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More bad news likely in store for AC casinos
2008-11-08
ATLANTIC CITY, N.J. - Lately, the luck has been all bad for Atlantic City's 11 casinos. Last week alone, a major casino developer put a $2 billion Boardwalk project on indefinite hold, and the city's newest and most successful casino laid off 400 workers. And Donald Trump had to knock $46 million off the price of one of his casinos in order to salvage a deal to sell it to someone else. Trump's casino company is cutting the pay of its top executives by 5 percent. More bad news is expected Monday with the release of October's casino revenue numbers. To say they are expected to be bad is putting it mildly. Consider: September saw the greatest monthly decline in revenues in the 30-year history of legalized gambling, down more than 15 percent. And that was before the financial meltdown hit with full force, and before a smoking ban on the casino floor took effect; it's not due to expire until Nov. 16. That ban chased away some of the city's most prolific gamblers, who went to slots parlors in Pennsylvania and New York, and Indian-run casinos in Connecticut, where they can still smoke. All told, it was a most unwelcome October surprise. On Thursday, Pinnacle Entertainment said it could be "years and years and years" before it builds its beach house-themed casino on land where the Sands Casino Hotel once stood. Since the company blew it up last fall to make way for its new project, the land has sat vacant, to the dismay of city officials and many residents, including Sands workers who lost their jobs to make way for a new resort that now looks iffy. In fact, Pinnacle says it would consider selling the land and backing out altogether "if someone made us a decent offer." Pinnacle chairman and CEO Dan Lee was gloomy about the atmosphere in Atlantic City right now. "With Atlantic City, we recognize that this isn't an environment to go dream big," he said. "We are going to sit in Atlantic City. We may be sitting there for a very long period of time." Joining him on the bench is MGM Mirage, which announced a massive $5 billion casino hotel project in October 2007, only to put it, too, on indefinite hold because of the economy. That's $7 billion worth of new development that might never happen. Job prospects aren't bright, either. The Borgata's job cuts were surprising in that the casino is the newest and most successful in Atlantic City. Borgata joined the four Atlantic City casinos operated by Harrah's Entertainment Inc. -- Harrah's Resort Atlantic City, Caesars Atlantic City, Bally's Atlantic City, and the Showboat Casino Hotel -- which laid off "several hundred" employees in recent months, spokeswoman Alyce Parker said. Resorts Atlantic City, said that casino has also had layoffs this year, but a spokesman would not say how many. According to the state Casino Control Commission, there were 40,124 workers in the Atlantic City casinos as of Nov. 1. -- a reduction of 664 since the beginning of the year, though not all were due to layoffs. Also in October, Trump Entertainment Resorts and New York developer Richard Fields agreed to reduce the purchase price for the Trump Marina Hotel Casino to $270 million, down from the $316 million they set as the price back in May. The declining economy was a main reason. On Friday, the company said it was cutting the salary of its 22 highest-paid executives by 5 percent to save about $500,000 a year. Donald Trump does not draw a salary from the company, where he serves as chairman. Trump Entertainment said cost-cutting is essential due to heavy losses in the third quarter. On Friday, the company reported a net loss of $139.1 million, or $4.39 per share, compared with a profit of $6.6 million, or 21 cents per share, in the third quarter last year. Net revenue fell to $198.3 million from $216.6 million. For the first nine months of the year, Atlantic City casinos won $3.6 billion, down 6.3 percent from the same period in 2007.
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