Carl Icahn, Atlantic City Mayor in Minor Spat
The relationship between billionaire investor Carl Icahn and Atlantic City continues to be testy as Icahn and Atlantic City Mayor Don Guardian exchanged words through the media last week.
Trump Taj Mahal
The back-and-forth revolves around Icahn’s ownership of the Trump Taj Mahal casino, which closed on October 10th, 2016. Icahn was the largest debt holder of Trump Entertainment Resorts when the company entered bankruptcy proceedings in September 2014. During said proceedings, Icahn agreed to take over ownership of the Taj Mahal and further said he would inject $100 million to upgrade the facility if he was granted concessions from the Unite Here Local 54 union and was given tax breaks by Atlantic City and New Jersey.
Icahn’s company, Icahn Enterprises, did take control of the Taj Mahal when Trump Entertainment Resorts emerged from bankruptcy in February 2016. During the proceedings, the union members lost their pension and healthcare benefits, but Icahn did not get the tax breaks he wanted, so he did not contribute the $100 million.
In the meantime, members of the union were without the benefits they needed, so the union attempted to negotiate with Icahn and friends to work on a solution that would both help Icahn and get its workers their healthcare and pensions back. The union said it came up with a win-win deal, but Icahn didn’t go for it.
Because of this, about 1,000 Taj Mahal workers went on strike in early July. In August, Tony Rodio, President and Chief Executive Officer of the Icahn subsidiary that operates the Taj, Tropicana Entertainment, said that the casino would close.
“Currently the Taj is losing multi-millions a month, and now with this strike we see no path to profitability,” he said.
Blaming the Taj Mahal’s failures on the striking workers infuriated Bob McDevitt, President of Unite Here Local 54. He responded:
The great deal-maker would rather burn the Trump Taj Mahal down just so he can control the ashes. For a few million bucks he could have had labor peace and a content workforce, but instead he’d rather slam the door shut on these long-term workers just to punish them and attempt to break their strike. There was no element of trying to reach an agreement here on Icahn’s part; it was always “my way or the highway” from the beginning with Icahn. It is the epitome of the playground bully, who picks up his ball and announces he is going home because nobody else would do it his way.
And now we’re here, three months after the Trump Taj Mahal closed, putting thousands of people out of work. On Wednesday, Mayor Guardian gave his State of the City address and afterwards answered a reporter’s question about Icahn’s dissatisfaction with Atlantic City:
It’s the worst of the worst, things like that. Taj Mahal was the crown jewel before the Borgata in Atlantic City. It’s a great facility, but it didn’t get that $100 million face lift that the other properties got in Atlantic City and so you knew it when you walked in there. But it’s a great property; I really hope that Mr. Icahn, if he doesn’t want to build, sells it…and lets someone else come in and do it.
He doesn’t have any faith in the city, I get it, or the state…but don’t let us lose that building and leave it vacant on the Boardwalk. We need the thousands of jobs, we need the taxes, and we need the type of activity that it draws to bring people to Atlantic City.
Icahn had told the Associated Press the day before that the Taj Mahal was not for sale. After hearing Guardian’s comments, Icahn amended his statement, saying he would be willing to sell the Taj Mahal to Guardian himself for $300 million, allegedly the amount of money Icahn has lost on the casino.
Icahn’s claim that the Taj is not for sale contradicts a New York Post report from late December that said he was “in dialogue with operators” to sell the casino.
Clearly, a sale would make Icahn millions and would prevent further money bleeding as the casino sits dormant, racking up utility and tax bills. He also may need to sell not just because the casino allegedly wasn’t profitable, but also because he may not be permitted to re-open it on his terms, even if he wanted to.
In August, the New Jersey Senate passed a bill which would strip any casino owner (read:Icahn) of his license for five years following the “substantial closure” of a casino, retroactive to January 1st, 2016. The state Assembly passed the same bill in December, though it is not known if Governor Chris Christie will sign it.
The bill arose because talk was that Icahn was going to try to re-open the Taj Mahal using non-union labor, rather than negotiating with the union to restore their benefits. It is entirely possible, of course, that a new Taj owner could move to start the casino back up without union labor, as well.
COMMENTS