Some try to blame Carl Icahn for the failure of the Taj Mahal in Atlantic City. He’s the individual that brought the Taj out of bankruptcy, as he previously did with the Tropicana. Some say that Donald Trump stripped the company of its assets. His big payday came from negotiated bankruptcies, where he managed to keep a meaningful amount of equity in the resort casinos; that had their debt substantially reduced, cutting annual interest costs.
The real culprit in the Taj closing is Unite Here, under the “Leadership?” of Bob McDevitt.
The Trump Entertainment bankruptcy, involved neither Donald Trump or Carl Icahn; although Icahn had substantial outstanding loans to the Company.
I was a Resorts International executive, when we started construction of the Taj Mahal in Atlantic City.
We invested some $600 million into the resort; before Trump (then Resort’s Chairman) and Merv Griffin split the assets; with Donald getting the unfinished Taj, and Merv the Resorts International Casino Hotel and Paradise Island, in the Bahamas.
Both companies were over leveraged, with little or no equity and mountains of high interest (14%) debt. And both companies were in bankruptcy; Merv within a year.
Unfortunately, the Nevada casino industry was thought to be mob controlled; and at one time this was true. But a law change in NV, allowed companies, like Hilton International, Bally Manufacturing and the Hughes Corporation to purchase properties built by Kirk Kerkerian’s Tracenda Corp. and other individually owned casinos, some with cosa nostra connections.
As a result, US Bankers were nervous financing Atlantic City’s early casino resorts; so Mike Milkin, and his new financial instrument, Junk Bonds, were used to build early AC resorts. And the more risky, High Yield Bonds, did not require the same level of equity, that commercial banks required for most projects.
Atlantic City, to succeed in the future, has to change its business model in the Fall, Winter and Spring; and attract the mid-week convention/trade show business; which has saved the Strip in Las Vegas. Rather that a week end casino resort; we must become a convention resort, with casino gaming.
Steve Norton.
About Steve Norton….
- Norton Management LLC Chairman/CEO · Consulting with casino gaming industry since 1998.
- Argosy Gaming Co. President/COO · 1993 to 1998 · Operated riverboat casinos in 5 states.
- Gold River Resort and Casino. President / CEO · 1991 to 93 · Laughlin, Nevada
- Las Vegas Sands. President/COO · 1990 to 91. Operations of Sands Hotel/ Casino, Sands Expo Center.
- Resorts International, Executive Vice President · 1967 to 90 · North Miami, Florida. The company owned Paradise Island, Bahamas; and the Resorts International Casino Hotel in Atlantic City. Started initially as VP/Treasurer/Comptroller of Paradise Island Ltd
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