Atlantic City

Nov 16, 2010 7:08 AM

Resorts Atlantic City buyer Dennis Gomes insists Wall Street is wrong. He believes in the future of the city where he has been operating the Boardwalk’s biggest hotels and casinos for close to 20 years.

Gomes makes some interesting points about Atlantic City’s potential when looking beyond the property he will probably get approval to operate by the end of the year.

Gomes sees the pending $250 million purchase of MGM Resort International’s (MGM) half of the Borgata by L.A.-based Leonard Green & Partners as a vote of confidence in the future of Atlantic City’s depressed gaming industry.

Gomes told me, “David Green is a sophisticated and knowledgeable investor. His desire to invest in Atlantic City is contrary to Wall Street sentiment. I believe that David Green is right and Wall Street is dead wrong.”

There is evidence other gaming executives are applying brakes to their formerly run-away pessimism about the future of business there.

Las Vegas-based Pinnacle Entertainment may be having second thoughts about tossing its Atlantic City real estate into the pile of corporate discards that has accumulated during the company’s recent focus on cutbacks.

The nearly 20 acres of Boardwalk frontage on which Pinnacle considered building a major resort several years ago continues to be for sale.

“But we’re not going to give it away,” CEO Anthony Sanfilippo says now. The current book value of the real estate is $38 million, or about three million more than Gomes is paying for Resorts.

Sanfilippo says that book value should not be considered as having anything to do with its potential value to shareholders should Pinnacle decide that the changing business climate warrants a second thought about future development of the land.

“Atlantic City has been a painful experience for Pinnacle,” the CEO conceded, “It [Boardwalk land] continues to be for sale but we are paying close attention to the changes taking place there now.”