It’s official: Atlantic City will be losing its fifth casino of 2014. First reported by the USA Today, Trump Entertainment Resorts has filed a revised reorganization plan in bankruptcy court, indicating that its Board of Directors has approved the closure of the Trump Taj Mahal casino on December 12th.
It has been known for a couple months that the Taj Mahal would likely close, but there had been at least a sliver of hope that it wouldn’t happen. The New York Post originally reported in early September that the casino had broken some of its loan covenants and needed to figure out some sort of restructured deal to be able to pay its creditors. If it could not, Chapter 11 bankruptcy was probably in the cards.
At the center of the situation is billionaire investor Carl Icahn, who holds much of Trump Entertainment’s debt. He said he would be willing to infuse another $100 million into the Trump Taj Mahal to keep it up and running if New Jersey and Atlantic City would grant him as much as $175 million in tax relief. That is unlikely to happen, though, so the casino’s closure is set for December 12th, six days before a bankruptcy hearing.
Icahn had also sought court authority to cancel the existing collective bargaining agreements with the casino’s main union. This request was actually granted, permitting cost savings by ending pension plan contributions and reducing health benefits, but Icahn needed the tax breaks to go along with it. If all of Icahn’s requests had been granted, he may have been able to convert $286 million in debt he was owed into 100 percent equity in the company.
If the Taj Mahal closes as planned, another 3,000 employees will lose their jobs, bringing the total to around 11,000 for the five shuttered Atlantic City casinos. Atlantic City Mayor Don Guardian told the USA Today, “I want them (the casino workers) to know that the city of Atlantic City did everything they could to help keep the Trump Taj Mahal open. However, (the company and its officials) still must pay their fair share of taxes, just like our residents do.”
Atlantic City has been on a tremendous downswing for much of the last decade, brought on mostly by casinos opening in neighboring states. With attractive gambling options in Maryland, Delaware, Connecticut, and Pennsylvania, many former Atlantic City visitors no longer have a reason to make the trek to the Boardwalk and can stay closer to home. Atlantic City is not known as a particularly pleasant place to visit outside of the casinos, so there is not much reason for people in the region to drive several hours to the coast when they can happily gamble in their own states.
Atlantic City began 2014 with a dozen casinos, but when 2015 rolls around, that number will have been sliced nearly in half. The Atlantic Club closed in January after nearly being purchased by PokerStars. The Showboat shut down on August 31st, followed two days later by the Revel. On September 16th, the Taj Mahal’s sister casino, the Trump Plaza, went under, and in less than a month, the Taj will be no more.
If there is any sort of bright side it is that the Revel was sold in October and the buyer does plan on reopening it at some point.