Our long national nightmare is over

Yes the Tropicana Atlantic City, which was “repossessed” by the Casino Control Commission over a year and a half ago, has finally been sold…to Carl Icahn. From the AC Press:

Tropicana Casino and Resort, once expected to fetch $1 billion or more, was sold today for $200 million to a group of lenders headed by billionaire financier Carl C. Icahn.

A bankruptcy court judge approved the sale agreement, culminating an 18-month quest for new ownership that began when the economy was strong and ended with it in a deep recession.

Icahn and his fellow lenders, who already hold a $1.4 billion mortgage on Tropicana, timed the market downturn perfectly by stepping in when no other investors were willing to bid to drive up the price.

"There is basically no other option available at this point," U.S. Bankruptcy Court Judge Judith H. Wizmur said while approving the sale to the Icahn group.

The deal is pending regulatory approval by the New Jersey Casino Control Commission and a final closing, a process expected to take until year's end.

Tropicana went on the market in December 2007, when the troubled former owners were stripped of their New Jersey gaming license for mismanagement and regulatory violations.

Bankruptcy judge approves $200M. Tropicana sale to Icahn group.

Since Icahn specializes in turning around distressed properties, this might not be an entirely bad thing. Yes, there’s the sad example of the Sands in Atlantic City, but the Stratosphere here in Vegas ended up being a win-win-win: he took the casino out of bankruptcy, ran it successfully, and sold it at a profit. That’s how the game is played.

At this stage, the Tropicana brand name has suffered such severe collateral damage in Atlantic City that I wonder whether a complete re-branding has been contemplated, since the casino is no longer owned by the parent of the Las Vegas Tropicana. I also wonder whether being a standalone property will change anything about the way it’s marketed.

Trop sale soon…really

The Press reports that the Tropicana Atlantic City is almost ready to go on the block:

After a 16-month saga, Tropicana Casino and Resort is one step closer to being sold. New Jersey gaming regulators today authorized the property to be auctioned off in bankruptcy.

Gary S. Stein, the state-appointed conservator overseeing the sale, said he would file a Chapter 11 bankruptcy petition later today to begin the auction process and designate a group of lenders headed by billionaire financier Carl C. Icahn as the leading bidder. Icahn and his fellow lenders have offered $200 million.

The auction is expected to occur in June. Although the Icahn group has been named the so-called "stalking horse," or front-runner, other bidders will have an opportunity to submit higher offers.

Press of Atlantic City, – pressofatlanticcity.com.

Wow, they sure work quickly, don’t they? The Tropicana saga is certainly not the brightest moment for New Jersey casino regulation.

More TI thoughts

Reading David McKee’s post on the TI sale to Phil Ruffin, something clicked that made me realize the transaction made perfect sense. For a while now, MGM Mirage has been positioning itself as a casino builder and hospitality brand manager. The international moves are ample evidence of that, as are the City Center partnership with Dubai World and the only-on-hold JV with Kerzner. Let’s look at the Treasure Island “sale” in that light.

Ruffin is going to be leasing his employee parking garage and access to the MGM Mirage loyalty program, in effect, from MGM Mirage. The property will still be connected to Mirage. That means that it will remain in the MGM Mirage family of properties, and 99% of visitors won’t even notice that it has a different owner.

Isn’t this exactly what the various branding and JV efforts are doing, as well? For a half-billion dollars in cash, MGM gives up absolute ownership of TI, but they maintain a relationship with the casino on several levels. If MGM had announced that they were partnering with Ruffin to build a new casino and that he’d be providing $750 million in cash to build (I know that a new resort would cost twice that, but bear with me) and MGM was offering the land, everyone would say it was a smart move for both sides. This isn’t deconsolidation, so much as divesting an asset while retaining significant operational interest in it.

On another note, I think that the price absolutely vindicates those who thought the Tropicana Atlantic City was not worth $1 billion. If a newly-renovated property designed by one of the best teams in the business a stone’s throw from two of the busiest market’s newest casinos isn’t worth more than $800 million, why would a tired, thrown-together property at the slow end of a market under considerable competitive pressure go for more? I think that $650-$700 million is a more realistic valuation. Of course, I haven’t studied the EBITDA and all that fun stuff, but this seems to be what the market suggests.

Go ahead and use my new, registration-free, comment system–I’d like to hear what others think.

Just posturing?

I found this draft that I forgot to post last week, and thought it might be topical. Enjoy.

Trop wants to make a comeback in Atlantic City. It’s kind of like asking the girl who dumped you at homecoming to go to the prom. From Newsday:

Tropicana Entertainment LLC, whose corporate affiliates were stripped of their casino license last December, is trying to regain ownership of the Tropicana and prevent it from being sold to someone else.

