casino and engage in activities reserved for those only 21 and older would create numerous problems we do not want, and could damage the Taj’s ability to attract customers and regain its financial health. You do not see a college on the Las Vegas strip. Both Caesars and Stockton elected to proceed with the Showboat sale even though they were fully aware that we could not waive the casino/hotel covenant as they were asking. “
Saatkamp said the university’s lawyers think the school could win in a legal fight for the property, but the school doesn’t have time for a lengthy battle. Stockton needs to sign contracts to open a portion of the casino as a public hotel and also renovate part of the space for classrooms and student housing to open by summer within the next three weeks.
“Simply stated, we would be saddled with an all cash outlay with no revenues in return” Saatkamp told the AP. “It would be unconscionable to submit Stockton University’s financial stability to this risk and delay. Doing so endangers the cost of student tuition and creates the potential for job loss among faculty and staff. We cannot afford to just hold this building with no incoming revenues while the two casinos play their own gamesmanship.”
At least one potential developer in Atlantic City thinks the matter can be solved quickly. Glenn Straub, who is attempting to buy the closed Revel casino, told the Press of Atlantic City that Stockton students would make “a perfect source” for whatever operations take place at that end of the Boardwalk.
“The result of this morass is that Atlantic City will lose a major economic and community engine and Stockton students lose out on some wonderful academic opportunities,” Saatkamp said. “I still hope this will turn around.”
Stockton students have begun a social media campaign on twitter and facebook in support of an Atlantic City campus.
Saatkamp told reporters that if the campus cannot open this summer, the school will probably put the site up for sale. He was unsure whether the purchase could be voided and the property returned to Caesars.
