Thousands of People Lost Their Jobs in Atlantic City and Donald Trump Is Gloating
What is happening in Atlantic City, casino closures, is very sad – but does anybody give me credit for getting out before its demise? Timing
— Donald J. Trump (@realDonaldTrump) August 31, 2014
On August 31st, Showboat Atlantic City closed its doors for the final time. On September 2nd, Revel did the same. More than 5,000 people lost their jobs — dealers, security guards, waitresses, maids, bartenders. When Trump Plaza closes later this month, the total will rise to about 6,000 unemployed casino workers.
Donald Trump, of course, thinks people should also mention Donald Trump — and his wise move of “getting out” of Atlantic City “before its demise.” Perhaps we should examine Trump’s history in Atlantic City.
Trump began buying properties on the Atlantic City boardwalk in the early 1980s, but didn’t build a casino until he won regulatory approval from casino regulators. He partnered with Holiday Inn, which then owned Harrah’s, to build the Trump Plaza. Trump banged out a remarkable deal that gave Trump an equal share of the profits and didn’t hold him responsible for losses in the casino’s first five years. (Now here’s where Trump deserves some credit.) What would eventually become known as the Trump Plaza Casino and Hotel opened in May 1984.
When Hilton was denied a casino license in 1985, Trump purchased the company’s hotel in the Atlantic City marina district and named it Trump’s Castle. He was sued by executives of Harrah’s for opening a second Trump casino right next to its own marina one; eventually, Trump bought out Harrah’s interest in Trump Plaza.
Trump then opened the Trump Taj Mahal in 1991, his third Atlantic City casino. But then the bankruptcies started. Heavily in debt, the Trump Taj Mahal filed for bankruptcy protection in 1991. A financial restructuring gave bond holders 49 percent of the casino. Trump Plaza and Trump’s Castle (later the Trump Marina) filed for bankruptcy protection in 1992.
In 2004, Trump Hotels & Casino Resorts Inc. restructured $1.8 billion in debt in a Chapter 11 bankruptcy. When a new holding company, Trump Entertainment Resorts Inc., emerged from bankruptcy, Donald Trump gave up his title of CEO and lost majority control of his eponymous company.
He remained chairman of the board of the company until early 2009, when he and daughter Ivanka resigned from the board after he said the board rejected his offer to buy the company and take it private. At the time, he controlled 28 percent of the company.
Was Trump done with Atlantic City? No! He attempted to regain control of his casinos in the summer of 2009, when he and Texas-based Beal Bank partnered on an attempt to buy them. “Two past Trump bankruptcy reorganizations have failed largely because they did not eliminate enough debt to make the company competitive in the cutthroat Atlantic City market,” USA Today reported. That partnership with Beal fell through.
Eventually, investor Carl Icahn bought the mortgage and teamed with Beal Bank himself to try to take control of the casinos, but Trump and the bondholders beat out Icahn to win control of the casinos. Trump Marina, now known as Golden Nugget, was sold to Landry’s (a hospitality company that also owns restaurants like Chart House) in 2011.
Trump now has a 5 percent stake of the two remaining Atlantic City casinos. His name is still on them, though he has sued to rectify that. The bankruptcies aren’t all Trump’s fault, of course: Those creditors decided to lend him money. “They’ve all played this game before, in the insolvency space,” AC lawyer Michael Viscount told Forbes. “The company that possessed his name filed bankruptcy because it was over-leveraged. What does that tell you? People want to lend him money. He does grandiose things with it.”
Trump can be praised for this: When he was in control of his eponymous Atlantic City casinos, none of them closed. But he didn’t really get out on his own. Trump once controlled nearly a third of the Atlantic City market. He didn’t sell those casinos to anyone; he had his stake reduced each time after the bankruptcy filings. Plus, it’s hard to give him credit for getting out when he recently tried so hard to get back in.
Follow @dhm on Twitter.