No Takers Yet for Atlantic Club Auction As Union Makes Demands
Posted on: December 20, 2013, 05:30h.
Last updated on: December 22, 2013, 08:22h.
UPDATED DEC. 22:
Finally a taker for the Atlantic Club, but perhaps not what the casino had in mind: Caesars Entertainment has reportedly put in a bid for the beleaguered property, but then plans to shut it down as early as January 13, 2014.
Colony Capital LLC – the outfit that currently owns Atlantic Club – announced late last week that the sales agreement would be forwarded to bankruptcy court for final approvals.
Caesars is getting the property for a fire sale price of $15 million, which includes the entire property and all its fixtures; the casino’s existing gaming equipment has been snatched up by competitor Tropicana for $8.4 million, and legal processing will charge the removal of the equipment to Atlantic Club.
With the closure, Atlantic City’s troubled land casino scene will shrink to 11, and four of those remaining will be Caesars-owned properties.
The total $23.4 million sale price gives Atlantic Club the dubious distinction of setting a new low in casino sales; the previous low record holder was Resorts Casino Hotel, sold three years ago for $31.5 million.
Who wants to buy the Atlantic Club Casino Hotel in Atlantic City? If you have the cash – and you’re not PokerStars, of course – the casino is currently up for auction, allowing anyone who has interest in purchasing the struggling property to pick it up, likely at a bargain price.
Going, Going, Still Here
However, after two days at auction, there still hasn’t been a buyer. That doesn’t mean that nobody will pick up the casino: even though it may well be the least of the dozen casinos in Atlantic City, it is still a casino after all, and has quite a bit of potential value. The casino hopes to have someone prepared to make a purchase by Monday, and it’s likely that talks will be ongoing with potential buyers in the days to come.
Still, the process is going a bit slower than expected. When the Atlantic Club Casino went into bankruptcy, the bankruptcy court set out a schedule for the sale of the casino that assumed a buyer would be found by the second day of auction. That means the entire schedule of sale has been pushed back, with a hearing to get a judge’s approval for any sale being pushed back to Monday morning.
That sale may have just become a little more complex. Local 54 of the Unite-HERE union has asked a judge to block any sale of the Atlantic Club that doesn’t include a guarantee from the buyer that they will assume the existing employee contract, or at least negotiate a new one with the union. The union, which represents a variety of different casino and hotel workers, filed their objection just in time to meet a last-minute deadline.
According to the union, the Atlantic Club did not comply with a federal bankruptcy code regulation that requires both notification to the union, and negotiations before they would be allowed to terminate an existing labor contract. They say that none of the potential buyers have met this legal requirement either, which would mean they’d have to take on the existing contract.
Long History in Atlantic City
The bankruptcy and sale of the Atlantic Club are just the final chapters in the story of a long-struggling casino. Previously known as the Atlantic City Hilton, it is one of the smallest and oldest casinos in the city, and it has had difficulty competing with many of its newer and more luxurious neighbors. In recent years, the Atlantic Club tried to rebrand itself as a haven for locals and casual gamblers, but that move only served to stave off the inevitable.
Earlier this year, the Rational Group – the parent company of PokerStars – attempted to purchase the Atlantic Club in an effort to gain a foothold in New Jersey ahead of the state’s regulation of online gambling. The sale would have been the cheapest in history for any Atlantic City casino, with PokerStars paying just $15 million to gain ownership.
However, the sale was held up due to fears that state regulators would be uncomfortable with a purchase by an online gambling company that continued operating in the United States after the passage of the UIGEA regulations in 2006. After contractual deadlines passed, the Atlantic Club backed out of the deal, and PokerStars failed to recover $11 million they had loaned to the casino, which had been designated towards the purchase price.
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