ATLANTIC CITY — Two casino firms agreed to buy and close the bankrupt Atlantic Club Casino Hotel on Jan. 13, spending $23.4 million to cut the number of gambling halls in the resort to 11.
Tropicana Atlantic City Corp., the parent company of Tropicana Casino and Resort, will spend $8.4 million for Atlantic Club’s customer data and gambling equipment, including 48 table games and 1,641 slot machines, according to Friday bankruptcy court filings.
In a press release Saturday, Caesars announced that ti "does not intend to resume gaming or hotel operations at the facility, and is evaluating options for the use of the assets, some of which may be used in the company's other Atlantic City properties."
Representatives from Caesars had previously not responded to requests for comment.
Caesars Entertainment Operating Co. will spend $15 million to acquire the 801-room hotel and its fittings, including linens, silverware and food, court filings show. Caesars will also be responsible for property taxes and any future refunds. Caesars owns the Bally’s, Caesars, Harrah’s Resort and Showboat casinos in Atlantic City.
Federal Bankruptcy Court Judge Gloria M. Burns is scheduled to ratify the agreement at 11 a.m. Monday in Camden.
Casino workers union Local 54 of UNITE-HERE has formally objected to the sale, arguing the purchaser should have to also take on the union contract, instead of selling free and clear.
Local 54 President Bob McDevitt previously said he believed there were bids in play to shut down the casino. He said he believed the property would be reopened as a noncasino hotel some time in the summer.
On Friday, McDevitt released a statement vowing to fight for the workers’ interests.
“The workers at Atlantic Club have loyally served the company for three decades,” McDevitt said. “While we can’t stop the Atlantic Club from closing, we are going to do everything we can to fight for the workers to get as much as possible in this tragic situation.”
The Atlantic Club has struggled in recent years. It was the city’s sixth casino, costing $140 million, when it opened in 1980 as the Golden Nugget Hotel & Casino. It was later sold and renamed the Atlantic City Hilton.
It was valued at $513 million when Colony Capital LLC bought it in 2005 as part of a $1.2 billion deal that included four casinos in New Jersey, Mississippi and Indiana.
But the casino had been on the market on and off since January 2011. It lost more than $7 million in the first nine months of this year, despite an 11 percent increase in gambling revenue.
A deal to sell to the PokerStars website for $15 million collapsed earlier this year over concerns about whether the website’s management could qualify for a state casino license because of unresolved legal issues involving the company’s founder.
When it filed for bankruptcy in October, Atlantic Club became the resort’s second casino, after Revel Casino-Hotel, to seek protection from creditors this year.
“First and foremost, I would like to express my profound admiration and respect for the employees of this company,” Michael Frawley, chief operating officer of the Atlantic Club, said in a statement Friday. “The events of the last few months have evoked an array of emotions, and through it all, the employees of the Atlantic Club have remained consummate professionals. It is because of these outstanding individuals that we were able to build considerable momentum over the last year. Unfortunately, our pace was unsustainable in the extremely challenging Atlantic City gaming market.”
The casino said it will operate normally until it closes.
Cathleen Kiernan, a spokeswoman for the Atlantic Club, said the company would not make any comment beyond its official statement.
Diane Spiers, a spokeswoman for Tropicana, did not comment Friday. When asked earlier in the week whether Tropicana was interested in the property, Spiers also did not comment.
Caesars Entertainment’s local spokeswoman, Katie Dougherty, said the company plans to release information through its corporate offices in Las Vegas. Gary Thompson, the company’s Las Vegas-based spokesman, did not respond to requests for comment Friday.
Word of the shutdown came on the fourth day of a bankruptcy court auction.
Pat VanWoeart, an Atlantic Club waitress, has worked there for 18 years.
“We’re disappointed,” the Mullica Township resident said Friday. “There were so many other opportunities they let slip through their fingers.”
“We knew someone would buy us, but we just didn’t expect someone would buy us to cut out the competition, because we are the best boutique casino in the city,” VanWoeart said. “But Caesars came, and I guess they just can’t stand the competition.”
Doug King, an Atlantic Club bartender, said he learned of the deal through a memo given to him Friday morning. The past few years had been like working for a company in a coma, he said.
“I’ll do the best I can,” the Atlantic City resident said. “Not many people are going to want to hire a 60-year-old bartender.”
The Atlantic Club has become the first Atlantic City casino to shut down because of the downward spiral the resort has faced since the first casinos opened in neighboring Pennsylvania in late 2006. The Sands was closed and demolished in 2006 to clear the way for a project that was never built.
Atlantic City’s casino revenue peaked at $5.2 billion that year. It will likely fall below $3 billion this year.
Analysts have long said Atlantic City has more casinos than the now-diminished market can bear, particularly since the opening of the $2.4 billion Revel, which could be headed for a second bankruptcy filing or be sold to new owners.
Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Richard Stockton College, said he wasn’t surprised by the move to shut down the Atlantic Club.
“My sense is that the industry clearly needed that property out of inventory in the city,” Posner said. “The important thing is that the city is moving in the direction of aligning supply with demand.”
At the same time, Posner said, “The answer to the question of what is the right number (of casinos) really depends on the capital structure. It’s not an easily answerable question.”
Still, Posner left open the possibility that the property could be repurposed or become a casino again in the future.
“This may not be the final word,” Posner said. “There may be a more favorable climate moving forward. It’s no secret that the city administration and the casino industry were not seeing eye-to-eye. The fact that there’s a new administration in town that seems to be saying the right things adds to a favorable climate going forward.”
Staff writer Wallace McKelvey contributed to this report.
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