Little Caesars Pizza Empire Acquiring Half of Ocean Casino Resort in Atlantic City
Posted on: October 15, 2021, 08:49h.
Last updated on: October 15, 2021, 10:11h.
Ilitch Holdings, the parent company of Little Caesars, is the newest owner in the Atlantic City gaming industry.
Yesterday, the New Jersey Casino Control Commission (CCC) approved Ilitch Holdings acquiring up to 50 percent ownership in Ocean Casino Resort. Ilitch and Ocean Casino majority owner Luxor Capital announced their intentions to become partners in April.
Ilitch Holdings is paying $175 million for its piece of Ocean. Reps from Ilitch and Luxor said $70 million will be used to finish 464 hotel rooms that were never completed when the towering blue Boardwalk structure opened as Revel in 2012.
With CCC approval, Luxor and Ilitch are expected to close on the transaction within 30 days. The gaming agency on Thursday additionally extended Ilitch an interim casino license. That’s a necessary condition of the acquisition, as Ilitch will become a substantial stakeholder following completion of the sale.
Mike and Marian Ilitch founded Little Caesars in 1959. The franchise, the third-largest pizza chain in the world, made the Ilitchs extraordinarily wealthy. The Ilitch family, worth some $4.4 billion, today owns the MLB Detroit Tigers and NHL Detroit Red Wings, as well as the MotorCity Casino Hotel in downtown Detroit.
Ocean Casino opened as Revel in 2012. The integrated resort cost $2.4 billion to construct, but was a financial disaster from its opening. Revel failed to generate enough revenue to cover its loans almost immediately after the first slot machine was spun.
Moody’s and Standard and Poor’s downgraded Revel’s credit rating to levels that suggested the casino would only be able to pay back its debts “upon favorable business, financial, and economic conditions.”
Atlantic City in 2012-13 did not present such conditions, and Revel filed for bankruptcy and closed on September 2, 2014. Florida businessman Glenn Straub purchased Revel in bankruptcy for just $82 million.
Straub floated numerous redevelopments plans for the former casino. But his contentious relationship with Atlantic City officials — which came to a boiling point in 2015 when he said New Jersey business owners “have to take all their clothes off” because the state doesn’t “know how to not rape you” — led to Revel remaining idle.
Straub sold the defunct casino resort to Colorado-based real estate developer Bruce Deifik in 2018 for $200 million. Deifik, who purchased the property without ever personally seeing it, reopened it as Ocean Resort Casino on June 27, 2018, the same day the former Trump Taj Mahal reopened as Hard Rock Atlantic City.
Deifik’s Ocean, however, found a similar fate as Revel. Unable to make good on his debts, Deifik was forced to hand over Ocean Resort Casino — since rebranded as Ocean Casino Resort — to his main lender, Luxor Capital, in early 2019.
Luxor brought in gaming industry veteran Terry Glebocki to help reverse Ocean’s fortunes. After losing $2.5 million operating through the first three quarters of 2019, under her leadership as CEO, which began in December of 2019, Ocean turned profitable.
The casino reported an operating profit of $21.9 million in 2020, the best performance of the nine casinos in Atlantic City. Glebocki shocked the industry this week — and apparently Luxor and Ilitch execs — by announcing her resignation. No word has been given for her departure, but Luxor thanked her for leading the casino through a most difficult time.
“Terry joined Ocean on the brink of bankruptcy, and is leaving the property as a leading casino resort in Atlantic City,” a company statement read.
Luxor principal Michael Conboy explained during the CCC meeting that an interim CEO will soon be named while a permanent CEO search is performed.
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