New CEO Scott Butera told The Associated Press the company hopes to convince state regulators it has purged the elements they found unsuitable to run a casino, including Kentucky-based Columbia Sussex Corp. owner William Yung III.

But if Tropicana Entertainment can’t convince the commission to let it have the casino back, Butera says there are other options in Atlantic City, including making an offer for an existing casino, or trying to build a new one.

"If were not successful, that doesn’t mean we won’t try and come back in another way," he said. "There are going to be assets that will become available."

That could mean making an offer for an existing casino _ several of which are struggling under heavy debt and plunging revenues _ trying to build one from scratch on vacant land including the former Bader Field airport site, or offering to buy out another casino company whose plans may have stalled in Atlantic City.

AP NewsBreak: Ex-Trop owner may eye other casino — Newsday.com.

I hope this is just some kind of posturing, not a real offer to re-enter the market. Because this doesn’t seem to have much of a ground in reality.

In a way, it seems kind of creepy and stalkerish. Like an abusive spouse, Trop Ent is assuring the city that “honey, I’ve changed.” From what I’ve heard, those situations don’t work out well. Strange.

I really get a kick out of the Stalinist overtones of the management shakeup–the counter-revolutionary elements have been “purged” from the company, and it is ready to move forward.

Like I said, strange.

What’s Trop worth?

When the Trop AC first went on sale (it seems like a decade ago), a newspaper reporter asked me how much I thought it would get. I considered the Sands’ recent selling price and made a quick mental tally of the Trop’s relative size. “$650 million, ” I replied. “Maybe $700 million.

The next day, I was taken aback to learn that the consensus among the “analysts” was that the casino should sell for $1 billion or so.

“Wow,” I thought. “I really don’t know this casino stuff at all.”

Yesterday’s AC Press, though, made me feel a little smarter:

A Baltimore developer known for transforming a blighted section of Atlantic City into a bustling downtown shopping district is in negotiations to buy Tropicana Casino and Resort.

Cordish Co. emerged Tuesday as a leading bidder in talks with the state-appointed conservator who has been overseeing Tropicana’s sale ever since the troubled casino was stripped of its New Jersey gaming license last December.

Under the terms, Cordish would acquire the Tropicana and virtually all other assets of its former operator, Adamar of New Jersey Inc., for $700 million in cash and stock, according to the state Casino Control Commission.

Cordish Co. offers $700M. for Tropicana in Atlantic City

I guess I knew what I was talking about. Either that, or the “analysts” put as much effort into their valuation as I did mine, or just picked the biggest round number they could spit out. I’m not surprised that the financial sector is in such disarray, since a relatively stable business can lose about 1/3 of its perceived value after it’s had a minor turnaround. Either that initial billion was badly inflated, or this is the bargain of the century. I stand by my original prediction and say that, if anything, the $700 million offer is generous.

Trop AC update

So how’s the Tropicana in Atlantic City doing these days? I got curious enough today to check out the vox populi of tripadvisor.com.

There are reviews for July up, so this reflects the property well after the Columbia Sussex retreat. And most of the people are happy, though the ones who aren’t have some horror stories.

Here’s one example that the AC tourism folks should really examine, since it’s written as representative of the city as a whole, not just the Trop:

Every staff member I encountered acted as though they were being inconvenienced by my arrival. Smiles? none. Eye contact? Minimal. Clear answers to questions? None. The room was not bad, the carpet appeared new but the bedclothes looked shabby. The hallway was also shabby and pooly cleaned. The location of the Trop is rather far from the center of the Boardwalk and the guys manning the pedicabs looked dangerous. Atlantic City as a whole is a bit of a joke and the Trop is doing nothing to make it better.

Tropicana reviews

Of course, many other guests found the place passable or even pleasant, and one even said that it was “lovely.” So obviously the Trop has some fans.

Here’s the funny thing. Over on ratevegas a while back, there was a debate over the Sahara offering $200/night room rates after a mythical remake. Lo and behold, the Trop AC’s average rate is $218 a night. Now, I’m as big a fan of the Morris Avenue corridor as anyone, but that seems like a big price for not such a great location or experience. Then again, the nearby El Greco motel has an average rate of $173 a night, so that might be a smoking deal. The Borgata, by comparison, is $349, so what this says to me is that, judging from the pricing, the Trop is closer to the El Greco than the Borgata. That’s food for thought.

But the Tropciana is ranked #9 on TA’s list for AC hotel, absolutely annihilating the Borgata’s new Water Club, which is really getting hammered.

They took the leads?

And the phones? What kind of office is this? Ah, it’s OK. Shelly Levine just closed a big deal.

None of that will make anything approaching sense if you’ve never seen Glengary Glen Ross, but trust me, it does.

