Nevada next to enter Tropicana fray

Dec 24, 2007 5:05 AM

It is difficult to believe the saga of the Atlantic City Tropicana will play out quietly, that it will be quickly sold and that will be that.

Carefully developed plans have a way of developing unexpected kinks of one kind or another and this story offers big potential for unexpected turns.

We have still to hear from Nevada gaming regulators who may well decide the transcript that tells of Columbia Sussex owner William Yung III’s adventures before New Jersey’s Casino Control Commission contains grounds for action in Nevada.

Nevada Gaming Control Board member Mark Clayton says officials here are exploring the transcript developed over several days of hearings for signs that Trop executives lied or intentionally misled gaming officials.

This, he says, is the sort of thing that will "”¦ pretty quickly get the attention of regulators anywhere."

As of a few days ago there was no sign that the issues making such a difference in New Jersey will get the same concern in Nevada, where there are no requirements for a "first class" facility and employment levels are generally left to management.

But lying to regulators — that can get a casino owner in trouble in a hurry.

There was a member of the Control Board not so many years ago who had a reputation for his willingness to forgive all sorts of boorish behavior, so long as an applicant or licensee was willing to come forward in advance of the hearing and, well, come clean, so to speak.

He was not so nearly understanding, the stories go, with applicants who lacked such candor.

So for the moment, it is only the Atlantic City Tropicana that is due to be sold.

Sources familiar with that resort say it can comfortably do $120 million to $130 million of annual EBITDA. It might even hit $150 million with the right marketing program.

This suggests a possible sale price of perhaps $1.2 billion if the price is tied to an earnings multiple of 9 or 10 times, making early sale price estimates of about one billion look like a bit of a bargain. The Trop also has about 300 feet of Boardwalk frontage and some 2,100 rooms. It also has The Quarter, an entertainment complex that another source says would rate a higher multiple.

But the rooms are in four different towers built over a couple of decades ”¦ it’s not exactly efficient.

"And by the time the new places are open in a couple or three years it (the Trop) is gonna be a third tier resort ”¦ a piece of (garbage). I’m not sure it is worth any more right now than the value of the real estate," which consists of about 14 acres, according to a potential buyer of the property who was clearly more interested in talking the price down rather than up — an attitude that suggests he may be serious about the place.

Should Nevada officials decide Sussex and Yung deserve the same punishment handed down in New Jersey, they can act with a conviction that says, we’ve been there and done that.

It was in May of 1979 that the Nevada Gaming Commission forced out the owners of the former Aladdin following a Detroit federal court case based on the wielding of unlicensed influence at the resort.

Senate Majority Leader Harry Reid was commission chairman then and in an emergency meeting at Reid’s Las Vegas law office, the late Leo Lewis was installed as conservator. Lewis’ task was to operate the Aladdin and preserve all those jobs while the place was sold.

The best guess then was that it would all be done in a few months.

Yeah, sure. Everything that could go wrong did and some nine months later when there was still no sign of a legitimate buyer, and the unsuitable owners had tried to "sell" it to their friends a couple of times, the Commission lost all patience and closed the Aladdin.

It was October of 1980 before the Aladdin re-opened with Wayne Newton and Ed Torres as co-owners.

Things went much more smoothly in 1983 when the state removed the owners of the Stardust and drafted Boyd Gaming to act as conservator.

Boyd subsequently bought the place, years before it would decide to look toward Atlantic City where it now co-owns and operates the Borgata.