{"id":7315,"date":"2011-08-12T13:24:13","date_gmt":"2011-08-12T21:24:13","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=7315"},"modified":"2011-08-12T13:24:13","modified_gmt":"2011-08-12T21:24:13","slug":"pain-in-the-ach","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/pain-in-the-ach\/","title":{"rendered":"Pain in the ACH"},"content":{"rendered":"

\"\"In the shrinking Atlantic City<\/strong> market, where most of the casinos are operating in the red, it was inevitable that one or two of the so-called “parasitic” ones would bite the dust. While the ex-Atlantic City Hilton<\/strong> (preposterously rebranded as “ACH<\/strong>“) hasn’t had the Last Rites read yet, industry analysts are already penning its obituary<\/a>. Even if it were given<\/em> away, it’d be an expensive proposition: It’s on pace to lose $28 million this year and rebranding the property will cost millions more. That’s just the beginning of the hidden costs involved.<\/p>\n

The downfall<\/strong> of Atlantic City’s gaming-centric economy may be the prime suspect in “Who shot ACH?” But a lengthening trail of bloodstains leads eventually to the executive offices of owner Colony Capital<\/strong> and its imbecilic CEO, Tom Barrack<\/strong>. This Stephenie Meyer<\/strong>-fixated boob paid a cool half-billion-plus for the property in a 2005 spending spree. Considering that Harrah’s Entertainment<\/strong> was being forced to divest itself of the property in order to engorge Caesars Atlantic City<\/strong> and Bally’s Wild Wild West<\/strong>, one questions Barrack paying a top-tier price in a buyer’s market. He had Gary Loveman<\/strong> right where he wanted him — and wrote Loveman a big-ass check.<\/p>\n

\"\"Revenues spiked<\/strong> the following year, then fell 50% over the next four. As they slipped, casino CEO Nicholas Ribis<\/strong> scapegoated property president Anthony Rodio<\/strong> (left<\/em>, who made a comeback at Penn National Gaming<\/strong>). The much-despised Ribis replaced Rodio<\/a> with an executive schlepped in from Tunica<\/strong> — and the revenue decline accelerated. Unfortunately, no one at Colony thought to fire Ribis. Whatever good he may have done — including a recent $20 million reinvestment in the facility — he did not improve the Hilton’s fortunes.<\/p>\n

\"\"Nor was that all<\/strong>. Barrack (right<\/em>) further ran up the tab on his acquisition by foolishly pledging it as collateral against still more debt. Unpaid bills mounted and then, finally, when rescue was in sight in the person of Tilman Fertitta<\/strong>, Colony got greedy. While Resorts Atlantic City<\/strong> and Trump Marina<\/strong> were on the market in the $30 million-$4o million range, the A.C. Hilton’s asking price shot up to between $50 million and $75 million<\/a>. (This was amid the brief euphoria about potential Internet gambling in New Jersey<\/strong>.) Fertitta eventually walked away and struck a deal with Trump Entertainment Resorts<\/strong>, relieving it of the Marina for $38 million.<\/p>\n

\"\"As ever, Dr. David G. Schwartz<\/strong> has made a persuasive case for why the money spent on something like the Seminole Tribe<\/strong>‘s Hard Rock<\/strong> project (just to the south of “ACH”) would be better invested in a distressed but extant property<\/a>. Trouble is, Barrack has booby-trapped the A.C. Hilton with so many costs above and beyond its face price that it’s a far riskier investment than was Dennis Gomes<\/strong>‘ purchase of Resorts (left<\/em>). The Seminoles might not necessarily be fools to buy it at a fire-sale price, but pre-existing liabilities would eat through a lot of the $250 million the tribe has otherwise earmarked for Hard Rock construction — and you’d still have an old casino with a dowdy image at the wrong end of the Boardwalk<\/strong>. At least a Hard Rock would have a reputable brand and novelty … and fewer hotel rooms to amortize.<\/p>\n

Colony took a $514 million investment<\/strong> and has run its value down to almost nothing. It’s unfortunate that the practice of tarring and feathering has gone out of fashion. The Hilton would have been sent to ICU eventually, perhaps very<\/em> eventually, but Colony has done almost everything possible to hasten its demise. It didn’t have to be this way.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the shrinking Atlantic City market, where most of the casinos are operating in the red, it was inevitable that one or two of the so-called “parasitic” ones would bite the dust. While the ex-Atlantic City Hilton (preposterously rebranded as … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[23,3,142,42,7,140,53,35,69,25,129,20],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/7315"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=7315"}],"version-history":[{"count":1,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/7315\/revisions"}],"predecessor-version":[{"id":7317,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/7315\/revisions\/7317"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=7315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=7315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=7315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}