If you were going to plan the worst year possible for a brand new casino, it would probably look something like what has happened to the Revel Casino in the past 12 months. The Atlantic City casino opened in April 2012, and just about nothing has gone right for it ever since.
High Cost, Low Earnings
For starters, Revel came with a huge price tag, as it cost $2.4 billion to build the casino and hotel complex at the northern end of the Atlantic City Boardwalk. But it quickly became apparent that the complex wasn’t meeting expectations, as it never found its footing with either locals or tourists. From the opening month, Revel ranked near the bottom of the 12 casinos in Atlantic City when it came to gambling revenues, and things never improved. From opening day through March 2013, Revel reported $149 million in operating losses.
That, combined with the large cost of construction, was just too much for Revel to handle. By the time the casino filed for bankruptcy in February, it had $1.5 billion in outstanding debt.
Pay It Forward
The casino’s bankruptcy has now been formally approved, and the filing helped Revel wipe away the vast majority of that debt. In exchange for having $1.2 billion in debt forgiven, the lenders have been given an 82-percent ownership stake in the casino, leaving Revel with a much more manageable $272 million in debt going forward.
“With a right-sized balance sheet, reduced debt load and improved cash flow, we have emerged from this process stronger and better positioned for success,” said Dennis Stogsdill, the chief restructuring officer for Revel.
The concept of Revel was to focus on the resort, with the casino simply being one aspect of the many attractions and amenities available for high-end customers looking for an overall leisure experience. That led to the casino being somewhat of an afterthought for the company, something that executives say will change going forward.
Still, nobody is expecting any miracles right off the bat. Even the company’s own projections don’t see Revel making a consistent profit until next summer, and the resort is on pace to lose far more money this year than Revel projected, putting those numbers in doubt.