Atlantic City got some surprising news on March 1st when it was announced that Carl Icahn found a buyer for the shuttered Trump Taj Mahal, Hard Rock International. It was a rare ray of sunlight for a town that has become known for its doom and gloom. Armed with the breaking news, reporters rushed around town getting reactions and they found joy and happiness on every corner. Mayor Don Guardian badly needs something good to happen in Atlantic City if he is ever to regain any credibility after the state takeover. He found the thought of a Hard Rock casino in town very pleasing. Guardian said, “I think we’ve reached the bottom and this is just great news. All the pieces are coming back together one by one.” Like the mayor, other politicians greeted the news with enthusiasm. City Councilman Gillian said, “A brand like Hard Rock is something that could pretty much be the change we were looking for and be the change Atlantic City needs.”
Among those finding pleasure in the news were members of Unite Here, the labor union that fought Icahn to the bitter end. Icahn had wanted the union to make compromises over pay and benefits, but the union refused and went on strike. The strike was bitter and lasted until the doors of the casino closed. One union member expressed what other former employees felt, “Can’t put into 140 characters how happy news of the sale of the Trump Taj Mahal casino makes me.” Bob McDevitt the head of the union was more reserved, but like everyone else he assumes the former employees will be the first hired when Hard Rock opens in 2018. “We look forward to working with the new owners to create good quality jobs and bring business back to the property,” McDevitt said.
Developers Bart Blatstein and Glenn Straub were equally excited; they believe a vibrant and successful Hard Rock will help their projects as well. Blatstein called Hard Rock’s purchase of the Taj Mahal “the best possible outcome for Atlantic City.” While Straub, the owner of the closed Revel, said, “Anybody that is going to generate business is going to be a good thing. I know the Hard Rock, and they will attract people to the area.” The newspaper reporters did not interview anyone who was not pleased. But I would venture to say the happiest of them all is probably the seller, Carl Icahn. He simply said his company had concluded that one casino in Atlantic City was enough.
Carl Icahn is a consummate investment poker player. He may bluff and bluster sometimes, but he is patient as he can afford to be. Icahn is listed 26th on Forbes list of wealthy people with an estimated wealth of $16.6 billion. Buying in at bargain basement prices and selling out at a premium is a game he has played over and over since the 1980’s when he made his reputation in a TWA takeover. “I like to wait and buy things when nobody wants them — that’s when you get the best values,” says Icahn. He has played in many industries and is no stranger to gaming investment, both in Atlantic City and Las Vegas. In 2008 he sold several Las Vegas casinos that he had purchased a few years earlier for a billion dollar profit. And in 2010, he bought the stalled Fontainebleau for $150 million; the unfinished shell of a once $2.9 billion project was listed in 2016 for sale at $650 million.
In 2010, Icahn bought the Tropicana in Atlantic City for $200 million. By all accounts he is pleased with the purchase and is getting an acceptable return on his money. But the Trump Taj Mahal has been a horse of a different color. Icahn purchased the debt on the property and then in 2016 took full ownership after the casino exited bankruptcy. By the end of the year he had closed it, citing a $350 million loss and continued labor problems. He said at the time the union pushed the property over the edge and made it impossible to continue. But closing the property did not end Icahn’s problems with the property or the union. His fights with labor earned him some serious enemies in Trenton. They were mad enough to pass a law to keep him from opening the property again or selling it as a casino. However, Governor Christie vetoed the bill and the lawmakers fell short in their efforts to overturn the veto. Icahn dodged the bullet and that cleared the way for him to sell the property. Interestingly, no price was announced and that is uncharacteristic; his deals are usually very public. All we have is the Hard Rock statement that by the time it has completely remodeled the property and transformed the 1990 casino into a 21st century Hard Rock, it will have spent $300 million.
Regardless of the price, Icahn must be relieved. He can now move on to other things. And certainly the good people of Atlantic City are relieved; they now have over a year to speculate on all of the good things that are going to happen when the Hard Rock opens. The only group of people likely to be ambivalent about the sale are the other casino owners. Things have improved a great deal for them in the last few months since the Taj closed and another casino in the mix is probably the last thing they want. But they also have over a year to take advantage of a market with only seven casinos. In any case, it is the end of an era as the Trump sign comes down making way for the Hard Rock guitar.
