Trump's A.C. era could be near end

Casinos struggling, bids under review.

Posted: June 25, 2007

ATLANTIC CITY - As his image flashed on video screens in his casino's nightclub recently, Donald J. Trump surveyed the mostly young crowd.

Many were too young to remember his history of financial difficulties here, or to care. They came to celebrate with The Donald on his 61st birthday at his flagship casino, the Trump Taj Mahal, and he relished the attention.

With his gambling halls still struggling and his casino company reviewing bids from possible buyers, this could be the end of the show for Trump in Atlantic City. People familiar with negotiations to sell his casino company - Trump Entertainment Resorts Inc. - say a sale could be announced this week.

The developer and reality-TV star said that, regardless of who buys his casinos, he hopes he won't be taking his final bow in Atlantic City. It would be difficult, he said, to walk away from the resort where he has been a fixture for 26 years.

"I've been here for so long," Trump said in an interview that night. "It's been really a wonderful journey.

"I'm one of the biggest developers in the world," he said. "But I have a great loyalty to Atlantic City."

But to play in the new Atlantic City, where at least four billion-dollar-plus gambling palaces are being built, and competitors are pouring hundreds of millions of dollars into upgrades to lure younger, more affluent overnight customers, The Donald knows his name and fame won't be enough.

He needs money - lots of it - to exist and compete here.

"The casinos have never been a big thing for me in terms of dollars," Trump said. "It's not a very large part of my company, but it's an important part."

Trump said his share of the three Atlantic City casinos makes up less than 3 percent of his net worth, which Forbes magazine lists at $2.9 billion.

Trump is banking that his famous name and brand will stay on at least one of the casinos, and that the new owner will have a role for him, even if it's just to make an occasional appearance.

"Any potential buyer wants me involved," he said. "The name is the hottest name right now anywhere in the world."

But Trump's role in Atlantic City has been slowly diminishing over the years. A bankruptcy restructuring in the spring of 2005 reduced his stake in the casino company from 52 percent to 31 percent and stripped him of his CEO title. While he remains chairman of the board, he has not been involved in the day-to-day operations of the casinos.

People familiar with the current negotiations say Trump is asking in excess of $2.2 billion for the Taj Mahal, Trump Plaza and Trump Marina casinos, which includes $1.5 billion in debt.

Trump acknowledged earlier this month that a private-equity group led by former Taj Mahal executive Dennis Gomes and New York real estate magnate Morris Bailey has emerged as the leading bidder. Last year, Gomes and Bailey were partners in a failed bid to land a slots license in the Poconos.

"They like the company very much, and we'll see what happens," Trump said of the Gomes-Bailey partnership.

This could be a pivotal year for Trump.

In addition to his casinos' being on the block, NBC is weighing whether to renew his reality TV show, The Apprentice, for another season. An NBC spokeswoman said last week that no decision had been made.

The cooling real estate market could also spell trouble for his multitude of building projects all over the country, which include Trump Tower, a luxury condominium high-rise proposed for the Philadelphia waterfront. That project has been on hold because the state had stopped granting rights to build along the waterfront. The state lifted the suspension two weeks ago.

Industry experts say Trump's failure last year to land a license to operate a casino in Philadelphia was a blow because it showed his casino company's inability to grow beyond Atlantic City. SugarHouse Gaming of Chicago and Foxwoods Development Corp. L.L.C. of Connecticut won the two city licenses.

Trump's stock has plunged more than 40 percent since he lost out on a Philly license. He said he remains disappointed by the Dec. 20 licensing outcome, and he put the blame squarely on Gov. Rendell, whom he labeled "a third-rate governor."

"I think Gov. Rendell made a terrible mistake," Trump said. "The others aren't going to do anything for a neighborhood, and ours would have saved a neighborhood.

"I think it was a highly political decision . . . and the governor decided to go with his friends," Trump said.

The Pennsylvania Gaming Control Board granted the licenses. Rendell said he didn't make the decision.

"I don't think Donald ever understood the way the statute was structured," Rendell said at a Center City condo ribbon-cutting ceremony last week. "It was illegal for any of the appointed officials, myself included, to communicate with our representatives on the commission.

"I never communicated, so I didn't make the choice. They did," he said.

With Trump's stock nose-diving, and his revenues in Atlantic City squeezed by new slots competition in Pennsylvania and New York and by new smoking restrictions on the gaming floors here, Trump enlisted Wall Street investment firm Merrill Lynch & Co. Inc. in March to explore the company's options.

And that made shareholders anxious.

"He owns premier property. It's worth some money," said Robert Strougo of New York City, who owns 25,000 Trump shares. "I think his justification for the low-ball offer is that any buyer is going to need serious money to fix them up."

Compared to the other casinos in town, Trump's are antiquated. The other gambling companies that own more than one property here, such as Harrah's Entertainment Inc. - which owns Bally's, Caesars, Showboat and Harrah's casinos - have had a sophisticated player-card system in place since 1997. Customers can use the cards at any Harrah's property to record their slots and table-games play and earn points for complimentaries.

Trump's three casinos just got the technology, and launched their player card, called Trump One, last Tuesday.

Trump got a $500 million line of credit from Morgan Stanley in 2005 to make immediate repairs to his three casinos, which hadn't been renovated in more than a decade. But it may have been too little too late.

One Trump customer, Joseph Malinsky, said having a well-funded owner take over the Trump casinos would be a benefit.

"Let someone with money come in, and make the places better, and put some real money into them," he said.

As Malinsky, 59, of Germantown, Md., peered across the Taj Mahal's cavernous gambling floor, he said: "If you compare this to Caesars Palace in Las Vegas, it's very old."

The three Trump casinos got a new lease on life Wednesday when the New Jersey Casino Control Commission renewed their licenses for five years.

Trump said he remained ambivalent about a sale.

"I would be happy if it stayed status quo, or I would be happy if somebody came in, as long as it's a great group that'll take very good care of the properties and my customers," he said.

But the master promoter clearly wants to hang on - and some of his most loyal customers would like that, too.

Catherine Loffredo, 66, an avid slots player from Ocean County, said it wouldn't be the same without The Donald occasionally popping in.

"It was nice for him to come here and give away prizes, like trips to his place down in Florida," she said after attending Trump's V.I.P. birthday party this month where Trump bestowed cash prizes on high rollers. "He can still work a crowd."

Listen to an interview with Donald Trump, who talks about selling his casino company, at http://go.philly.


Contact staff writer Suzette Parmley at 215-854-2594 or

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