When 2008 began, Atlantic City's casinos were fighting an economic slump but still talking and dreaming big, with plans for as many as four new casino-hotels worth as much as $11 billion.
But as the new year looms, most of those plans have been shelved, hundreds of workers have been laid off, and as many as five of the 11 casinos could wind up in bankruptcy court in 2009.
"I'm hoping things will be somewhat better," said James Howard, who worked 14 years as a food and beverage worker at the Atlantic City Hilton Casino Resort before being laid off this month. "Could it get any worse?"
The scary answer is yes.
"It is going to be a tough winter," said Mark Juliano, CEO of Trump Entertainment Resorts Inc., which owns three casinos here but hopes to sell one (Trump Marina Hotel Casino) by May. "Everyone is battening down the hatches and trying to survive. Obviously 2008 speaks for itself, and I don't see a whole lot different in 2009, at least until the summer."
Having missed a monthly interest payment because it just didn't have the money, the owner of Resorts Atlantic City could be forced to turn over control of Atlantic City's first casino to its lenders shortly after the first of the new year if a repayment arrangement is not reached.
Over the first 11 months of 2008, Resorts' revenue was down 15.7 percent. The only casino that did worse over that period was its sister casino, the Atlantic City Hilton Casino Resort, where revenue was down nearly 17 percent. That made them the two worst-performing casinos in Atlantic City.
Trump was also trying to rework its debt, having skipped its $53.1 million December bond interest payment, although it is allowed to do so under a 30-day grace period. However, the deadline for making the payment or renegotiating terms with bondholders is Dec. 31. If a new agreement is reached, the company must file a regulatory statement within two days of that occurring.
Juliano said talks are progressing on restructuring about $1.25 billion worth of bond debt, and he's optimistic a deal can get done. If not, many observers believe another bankruptcy filing could be in the offing for Trump, which has been there twice before.
However, Joe Corbo — president of the Casino Association of New Jersey — said there are positives that Atlantic City can build on even in a bad economic climate. One encouraging fact is that three casinos opened new hotel towers in 2008, and a developer opened a luxury boutique hotel where a Howard Johnson once stood. That added nearly 2,900 rooms to a city where it can be difficult to book a room at a casino hotel on a weekend.
"While the current economic difficulties will undoubtedly extend into 2009, these factors are largely beyond our control," Corbo said. "Consequently, we recognize the need to focus on areas that are within our control and that have served our industry well during past challenging times including innovation, resourcefulness and good old-fashioned customer service.
"In this way, we will continue to serve and maintain our existing customers and also be well-positioned when circumstances change and opportunities for growth again present themselves," he added.
Other positives for 2009: Express train service from New York City to the casinos will begin in February, and the Borgata Hotel Casino & Spa will get some national exposure as 16 aspiring chefs compete on the reality TV series "Hell's Kitchen" to win a head chef job at the casino.
Right now, however, the news isn't good — even for casinos that haven't been built yet. MGM Mirage shelved its $5 billion Atlantic City mega-casino plan indefinitely, as did Pinnacle Entertainment Inc. with its own $2 billion Boardwalk casino where the former Sands Casino Hotel once stood.
Pinnacle's ubiquitous billboards that once seemed clever and hip are now being viewed in a whole different light. "You know what this town could use?" one asks. "Another casino." A different sign proclaims, "Until we open, you'll just have to play somewhere less fun."
In the meantime, a gaping void sits just off the Boardwalk, angering nearby businesses and city officials, who liken it to a knocked-out tooth in Atlantic City's smile.
The Tropicana Casino and Resort has operated for more than a year under a state-appointed conservator, who is trying to sell it in a bankruptcy auction. The Cordish Company, which helped revitalize Baltimore's Inner Harbor and built The Walk, Atlantic City's popular midtown retail outlet shopping district, has been chosen as a potential purchaser at $700 million.
This was the second straight year that casino revenue fell in Atlantic City after 28 straight years of increases.
It began when slots parlors opened outside Philadelphia, which quickly stole some of Atlantic City's most reliable and profitable gamblers, who could now play close to home instead of driving an hour east to Atlantic City. And more competition followed from racetrack slots in New York.
For the first 11 months of 2008, the casinos won $4.2 billion, down 6.7 percent from the same period a year ago.
The decline prompted casino executives to ask Atlantic City to delay a total smoking ban that the City Council had approved in April, saying they couldn't afford to drive away any customers in such a bad economy.
The council agreed, and will revisit the issue in November. Until then, smoking will be allowed on up to 25 percent of the gambling floor.Related Articles:
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