All of this is my lead-in to what is surely the casino caper of the decade: three former employees are accusing of stealing a player list from the Trop AC. From the LVRJ:

Three casino workers were indicted Monday on charges they stole a list of more than 20,000 top players from the Tropicana Casino and Resort in Atlantic City.

New Jersey prosecutors said the list was worth more than $108 million because it included the names, addresses, phone numbers and gambling data on important casino patrons.

“We charge that these marketers stole one of the most valuable assets of the casino, namely detailed contact information and ratings for its top-level players,” Attorney General Anne Milgram said in a statement. “This type of corporate espionage and theft involving proprietary information is a very serious crime.”

The three had all worked for the Tropicana three years ago and later left for other casinos in Atlantic City and Las Vegas.

Prosecutors charged that while at Tropicana, Conklin had Litterelle download a list of top-level player names from the Tropicana computer database for “future leverage” so they could take patrons with them when they went to other casinos. The list was placed on three discs Litterelle labeled “Bette Midler,” officials said.

In March 2007, Conklin was at the Borgata when he called Litterelle, who was a national marketing manager at the Bellagio, and asked Litterelle to send DiMarco the player list because DiMarco had lost his job at the Tropicana, officials said.

Litterelle e-mailed the list to Conklin and arranged with DiMarco to send him a paper copy. Litterelle tried to send the paper copy from the Bellagio mailroom, but an employee notified Bellagio security department, officials said.

Bellagio notified the Tropicana and the Borgata, and all three casinos cooperated with New Jersey’s investigation, authorities said.

Casino workers accused of stealing player list

Let’s put aside for a second the notion–as humorous as it is–that the Tropicana’s leads are worth $108 million. I never knew that it had a reputation for high-end play.

Definite points for style for labeling the disks with the purloined leads “Bette Midler.” Was that because they figured no one would want to listen to three generic Bette Midler CDs? Or was it some kind of back-handed tribute to the stage legend? We can only hope this comes out in the trial.

What elevates this from a simple case of theft is the monumental stupidity involved. So you steal three disks worth of player info from your employer, but instead of keeping it, you let your assistant take it with her to Las Vegas. Of course, you wouldn’t want to waste five minutes by burning a back-up copy. Then, you try to send a paper copy of the list to your buddy. You don’t print it out yourself, at home or at Kinkos. No, you print it out at work–which just happens to be a major Las Vegas casino–then try to send it out through the mailroom.

Of course, no one will find this suspicious at all–and naturally, casino management would be happy about someone mailing out a long list of player information, because they are committed to open source casino marketing.

But strangely enough, someone notices, tells management, and the police get involved. And you find yourself facing a variety of charges for stealing leads from the Tropicana Atlantic City, of all places.

Where’s Jerry Graff when you need him?

Too funny

Just like the Clinton Administration galvanized and nurtured conservative talk radio during the 1990s, the Tropicana Atlantic City is going to keep me posting. If I still lived in Atlantic City, I’d walk down there every day and probably come back with classic 1000-word posts. Take, for example, this entertainment listing that I found in the vaunted AC Press:

WHAT ISIT: MANTASM is a new male revue at the Tropicana, presented by creator Dave Pena and producer Shari Pearl. The show promises to feature some of the hottest male dancers strutting their stuff to the pulsating music.

WHAT TO EXPECT: For those who missed Tropicanas long-running “Men of the Cave” male revue last year, or who need another dose of scantily-clad, gyrating beefcake, MANTASM is just what the doctor ordered. What better way is there to spend a Saturday night than sitting alongside shrieking women marveling at a bunch of six-pack abs and ridiculously toned biceps? What makes MANTASM unique is its interactive nature.

Casino Scene

I’m not saying that ladies shrieking at oiled abs, pecs, and biceps is bad. I’m not even saying it’s a bad idea–if guys are allowed to ogle objectified women, I say it’s only just to allow women a parallel diversion. And a female-directed male revue? We’re moving into Margaret Fuller/Susan B. Anthony territory here.

But the name…for the love of all that is holy, why? MANTASM. The soul of class and refinement, no?

With the CAPS LOCK thing, I’m thinking that maybe this should be a feature attraction at MEGACENTER.

Even better, the show it replaces was called “Men of the Cave.” I’m picturing the GEICO cavemen doing lap dances. It’s funny, but only if you don’t think too much about the specifics. Shaggy back hair! NOOOOO!

You know, the best GEICO caveman commercial was (I think) the first one, where they’re in the studio and the talking head says the famous line, then the sound guy, who just happens to be a cave man, throws down his gear and says, “NOT COOL” before storming out. I don’t know why–it just seems like it would actually go down that way. The one at the therapist’s where he says, “It’s my mother. I’ll ut it on speaker,” is a close second, just because of that line.

