The fourth time’s the charm — at least if you’re Justice Gary Stein, the tortoise-powered conservator of the Atlantic City Tropicana. Having prolonged the timeline for selling the mammoth hotel-casino three times already, he’s asking the state for a fourth extension. He double-pinky swears that, if the New Jersey Casino Control Commission gives him until Nov. 12, he’ll have deal with Cordish Co. signed, sealed and delivered. Honest Injun.
It’s difficult to see that the NJCCC has any choice in this matter. Stein’s playing chicken with them, considering that they have to vote on his request on Oct. 15, one day before his current deadline to get the deal done. The commissioners picked this nincompoop to handle the Trop sale, so responsibility for this latest delay redounds right back to the NJCCC. Besides, if you had Stein’s cushy $650/hour gig, would you be in any hurry to wean yourself off the Garden State’s teat?
Stein’s slumbrous pace is only further aggravating Tropicana Entertainment CEO Scott Butera. He says the NJCCC should give his company a chance, since it’s “essentially” a different entity now. That “essentially” is certain to be a sticking point, as it’s a tacit admission that owner William J. Yung III is still lurking in the shadows. Unless TropEnt creditors wrest every last share of equity from Yung’s purse, it’s impossible to envision a scenario in which TropEnt gets its wish.
When I joked earlier that Butera had gone “off his meds,” I didn’t know the half of it. Now he’s making off-the-wall remarks about “making an offer for an existing [Atlantic City] casino, or trying to build a new one.”
Butera’s remark would not be ridiculous on its face were TropEnt not in Chapter 11 and limping along with an emaciated cash flow, thanks to the loss of its most lucrative property (the A.C. Trop). Oh, and its flagship riverboat, Casino Aztar, is now being run by the State of Indiana. So Butera would have to sing a very sweet siren song to investors to get them to part with the kind of dough his plan requires. And even then, it’s still a Yung-owned entity, so he’s back to Square One with the Jersey regulators.
Let’s put the build-a-new-casino idea aside for a moment, because it looks prohibitively expensive for a company as waterlogged as Butera’s. Let’s say he can scrape together the hundreds of millions it would require to buy somebody else’s casino. (It’s a stretch, but work with me.)
Perhaps he could go for one of the market’s laggards, like Resorts Atlantic City or the Hilton. Both perform better than Trump Marina (market value: $316 million), so perhaps a deal could be swung for a half-billion or less.
Or maybe Harrah’s Entertainment, which is getting hurt in Atlantic City by Harrah’s Chester, in Pennsylvania, would like to lower its oceanside exposure. The Showboat would be the obvious candidate to pursue; it brings in the lowest daily average win of the four Harrah’s properties and it uses a brand that Harrah’s has effectively discontinued. But you’re talking about a casino-hotel that (with a smaller facility) pulls in Trop-sized revenues. So if Butera really thinks the Trop is worth $950 million or more, what would the Showboat fetch?
If Butera is serious about being a buyer in Atlantic City and not just trying to make a nuisance of himself in order to wear down the NJCCC, he’s getting into a bit of a bind. The higher the price he says the Trop ought to merit, the more it’s going to cost him to get back onto the Boardwalk or into the Marina by buying from someone else. Is his strategy crazy or crazily brilliant? It’s sure got me foxed.
