New Jersey’s Atlantic Club Casino Nearing Sale
New Jersey’s Atlantic Club Casino Hotel, the first of a slew of Atlantic City casinos to close in 2014, may soon be sold, according to a report by The Press of Atlantic City. Situated on the southern end of the Atlantic City Boardwalk, Atlantic Club has been dormant and in a state of disrepair since January 2014.
The potential buyer has not been reported, as Dale Schooley, director of acquisitions for the Atlantic Club’s parent company, TJM Properties, would not reveal a name, saying he was still “waiting for the ‘hard money’ for the deal.” That hard money may surface by the time the week is over.
The Atlantic Club was built in 1980, originally as the Golden Nugget, owned by Steve Wynn. Though it was Atlantic City’s second smallest casino – and the sixth built after New Jersey legalized casino gambling in 1976 – it had become the top earning casino by 1983.
Wynn sold the Golden Nugget in 1987 to Bally Manufacturing, which changed the name to Bally’s Grand Hotel and Casino. The name was changed again in 1998, this time to the Atlantic City Hilton, after Hilton Hotels Corporation bought Bally Entertainment. In 2005, Colony Capital bought the casino – as well as Resorts Atlantic City – but kept the Hilton name in a deal with Hilton Corporation.
When the licensing deal ended in mid-2011, however, Colony Capital changed the name to ACH (which stood for Atlantic City Hilton) and then later rebranded it to the Atlantic Club in February 2012. With the rebranding also came a new image – the Atlantic Club was now a “locals casino.”
While the Atlantic Club was certainly a known quantity to people who lived nearby and visited Atlantic City frequently, it wasn’t a household name in the poker world like, say, the Borgata and the Trump Taj Mahal were. But in 2012, it came to the forefront, as PokerStars parent company at the time, Rational Group, had agreed to a deal with Colony Capital to acquire the property. This was before online gambling became legalized and regulated in New Jersey and PokerStars was interested in establishing itself via brick-and-mortar gambling in the state so that it could get in on the ground floor when the online gambling industry started up.
The deal was for $15 million and Rational Group had actually made $11 million in payments with a $4 million upgrade to the poker room announced. Colony Capital backed out of the deal, taking the $11 million in the process via a legal loophole.
Colony Capital announced in December 2013 that the Atlantic Club would close and promptly sold it to Caesars Operating Co. and Tropicana Atlantic City Corp. for a combined $23.4 million. Tropicana paid $8.4 million of that and acquired the gaming tables and slot machines. Caesars received the actual Atlantic Club property. In May 2014, Caesars turned around and sold the property to TJM for $13.5 million.
If you are thinking to yourself, “$23.4 million sounds like a pittance for a casino,” you would be correct. As my colleague Haley Hintze reported at the time, the Atlantic Club had been struggling, posted losses for a number of years. It went into bankruptcy in November 2013, the month before it was sold to Caesars and Tropicana. As part of the bankruptcy proceeding, the casino and Colony Capital got out of paying out its employee pension fund which, not so coincidentally, was reportedly short $32 million.
As one might expect, the casino put forth empty praise for the 2,000 employees who were about to be out of work and without their pensions. Atlantic Club CEO Michael Frawley said in a company statement:
First and foremost I would like to express my profound admiration and respect for the employees of this company. The events of the last few months have evoked an array of emotions, and through it all, the employees of the Atlantic Club have remained consummate professionals. It is because of these outstanding individuals that we were able to build considerable momentum over the last year. Unfortunately our pace was unsustainable in the extremely challenging Atlantic City gaming market.
It is not known what will become of the Atlantic Club when and if the purchase agreement is completed. Since TJM bought it, it has almost been re-sold on a few occasions, but every deal fell through for one reason or another.
Said Atlantic City Mayor Don Guardian to The Press of Atlantic City, “Some people say if they buy the Atlantic Club, they might bulldoze it because they don’t feel/think it’s worth it. Everyone wants to save the garage; some people want to save the tower that was built. While others said it just needs some TLC.”
Cover photo credit: PJ Ferrara
Creative Commons Attribute-ShareAlike 3.0 License