Ah, Atlantic City, how far you have fallen. Due to a confluence of factors, including the rapid expansion of legalized gaming in the East Coast & Midwest, Atlantic City has struggled to attract business and tourism dollars. Last October, the Trump Taj Mahal closed due to owner Carl Icahn’s inability to settle with workers unions over benefits and pensions, and mounting losses. He then put it for sale, open to various interested parties.
Sale & Next Steps
Once dubbed the “eighth wonder of the world” by Trump during the opening, the recently-shuttered casino was sold for just $50 million to Hard Rock International. Built for $1.2 Billion 27 years ago, that represents a drastic decline.
Icahn was racking up hundreds of millions in losses, but this did represent a successful sale. Perhaps Hard Rock will be able to turn it around, making it profitable where so many others have struggled.
Hard Rock Plans for Trump Taj Mahal
Owned by Florida’s wealthy Seminoles, Hard Rock plans to reopen Taj Mahal next year, with a $375 million renovation and installing plenty of the traditional Hard Rock musical memorabilia. One guest benefit is the ability to borrow Fender electric guitars to play in their rooms. This is certainly something that I am a fan of, and would take advantage of should I go back to Atlantic City.
Additional Acquisition Benefits
Hard Rock has strengthened its position and bid for a northern New Jersey casino, should that be legalized in the future. Although such a gambling referendum was defeated in November of 2016, these companies will not stop their push for additional casinos and resorts. However, they should be concerned about the ability to sustain multiple properties, especially as there are plenty of current gambling locations, and upcoming casinos as well. With the recent completion of MGM National Harbor, as well as the upcoming Wynn Everett, near Boston, competition will be fierce, and profitability similarly elusive.
This deal was a terrible one for Carl Icahn, but most likely the best he could get under such circumstances. I am always for property renovation, as I enjoy seeing how they change. I hope I get out to Atlantic City in the near future!
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