While there has been no shortage of bad decisions in the casino industry of late, the Dunce of the Year winner for 2008 and presumptive favorite for 2009 has got to be Tropicana Atlantic City conservator Gary Stein. This former member of the bench managed to turn what was intended to be a brief transitional process into a munificent 16-month sinecure … which could stretch to 18 months or longer, depending on how soon the bankruptcy court acts. Not only was Stein’s interminable tenure an unconscionable waste of money, if he made one good decision during that time, S&G must have nodded off for five seconds and missed it.
You will recall that, last spring, Stein scoffed that an $850 million bid by Colony Capital and an undisclosed one from Cordish Co. were “unreasonably low.” What’s more, he said the market for a distressed, mismanaged Atlantic City casino could only get better. (One of Stein’s several miscalculations was to use the still-in-abeyance Trump Marina sale as an economic barometer.)
Reality was close behind with a swift kick in the ass, as the best Stein could manage was $545 million in cash (plus another $150 million or so in securities) from Cordish. And, as Stein’s tortoise-powered negotiations crept onward, Cordish wanted to haggle the price down even further and eventually there was no deal to be had.
Which means that a casino that might have fetched over $800 million 11 months ago will now go on auction for a quarter of that amount, after a process that the Press of Atlantic City eventually characterized as “exceedingly slow.” Worse still, since Icahn would gain the Trop via a credit bid, New Jersey won’t have any sale proceeds to show for its year and a half of trouble. Since a parallel bankruptcy proceeding hasn’t yet expunged Tropicana Entertainment owner William J. Yung III‘s equity stake, there’s no way in hell the NJCCC would hand the Trop’s keys to TropEnt CEO Scott Butera, no matter how pure his intentions.
Stein put the best spin he could on this fiasco, stating that “although like the entire industry our revenue and profits have been effected [sic] by the difficult economy, our financial position is solid and the only reason we are filing petition today is to be able to sell the casino assets free and clear of all liens.” Somehow NBC40 was able to keep a straight face while reporting that the NJCCC believes “this ‘stalking horse bid’, will help them achieve the highest price possible in light of the current economic conditions facing the gaming industry.”
True, starting the bidding at a rock-bottom $200 million might entice Cordish or someone else to pony up real money. But whatever the Trop eventually fetches is all but certain to be a shadow of what it could once have brought, had Stein performed his duty with alacrity. (And no potential bidder’s position is nearly so advantageous as Icahn’s.) It took an April 15 public yanking of Stein’s leash by his NJCCC overseers just to get this much accomplished, threatening to send the Trop to bankruptcy court with no stalking horse bid.
While Stein strove for a victorious posture, The Associated Press cut through the crap. Its headline? “NJ OKs cut-price auction for Atlantic City casino.” Reporter Wayne Parry even got Stein to concede there was no guarantee that $200 million wouldn’t be the final price. If that’s the ignominous conclusion to this saga, it may someday be known in the industry as “Bill Yung’s Revenge.”
What a screw-up.
