Experts not enthusiastic about future of Revel

This May 30, 2014 photo shows the exterior of Revel Casino Hotel in Atlantic City N.J. The $2.4 billion casino filed for bankruptcy on June 19, 2014, the second time in as many years it sought bankruptcy court protection, and warned that it will shut down this summer if a buyer cannot be found. (AP Photo/Wayne Parry)
This May 30, 2014 photo shows the exterior of Revel Casino Hotel in Atlantic City N.J. The $2.4 billion casino filed for bankruptcy on June 19, 2014, the second time in as many years it sought bankruptcy court protection, and warned that it will shut down this summer if a buyer cannot be found. (AP Photo/Wayne Parry)
Posted: June 23, 2014

Even if Revel Casino Hotel, which started its second trip through Chapter 11 on Thursday, is virtually given away in a bankruptcy auction, a new owner might have to spend $150 million to fix fatal flaws in its design, experts said.

"I don't even know if $150 million gets you to where you need to be," Alan R. Woinski, chief executive of Gaming USA Corp., a consultant in Paramus, N.J., said Friday.

Woinski said he imagines another scenario for the $2.4 billion Revel that would have left Atlantic City better off, ultimately.

"The best thing that could have happened to that property is Hurricane Sandy, instead of nailing Seaside Heights, would have nailed that property. That thing should have wound up in the ocean instead of the roller coaster," Woinski said.

"It's sad, but unfortunately that was the only way, to completely knock the thing down and redo it," Woinski said.

It sounds harsh. But when Revel opened in 2012, it added slot machines and gambling tables to the Atlantic City market without expanding the market itself, industry executives said.

Instead, Revel siphoned gamblers from other local casinos, jeopardizing jobs throughout the city's casino industry.

Now, Revel's hedge-fund owners, who took control of the casino in the first bankruptcy, will attempt to sell the soaring 130,000-square-foot casino with court supervision. If that fails, a shutdown is possible, Revel officials said.

"It's not a good day for sure when you're talking about closing a property and throwing several thousand people out of work and, frankly, nothing on the horizon to take its place," said State Sen. Jim Whelan (D., Atlantic).

As of June 1, Revel employed 3,187, including 1,718 full time. Revel's biweekly gross payroll is $3.3 million, plus $585,000 in tips biweekly, Revel said in a bankruptcy court filing Thursday.

"The hope is that through the bankruptcy process a buyer will emerge. I know they've had serious talks with a number of people, but obviously they don't have anything done yet. It's troubling," Whelan said.

"One of the major concerns there," he said, "is that a lot of casino people have looked at [Revel], and they've said there are design flaws there. That's more than a rebranding."

Revel's design faults, according to Woinski and other critics, include a long distance between the casino floor and the hotel's front desk, a casino floor that fails to engage gamblers, and vast empty spaces that make Revel expensive to heat and cool.

"Unless you park on the right floor of the garage, so you can walk right into the casino, people don't even know how to get into the casino," said Saverio R. Scheri III, president and chief executive of WhiteSand Gaming L.L.C., a consulting firm with offices in Atlantic City, Las Vegas, and overseas.

A major gutting of Revel would not be worth it, Scheri said. "You'll never make that money back," Scheri said. "If somebody picks that property up at $100 million, which is like a nickel on the dollar, that's not a bad deal. You could make money, if you're smart."

Another industry expert said that Revel could fetch as little as $50 million to $60 million in an auction.

That is far from the $300 million to $400 million Revel's owners were hoping to get, analysts at Union Gaming Research, of Las Vegas and Macau, said in a report Thursday.

Big investments in Atlantic City casinos no longer ensure easy profits.

Landry's Inc., an international restaurant and casino operator, bought the former Trump Marina Hotel and Casino for $38 million in 2011 and spent $100 million renovating it, and still lost money in 2012 and 2013 despite revenue gains, filings with the New Jersey Division of Gaming Enforcement showed.

Sen. Raymond Lesniak (D., Union) said he doesn't think a big investment is coming Revel's way.

"Nobody's going to invest the type of money that's needed to rebuild Revel," said Lesniak, who has long advocated for casinos in North Jersey.

In 2011, Gov. Christie gave Atlantic City five years to get its act together, to show that it could have a viable casino industry despite the competition from surrounding states. Only then would he seriously consider allowing a casino to open elsewhere in the state.

A Christie spokesman, Kevin Roberts, did not respond Friday to a request for comment about whether Revel's second bankruptcy would cause any changes to that five-year plan.


hbrubaker@phillynews.com

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