Carl Icahn Reportedly Looking to Sell Trump Taj Mahal
Billionaire investor Carl Icahn is reportedly in talks with other casino operators about selling the Trump Taj Mahal, which closed on October 10th, this according to the New York Post. The newspaper has little else as far as details about the discussions other than a source saying, “He is in dialogue with operators.”
The Taj Mahal, of course, was previously owned by United States President-elect Donald Trump and Trump Entertainment Resorts, which is now a subsidiary of Icahn Enterprises. Trump Entertainment Resorts went into bankruptcy in September 2014 and when it came out of the proceedings in February 2016, Icahn, the company’s largest debt-holder, agreed to take over the Taj.
That initially looked like a promising development, as Icahn pledged to contribute $100 million to help keep the struggling casino property running, but unfortunately, that pledge came with strings attached. During bankruptcy proceedings, Ichan made the $100 million promise if he could gain certain concessions from the Unite Here Local 54 union and $175 million in tax breaks from Atlantic City and New Jersey. He got the union concessions, resulting in union members losing their healthcare and pension benefits, but he didn’t receive the tax breaks. That, combined with a push by some in the legislature to expand casino gambling outside of Atlantic City (a referendum failed in the recent November election), caused Icahn to not inject the much-needed funds.
This year, the union attempted to negotiate with Icahn and Tropicana Entertainment, the operator of the Taj Mahal, to restore the lost benefits, but Icahn would have none of it. In July, about 1,000 Unite Here Local 54 workers went on strike. In August, President and Chief Executive Officer of Tropicana Entertainment Tony Rodio announced that the Taj Mahal would close after Labor Day, blaming the union.
“Currently the Taj is losing multi-millions a month, and now with this strike we see no path to profitability,” Rodio said. “Unfortunately, we’ve reached the point where we have will to have to close the Taj after Labor Day weekend and intend to send WARN (Worker Adjustment and Retraining Notification) notices to before this weekend.”
Bob McDevitt, President of Unite Here Local 54, responded not-so-kindly, saying:
How petty. I would never have thought Carl Icahn was so one-dimensional. 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. It is truly a shame that such an unscrupulous person has control of billions of dollars.
And thus, the Trump Taj Mahal closed on October 10th.
It was thought in industry circles that Icahn might try to re-open the casino with non-union employees, thus getting around having to negotiate wages and benefits in good faith with the union. The state legislature, though, made a move after the Taj Mahal’s closure to try to keep that from happening.
A week and a half after the Taj shuttered its doors, the state Senate passed a bill to keep Icahn from re-opening it without working with the union by revoking his license for the casino. The text of the amendment reads as follows:
Notwithstanding the provisions of any law, rule, or regulation to the contrary, the substantial closure of a casino hotel facility by the licensee occurring on or after January 1, 2016 shall disqualify the licensee from continuing to hold that license and shall constitute sufficient cause for revocation of that license, except that such substantial closure shall not impact any other pre-existing casino license held by the licensee. The division shall determine what constitutes a substantial closure of a casino hotel facility pursuant to this section.
The disqualification would remain in effect for five years and, as the law is retroactive to January 1st, 2016, it would only affect Carl Icahn.
The sponsor of the bill, Senate president Steve Sweeney, told the AP, “Casino owners shouldn’t be manipulating the system and exploiting bankruptcy laws as a way to break unions and take away the rights and benefits of the workers. Atlantic City’s gaming industry is obviously experiencing the difficult challenges of competition from other states, but the answer is not to engage in practices that punish the workers.”
Last Monday, the New Jersey Assembly also passed the bill overwhelmingly by a 60-17 vote. Next up is the desk of Governor Chris Christie, but it is not known if he will sign it. Even if he vetoes it, the legislature may have enough votes to override the veto.
It does seem from the wording of the bill – and the New York Post said another source believes this, as well – that if Icahn sells the casino, the suspension of the license could be avoided altogether, even if the new owner brings in non-union workers. Since the new owner would not be the licensee to close the casino, its license would not be at risk.