If Carl Icahn holds the note on your life, you are in a world of hurt, my friend. Just ask Trump Entertainment Resorts, whose $20 million sale of wretchedly performing Trump Plaza Hotel & Casino suddenly looks very shaky. What’s Uncle Carl’s reasoning? That the casino is “worth more,” although how much more is conveniently left unspecified. Lead investor Marc Lasry would have to hit the pavements again in order to find another mug to relieve him of a casino that does about $5 million in revenue a month. You might get by in rural riverboat company on performance like that … but in Atlantic City??? Seems that Icahn’s spent the last quarter trying to thwart TER from consummating its Meruelo Group deal but finally decided to negotiate via the media. That alone speaks volumes when you know how media-averse Icahn is.
Icahn’s expectations may have been unreasonably swollen by the much higher bid that PokerStars has put on the Atlantic Club. Mind you, the latter is on an upswing and PokerStars would only put $40 million into fixing the place up. Meruelo, in return for a lower purchase price, proposes $100 million in capex improvements, bringing Trump Plaza into the 21st century. Icahn is hinting that something in the neighborhood of $40 million for the place would get his approval … but he likes to keep people guessing.
Meanwhile, an interesting figure has turned up in PokerStars’ dickering with the State of New Jersey: none other than Steve Wynn, with whom the company has held (literally) offshore meetings on a yacht in the Mediterranean Sea — a relationship that supposedly ended two years ago. Sure, maybe they were just hanging out, but that’s a long way to go in order to converse. PokerStars’ murky past and present continue to trouble other industry figures, although the chattering classes in Trenton have been dumbstruck. You get the feeling that people like state Sen. Raymond Lesniak (D) really need this deal to happen.
I certainly never thought I’d live to see the day that men who — according to former Poker Stars money man Nelson Burtnick — knowingly circumvented the law, would be taken seriously as casino applicants. Shareholder and fugitive former CEO Isai Scheinberg (right) remains under indictment. While New Jersey and Missouri used to be the toughest regulatory jurisdictions in the U.S., if this PokerStars deal were proposed in Nevada, the Gaming Control Board would laugh it out of the room.
In case you recall the tragic bus crash that killed several gamblers bound from Texas to Oklahoma, it appears we can rule out mechanical failure. However, neither the company nor driver Loyd Reyve may be in the clear. Cardinal Coach Line continued to employ Reyve, who had a 1998 fatality on his conscience, if not on his rap sheet. Three lawsuits have already been filed, so these latest deaths are sure to cost Cardinal plenty, even if it’s just a matter of making them go quietly away.
Good for Carl. Trump has literally been holding a garage sale since the last BK (Marina, limos, warehouses, Steel Pier, etc).. Why do you have a garage sale??? You get rid of your junk at bottom-basement prices because those items/assets no longer hold any value for you. However, one person’s trash can be another person’s treasure! I too believe that the Plaza is selling too low. The Pinnacle LAND is reportedly selling for more ($30 mil?). Anyway, the low price does give Meruelo the ability to invest more into the property, as you have pointed out. And A.C./TP needs as many improvements as they can get. But Trump should be able to get more for TP.
The whole Poker Stars deal is a joke. It only shows how desperate N.J. has become. Kick MGM out the door but take Poker Stars seriously … give me a break.
Although, remember when I suggested here that MGM re-apply due to the pro-business/pro-A.C. Christie Administration (and revamp of the CCC)? I guess they figured the same and are almost guaranteed to get their license back.
Guru, Pokerstars is trying to clean up their act. They’re probably more reputable at this point than some of the shady dealings CZR pulls. Getting AGA involved in the Pokerstars deal shows how bad they want the internet game for themselves. As for MGM, they’re relationship with Pansy Ho is different than it was when they left N.J. and the Borg is still a big moneymaker.
Bob,
I agree on both your Pokerstars and MGM comments. I guess I was really just trying to ding NJ’s regulatory history. They deny a license to Barron Hilton (at one point) and countless others, but are now considering a company that has proven to have broken the law (although they are cleaning up their act).
In my own opinion, Pokerstars can only do better with that asset than Colony Capital can and I fully support the re-licensing with MGM. Their license should have never been taken away to begin with.
I think that what Icahn really wants is the Trump Taj Mahal. The judge presiding over the last bankruptcy went with the bondholders because they had a deal to keep using the Trump name over Icahn who owned the mortgage. TER’s mortgage is if I recall correctly about $289 million. If they put the $20 million directly against that, the mortgage for the Taj Mahal would be $269 million. I don’t think that someone would purchase it for that amount and it’s obvious that the current ownership is just trying to squeeze as much money out of the properties as possible to make up for what they lost in the BK. I think that Icahn is trying to leverage the Plaza to get the Taj at his price.