In what seems like a case of, “If I can’t have nice things then nobody is going to have nice things,” the Trump Taj Mahal is blocking the sale of the nearby Showboat Casino to anyone who would turn it into anything but a casino.
First it was Stockton College that purchased the property with the intention of turning it into a campus. Trump Taj Mahal then invoked their right from a 1988 ruling to quash the deal if the Showboat would be used for a purpose other than a casino.
With Trump Entertainment blocking the way, Stockton College sought to resell the property and found an interested buyer in Florida developer Glenn Straub (the same Glenn Straub that is involved with the convoluted Revel sale) but once again Trump Entertainment says it would invoke its right to blow up the deal if Showboat wasn’t going to be reborn as a casino.
Straub, in his usual over the top fashion, is calling the purchase of Showboat part of his “Phoenix Project,” a $500 million investment designed to make Atlantic City rise from the ashes. It also appears Stockton would continue to be involved with Straub’s AC redevelopment project, as part of the deal includes Stockton College leasing Showboat from Straub – provided they can settle their issues with Trump Taj Mahal in 90 days.
Why is Trump Taj Mahal blocking the sale?
From a business point of view, the stance of Trump Taj Mahal makes little sense. Why would the Trump Taj Mahal want to increase competition in an already saturated market by blocking the sale if the property were to be used for anything other than a casino?
One would imagine that the Trump Taj Mahal would be ecstatic about the permanent loss of a potential competitor.
One would also think Trump Taj Mahal would prefer anything next door to them over an empty and vacant building.
Yet here they are, blocking the sale.
Head scratcher number 2
On top of inviting increased competition, why would the Trump Taj Mahal be against Stockton College opening a campus at the former Showboat, considering it would bring thousands of twenty-somethings to AC?
And let’s not lose sight of the fact that Stockton College has a hospitality program that could provide The Taj and other AC casinos with plenty of qualified employees.
One possible explanation
The public explanation is Trump Taj Mahal is afraid that a nearby college would increase the chances of underage gamblers accessing the gaming floor. However, a lot of college age students are over 21, not to mention they would certainly welcome 18 to 20 year olds into shops and eateries.
The only other explanation for their opposition would be that Trump Taj Mahal has designs on the currently shuttered property themselves, and by enforcing the 1988 clause that forbids Showboat from being used as anything but a casino, they can essentially ruin the market value of the property.
If no one can buy it for anything other than a casino (which nobody wants to open in Atlantic City) this might allow Trump Taj Mahal to pick it up on the cheap.
The one problem with this theory is the company is currently mired in its own bankruptcy restructuring, and bankruptcy courts don’t look too fondly on major acquisitions and renovation projects during restructuring. The Taj isn’t in much of a position to be calling any shots.
But then again, you have the considerable wealth of Carl Icahn sitting on the sidelines (Icahn is Trump Entertainment’s largest bond holder and has promised to infuse cash into The Taj if certain concessions are met), or perhaps Trump Taj Mahal thinks they can buy the property and flip it by agreeing to not enforce the clause on the new potential buyer?
Stockton College still hoping to buy NJ casino
Despite Trump Taj Mahal’s assertions, it’s not a foregone conclusion that the courts will allow them to block the sale, as the city council is expected to approve a new redevelopment zone that would make it impossible to reopen Showboat as a New Jersey casino, and should allow Stockton College to go forward with its plans – with or without the assistance of Straub.
“I am assured by counsel and others that we are on very firm ground should there be any legal challenges by any casinos regarding the 1988 covenant,” Stockton president Herman Saatkamp said of the Trump/Showboat situation.