Anyone Want to Buy Some Casinos?
Scott Van Voorhis has a good piece in the Herald today, noting that Trump Entertainment Resorts would be seriously handicapped if they tried to finance a casino in Massachusetts. The problem stems from the troubled Atlantic City company’s financing agreements—they came out of bankruptcy in 2005—which forbid Trump from putting more than $50 million into equity on any deal outside of New Jersey.
As Van Voorhis notes, considering how much money it would take to build a casino here in Massachusetts, that $50 million cap would put Trump at a serious competitive disadvantage in the bidding for one of Gov. Deval Patrick‘s three proposed casino licenses.
But do not count the Donald out just yet.
What Van Voorhis didn’t mention is that Trump has been trying to sell his three Atlantic City casinos for a while, and thus would be free of that $50 million equity cap. Rumors about a sale have been rampant, and just last month, lengthy talks between Trump and Cordish broke down when Cordish’s financial backer, Goldman Sachs, balked.
Speaking to us a couple months ago, David Schwartz, director of the Center for Gaming Research at UNLV, mentioned the scenario.
“It’s possible that they would do a little switch there,” he said, “and sell the Atlantic City casinos to focus on Massachusetts.”
Considering how poorly the Jersey casinos—the Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino—have been performing, that could make a whole heap of sense.
Between the three, gaming revenue slipped four percent during the third quarter, and according to the company’s latest SEC filing, it lost nearly $15 million in the first nine months of this year. Those numbers make it a tough sell, but they also make it all the more attractive for Trump to trade up from Jersey (plagued by new competition in Pennsylvania and New York) to Massachusetts (which is seen as something of a blue chip market).
Jeremy Kleiman, chair of the New Jersey State Bar Casino Law Section, said that inquiries are frequently made into Trump’s Atlantic City properties, and he wouldn’t be surprised to see them sold off as a group or one at a time.
“A lot of people have tried to put the thing in play, but it didn’t really go anywhere,” he said. Perhaps now, the Donald will be more motivated than ever to sell.