New Jersey casino regulators were not impressed with former soap maker Bill Yung’s talk of coming clean.
Look up "disingenuous" in the dictionary and you may find a picture of Yung and the minions who did his bidding in misleading regulators about what was happening at the Atlantic City Tropicana as its image and business levels fell on hard times.
That was the picture painted with broad brush strokes of often conflicting testimony as regulators came down hard, declaring with a 4-1 vote that Yung’s time at the helm of the Boardwalk resort had resulted in its image and operations being soiled and dragged to a dangerously low level.
So the one time engineer with the Andrew Jergens Company who began his climb toward the upper levels of the hotel business with a single Days Inn more than 30 years ago finds himself in the middle of problems that will not be easily washed away.
It’s just like the old days of 20-30 years ago when New Jersey was knocking off Nevada licensees right and left.
Yung’s wholly-owned Columbia Sussex was teetering on the brink of a need to file bankruptcy as the New Jersey Casino Control Commission denied a license and Nevada regulators got down to some serious thinking about how they might be forced to respond.
Nevada’s licensing process does not include many of the sharp edges associated with Atlantic City where state statutes mandate a "first class" facility. Nevada’s position is that consumers generally determine with the power of their spending what is or is not a first class facility.
Some of the fiercest pressure on Yung and Sussex is coming from lenders. Billions were borrowed to finance Columbia’s $54 a share or $2.75 billion purchase Aztar Corp., whose prime assets were the Tropicana resorts in Atlantic City and Las Vegas.
Lenders are understandably nervous in the wake of the Commission action and uncertainty about what might occur in Nevada.
Uncertainty is one of the things bankers do not like.
And Yung was very much aware of this as he turned to the appeals process and pressures on his company were ratcheted to a higher level.
A number of potential buyers have been quizzed during recent days about their interest in taking what was Aztar off Yung’s hands but the consensus attitude was that now is the time to sit back and wait to see what track this saga may take.
A lot has happened during the two years since the bidding war for Aztar was kicked off in March of 2006.
Pinnacle Entertainment was aggressive in its pursuit of the company, mostly because of those prized sites in Las Vegas and Atlantic City. But Las Vegas-based Pinnacle has since veered away in search of other deals such as its purchase of the Atlantic City Sands, a potential development in Baton Rouge and a big new hotel that is close to opening in St. Louis.
Colony Capital was also a participant in the 2006 bidding war but turned its ambitions to other projects such as the decision to be part of taking Station casinos private.
The two Tropicana resorts will get a lot of interest if and when the time comes for potential buyers to line up. One of the new players in whatever develops may be James Packer’s Crown Ltd., which last week agreed to buy Cannery Resorts for $1.8 billion and already has two other deals awaiting the blessing of Nevada officials.
Penn National’s Peter Carlino has made it clear during recent months: He wants to be part of the Atlantic City action.
Atlantic City has been basking in the bright spotlight of a resurgence of interest by big companies willing to spend big money there.
As for the Las Vegas Strip, steadily escalating land prices along the Strip corridor have pretty much caught up with Yung’s offer that at the time (in mid-2006) looked impossibly high.
The competition in Atlantic City has done little to discourage investors, but as New Jersey Casino Commission Chair Linda Kessekert told Yung, her tone suggesting the cold disdain of Simon Cowell crushing the hopes of an Idol wannabe: Sussex does not deserve be part of this competition.