A new day at the Trop

No, the Tropicana didn’t sign Celine Dion. Instead, in the best AC tradition, the casino is launching a new advertising campaign to convince visitors that there’s no place for squalor and surliness in the court-appointed conservator-run casino. From the AC Press:

Tropicana Casino and Resort is overhauling its battered image with the help of a new, upbeat advertising campaign that invites customers to “experience the difference.”

The $1 million publicity push includes print advertisements, mailings, billboards and a 30-second television spot that begins airing today in the Philadelphia, New York and New Jersey markets.

Tropicana’s management hopes customers will give the casino a second chance following a turbulent 12 months of mass job cuts, lagging service and unsanitary conditions under the previous owner, Columbia Sussex Corp.

“We want to get away from a period of time when it was tumultuous, and say to our customers, ‘When you come to Tropicana, you’re going to have a great time,’” said Mark Giannantonio, the casino’s president. “We want people to stay at the property.”

To lure customers back, Tropicana is launching an advertising campaign based on the theme “Experience the Difference.” The goal is to portray Tropicana in an entirely new light – countering negative publicity about bedbugs, smelly rooms, overflowing toilets and surly employees during the casino’s disastrous licensing hearing last month.

Angered by those problems, the New Jersey Casino Control Commission stripped Tropicana of its license Dec. 12 and deemed Columbia Sussex an unsuitable owner. Tropicana is now under the control of a state-appointed conservator, who will oversee the casino’s sale to a new buyer.

Admitting mistakes, Tropicana looks to remake its image

For months, the union and the Casino Control Commission were blasting this place in the papers, convincing the public that the Tropicana was not a “first-class resort.” Did they think that this would have any effect besides running off customers? Of course the ads are going to say, “things are great,” but I would hope that patrons aren’t so naive as to automatically believe that just because the “baddies” are leaving town, the Trop is once more first-class.

If it only takes an ad campaign to restore the Trop’s luster, then things weren’t so bad in the first place. So maybe it will take a major renovation (which hopefully includes sprucing up the exterior) to re-establish the place.

And maybe the organizations who were so quick to trash the place in the press should work just as hard to rehabilitate it, and the city’s image. I think that people in Atlantic City lose sight of the fact that the world off of Absecon Island isn’t paying rapt attention to who owns which casino. Ninety percent of the city’s target demographic probably just heard “Atlantic City casino…bedbugs…stinky toilets” and figured “why not play in PA instead?”

To use an area-appropriate analogy, it’s like a Boardwalk merchant feeding the seagulls every day then complaining because the birds are fouling the passers-by and driving off business. What did he expect?

Customer complaints, the old-fashioned way

Like most of you, I spent some time this morning browsing through the Mahabharata looking for material for a class. And I was struck by the courtly fashion in which hospitality-related customer complaints were resolved back in Vedic times:

And the king having signified his assent, entertained Utanka duly. And Utanka seeing that the food placed before him had hair in it, and also that it was cold, thought it unclean. And he said unto Paushya, ‘Thou givest me food that is unclean, therefore shalt thou lose thy sight.’ And Paushya in answer said, ‘And because dost thou impute uncleanliness to food that is clean, therefore shalt thou be without issue.’ And Utanka thereupon rejoined, ‘It behoveth thee not, after having offered me unclean food, to curse me in return. Satisfy thyself by ocular proof.’

“And Paushya seeing the food alleged to be unclean satisfied himself of its uncleanliness. And Paushya having ascertained that the food was truly unclean, being cold and mixed with hair, prepared as it was by a woman with unbraided hair, began to pacify the Rishi Utanka, saying, ‘Sir, the food placed before thee is cold, and doth contain hair, having been prepared without sufficient care. Therefore I pray thee pardon me. Let me not become blind.’ And Utanka answered, ‘What I say must come to pass. Having become blind, thou mayst, however, recover the sight before long. Grant that thy curse also doth not take effect on me.’ And Paushya said unto him, ‘I am unable to revoke my curse. For my wrath even now hath not been appeased. But thou knowest not this. For a Brahmana’s heart is soft as new-churned butter, even though his words bear a sharp-edged razor. It is otherwise in respect of these with the Kshatriya. His words are soft as new-churned butter, but his heart is like a sharp-edged tool, such being the case, I am unable, because of the hardness of my heart, to neutralise my curse. Then go thou thy own way.’ To this Utanka made answer, “I showed thee the uncleanliness of the food offered to me, and I was even now pacified by thee. Besides, saidst thou at first that because I imputed uncleanliness to food that was clean I should be without issue. But the food truly unclean, thy curse cannot affect me. Of this I am sure.’ And Utanka having said this departed with the ear-rings.
The Mahabharata, Book 1: Adi Parva: Paushya Parva: Section III

I think that the Tropicana AC relicensing might have gone a little better if they’d have handled all their customer complaints through ritualistic curses instead of referral to the risk management department, or whatever they did.