Carl Icahn, Stephen Sweeney Go At It Over Atlantic City’s Gambling Future
Posted on: October 13, 2014, 06:36h.
Last updated on: October 13, 2014, 06:42h.
Business mogul Carl Icahn and New Jersey State Senate President Stephen Sweeney exchanged harsh words last Friday, with each accusing the other of selling out some portion of Atlantic City for their own gain. The war of words started after Sweeney participated in protests with union workers from the Trump Taj Mahal, protests of which Icahn proved to be a major target.
As we reported earlier this week, those protests were designed to fight back against a Trump Entertainment plan to break out of a contract and cut pensions and benefits for workers in order to cut costs and keep the casino open.
The company says that the casino will have to close on November 13 unless numerous concessions are granted to it, including the cutbacks in employee benefits and $25 million in aid from the state, along with a reduced tax assessment.
Workers Blame Icahn
But Icahn proved to be a major figure in the protests. The protesters demonstrated near the Tropicana, which is owned by a group led by Icahn, and many see him as the true threat to the benefits and wages offered by their current positions. In bankruptcy court, Trump Entertainment has requested permission to turn over its venue to Icahn by converting the debt he holds in the company into ownership of the casino. Icahn says he would then be willing to invest another $100 million into the Taj Mahal, but only if his concessions are granted.
Sweeney reacted to this by saying that there was no way the state would contribute to the proposed transfer to Icahn, and sharply criticized the investor’s plan for the casino.
“If he doesn’t get everything he wants, he’s closing anyway,” Sweeney said. “But if he can get all this money from the taxpayers and the workers, then he’ll make an investment in the property.”
Sweeney was just one of several politicians from both major parties who criticized Icahn’s proposal at a Boardwalk press conference.
“You get nothing from us until you treat workers with respect and dignity,” Sweeney said.
Icahn Fires Back
But Icahn was ready to fire back at Sweeney and other state officials who have criticized him while also proposing that casinos be built in north Jersey.
“Sweeney is selling out Atlantic City to northern New Jersey on the one hand, and now he’s telling all these employees in Atlantic City that Carl Icahn is to blame, when I’m the only one that took a risk with $80 million when no one else would,” Icahn said. “On the one hand, we are to believe Senator Sweeney is Atlantic City’s staunchest defender, yet on the other hand, the same Senator Sweeney is off in north Jersey making plans to allow gaming outside of New York City, a concession that may mean the end of gaming in Atlantic City.”
Sweeney appears in US District Court on this week in an attempt to get a judge to force the concessions he has asked for, as the state and Atlantic City have so far rejected his terms.
Trump Entertainment is also hoping that a Delaware bankruptcy court will allow it to terminate the current union contract. The company is accusing the workers’ union of sacrificing 3,000 jobs at the Taj Mahal in an attempt to protect workers at other casinos, as under the union contract, any concessions won at one casino would be allowed at all other Atlantic City casinos as well.
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Last Comments ( 3 )
Carl will save the Taj. Let him pull off the deal or kiss the town goodbye
Railing against Carl Icahn may make NJ politicians feel good and show solidarity with Union voters; but grandstanding is not going to help keep Atlantic City casinos and resorts open. It is obvious, with new gaming competition in our previous markets, New York, Pennsylvania and now Maryland, that we have to cut back on gaming capacity. And with all AC casino resorts operating at a loss, why shouldn't owners expect employees and management to share in their financial hardship? Unfortunately press releases covering quarterly financial's, report operating earnings. That doesn't tell the full story, because they do not include the expenses of interest, real estate taxes, CRDA fees, building insurance, depreciation and other fixes costs. And all of these are cash expenses, except depreciation; and if that reserve is not spent, you wind up with tired carpets, outdated slot machines and deteriorating facilities (see Trump Plaza). Since 2006, when PA opened its first slot parlor, AC casino win has declined from $5.2 billion to last year's $2.5 billion (after removing free play, that wasn't offered in 2006). And net, pre tax profits, have declined from over $500 million to now a loss of $400 million plus, nearly a $billion decline. As for the Taj Mahal, Casino win has declined from 2007's $504 million to 2013's $257 million, operating earnings from $119 million to $19 million, a decline of $100 million. But the number an investor, like Carl Icahn, looks at is pre tax profits, and here the Taj has gone from a small profit of $2 million to a net loss of $30 million, since 2007. So its not unreasonable that Mr. Icahn would look to employees and management to share in the problems the AC industry is now facing, which could get worse. A new casino, Horseshoe, just opened in Baltimore; and a new casinos MGM, under construction, next to our Capital in DC. Plus new casinos planned in Philadelphia, and NY State, will undoubtedly get a share of our Northeast market. Taj went through a 3rd. bankruptcy in 2009, which wrote down $854 million in assets, and eliminated $814 million of debt, reducing interest costs from a high of $60 million to $26 million last year. But before Mr. Icahn, risks additional money on a loosing property, he is expecting, and deserves, some give backs from Unite Here and help from State Government. We need to remember that Mr. Icahn saved the Trop property, investing more money and hiring additional employees, to turn that casino resort around. And it is the best interest of all parties to try and keep another AC casino from closing on the Boardwalk. AC employees have to decide if unemployment, and its limited time frame, is better than a paying job, where the benefits are like they were in AC before casinos.
Swiney