Hump Day Report: Carl Icahn Returns
Rants and raves about burning topics that have caught my attention midweek, be it greedy corporate shenanigans, frustration or joy in regards to the Philly sports teams, a movie, show or DVD that has fired up my imagination, an intriguing personality, or my on-going battle to lose weight in our fast food world. — Lori Hoffman, Associate Editor, Atlantic City Weekly
It became official on Monday, March 8. New ownership led by Carl Icahn took over the Tropicana Casino & Resort, signaling a new era. Multi-billionaire Icahn has been a wheeler-dealer in the Atlantic City market before. Back when the Sands Casino Hotel filed for bankruptcy in 1998, he swooped in two years later and bought controlling interest in the property, winning in bankruptcy court over Park Place Entertainment. At the time Icahn also wanted to purchase the Claridge, but eventually Park Place Entertainment won that battle. Park Place Entertainment, now known as Caesars Entertainment Inc., owns Bally’s/Claridge, Harrah’s Resort, Caesars and Showboat/House of Blues.
Carl Icahn
Icahn, who has been described as both a corporate raider and a corporate savior, sunk significant money (reported at $65 million at the time) to try and improve the bottom line for the Sands. Still, the smallest casino in town, once home to Frank Sinatra and Cher as regular entertainers, continued to lose money. Eventually Icahn sold the Sands to Pinnacle Entertainment in 2006.
The Tropicana has a lot going for it as a destination casino with the dining, shopping and nightclub complex, The Quarter, and 2,129 hotel rooms. Despite that, the previous owners mismanaged the property into the loss of its casino license and bankruptcy. In essence, Icahn and his partners have brought a property sold for 2.75 billion in 2005 for the fire sale rate of $200 million of the property’s mortgage for equity.
The Tropicana has managed to survive quite a bit of chaos the last decade and Icahn should certainly bring financial stability.
In a press release, Mark Giannantonio, president and C.E.O. of Tropicana Casino & Resort said, “It’s a whole new year, new energy, new era at the Tropicana. Now, with a great partner like Carl Icahn at our side and our staff of dedicated and hardworking employees, we can really move the Tropicana forward as the pre-eminent entertainment resort in Atlantic City. We’re thrilled about the possibilities.”
To see the Trop’s new direction, check out this Web site.
Of course Icahn has another pending interest in Atlantic City. He is still locked in a clash-of-the-titans battle with Donald Trump over control of the Trump properties. Icahn’s final witness, Vince Intrieri, a senior executive at Icahn Partners L.P., testified in the Trump properties bankruptcy hearing on Tuesday, March 9, claiming that if the properties stick to the Trump plan, “This company will be in bankruptcy again within two years.”
The very fact that Trump and Icahn are still interested in Atlantic City suggests that all these recent stories about how Atlantic City gaming cannot survive due to increased competition in Pennsylvania are selling the market short. Yes, it has been tough (and it has been tough in Las Vegas as well because of the economy), but when two giants like Trump and Icahn are willing to weather the financial storm, they must see blue skies in the future.
Tags: Carl Icahn, Donald Trump
March 10th, 2010 at 2:43 pm
Hopefully, Mr Icahn will exercise better judgement about the people he trusts to run the Tropicana than those he put in charge of the Sands. It’s one thing to invest a lot of money in a property, and another to invest it wisely.
Bigger isn’t necessarily better; a lot of us liked the greater sense of intimacy in the Sands and the Claridge than the admittedly spectacular extravaganzas that are the larger places. Of course, patrons don’t know the economics of running casinos, but using small size as an excuse for not doing well seems like a weak excuse for poor management.