I’ll pay $1.
That’s right. One dollar.
If current ownership is smart, they’ll leap at this offer. It’s one hell of a deal since a buck is far more than the casino’s worth.
Let’s be clear. The only way for the Atlantic Club Casino to turn a profit is to fire sale every pot, pan, slot machine, and stick of furniture in the place. Sell off the casters on Craig’s List. Then, wrecking ball it to the ground and bulldoze the scrap metal into dump trucks headed straight for the salvage yard. Were it up to me, I’d Gordon Gekko that money pit quicker than you can utter the words, “greed is good.”
No, I’m not joking. If Atlantic City’s marketeers thought things were bad before, just wait a few years from now, when casinos in New York State start to open up and siphon off the final customers out of New Jersey’s drain. It took a long while, but earlier this week voters in New York finally joined the 21st century and accepted what just about everyone already knows — that people like to visit casinos. The Empire State was the final domino to tumble in the northeast, which will eventually be saturated with casinos.
So much has changed so quickly. New Jersey used to be the only state on the entire East Coast with casinos. Now, it’s surrounded by six nearby states all with legalized gambling — including Pennsylvania, Delaware, Maryland, West Virginia, Connecticut, and the richest prize of all — New York. Even residents of the most populous areas of New Jersey, in suburban New York City and Philadelphia, will soon be more likely to drive across the border to casinos elsewhere that are closer and newer.
Kicking Atlantic City while it’s down is easy. It’s almost a blood sport. Trouble is, casinos there make it so easy for us. It’s hard to have much sympathy for a so-called “resort destination” that basically screwed its clientele for three decades with lousy service, ludicrous prices, and none of the perks associated comparatively with Las Vegas-style gambling. Where are the giant fountains or the exploding volcano? Where’s the great all-you-can-eat $10 buffet? Oh, that’s right, Atlantic City doesn’t have any of that. They even charge you for parking.
So, what will happen next? What should Atlantic City do?
Easy answer.
Padlock the casinos that aren’t making it. Shut them down. Right now. Why even wait? Does anyone really believe things are going to get better in Atlantic City in six months? Or six years? Right now, they’re giving away hotel rooms for free two-thirds of the time, and still can’t attract customers.
It’s time to ask some tough questions: Why must there be 12 gaming licenses, and by consequence, 12 casinos all operating 24/7?
Think of it this way. What if instead, we were talking about racetracks (horse racing)? That’s another dying gambling sector with a bleak future. Would anyone be protective of keeping open a dozen racing venues? No. You’d trim away the weakest performers so surviving businesses can pull in more customers and therefore turn a profit.
But that’s unlikely to happen. Because no one wants to face the truth. As things stand now, it’s suicidal for this many casinos to operate where there should be perhaps half as many. No doubt, there are some casinos that should be closed as soon as possible — including the Atlantic Club, Resorts, Golden Nugget, Showboat, and Revel. All are struggling to keep their doors open. Even the Trump Taj Mahal probably needs to be erased from the landscape, assuming that was possible. If we could erase Donald Trump too as a bonus, that might actually produce a popular mandate.
But reasonable arguments won’t prevail here. They almost never do in the gambling industry. A dozen casinos will continue to fight for the scraps, with perhaps only 2 or 3 producing decent revenues. The rest of the starving pigeons will reorganize themselves, delay creditors, and pass through a revolving door on the way to and from the bankruptcy court. The lawyers will get rich, a few casino executives will exit with golden parachutes, and the workers will get porked in the ass. That’s usually the way it works.
The charade’s already begun. Yesterday, the Atlantic Club Casino declared bankruptcy.
Such news wouldn’t normally be cause for joy. But this casino is a special case, and plenty of grins and “I told you so’s” might indeed be warranted, based on the way Chief Operating Officer Michael Frawley unscrupulously handled the PokerStars’ takeover negotiations and buyout offers. Last spring, back when it appeared the casino/hotel was just about to be shuttered closed because it couldn’t meet its weekly payroll, PokerStars rode to the rescue with an immediate $11 million cash infusion — which was an up-front payment on the promise to take over ownership and operations, assuming they could get licensed in New Jersey.
That didn’t happen (at least by the deadline). So, Frawley and the rest of the suits grabbed the money and ran. They’re either the dumbest guys on Boardwalk Avenue or the smartest. It’s hard to tell which. A lot depends on “what if” speculation.
The obvious way of looking at things is the Atlantic Club Casino made a monumental blunder by pissing off a potential buyer. Not only that, but the interested suitor came with almost unlimited cash reserves and a clear commitment to spend a fortune on renovations, turning an eyesore of a building into a centerpiece for its North American operations. Sure, ownership was legally entitled to seize the good faith payment and then later throw the prom date holding the corsage hoping for a kiss out on the street. Trouble was, once that happened, there wasn’t anyone else standing in line to ask them out. Now, they’re stuck at home on Saturday night watching re-runs, about to be evicted.
The other viewpoint, and far lesser-known possibility, is that Frawley and his gang figured that PokerStars had no real chance at getting licensed. They could feign some love interest in making a deal and accept the $11 million. But they weren’t actually going to tango with the giant from the Isle of Man. So, why not take the free money and buy some extra time? In fact, a deal with PokerStars might have been disastrous for everyone, since an agreement would have ball and chained the casino to an unlicensed company based overseas, with no viable chance at actually exercising its ownership. Talk about a potential disaster for all concerned.
Moreover, there’s even some suggestion PokerStars may be thrilled to “get out cheap” when it comes to New Jersey. They’ve already invested heavily in a flirtation with the Atlantic Club Casino, and now the same song and dance Resorts. Certainly, the lobbying effort within New Jersey doesn’t come cheaply either. But better to lose $20 million or so and move on, than to buy a casino, spend a ton of money on renovations, and then have to walk away later when New Jersey gaming stonewalls the license.
Instead, we’re now being spoon-fed excuses. The spin has already begun, and it starts at the top. Consider what the Atlantic Club’s Frawley told ABC News when asked why his casino is going bankrupt:
“We believe in our property’s positioning and the value-centric niche we committed to nearly 18 months ago,” he said. “Our creative branding campaign and the tremendous efforts of our employees have resulted in property growth within a continually challenging market. Unfortunately, the market has taken longer to rebound than we had hoped.”
Just so I get this straight — his management wasn’t the problem. His strategy and ideas just needed more time. Sounds a lot like this quote from a well-known football coach after losing a big game:
“We didn’t lose the game. We just ran out of time.”
For the Atlantic City casino market, the clock now reads “0:00.” Except for a very few, the game is now over.