ATLANTIC CITY — Gaming executive Dennis Gomes announced Monday he has agreed to buy Resorts Atlantic City, the town’s oldest casino, for an undisclosed price just nine months after lenders took over the property when it defaulted on its mortgage.
The sale saves Resorts amid predictions that the aging and undersized Boardwalk property simply would not have survived much longer unless it came under new ownership. The announcement gives some lift to a gaming market stuck in a four-year economic slump and dealing with growing competition from rival casinos in surrounding states.
“We are hopeful that this will not only revitalize Resorts, but all of Atlantic City,” said Linda M. Kassekert, chair of the New Jersey Casino Control Commission. “We have worked closely with Resorts to help stabilize that property for the benefit of the 2,100 employees whose jobs were at risk. This deal will preserve those jobs and hopefully create even more employment as the property improves.”
Gomes settled on Resorts after spending the past three years unsuccessfully trying to acquire the Trump Entertainment Resorts Inc. casinos and Tropicana Casino and Resort. The 30-year veteran of the Atlantic City and Las Vegas markets had previously served as a senior executive at Trump Taj Mahal Casino Resort and at Tropicana.
“I believe in this property,” Gomes said of Resorts. “It heralded the beginning of casino gaming in the East and has always had a special place in my heart. It is an exciting place with a lot of history, and we are going to bring it back to life with even more energy and vitality than it possessed at its creation in 1978.”
Resorts, which began Atlantic City’s casino era when it opened May 26, 1978, has had a turbulent history of multiple bankruptcies, a succession of owners and promises of expansion plans that were never fulfilled.
The 942-room casino hotel had been on the market since lenders grabbed control in December after the casino defaulted on its $360 million mortgage and faced possible foreclosure. Never before in Atlantic City had lenders become casino owners in that way.
Gomes, 65, is buying the property from RAC Atlantic City Holdings LLC, which is headed by Wells Fargo Bank, the trustee representing the lenders. Gomes is teaming up with his 29-year-old son, Aaron, to make the purchase through their consulting company, Gomes Gaming Inc. The deal, expected to take at least four months to complete, is pending regulatory approval by the Casino Control Commission.
Gomes said he does not plan to rename Resorts. However, he will embark on a new marketing strategy to revive a casino that has seen gaming revenue plummet 17.2 percent and has lost $10.8 million so far this year.
“I promise everyone that it will ultimately be the place to be and to be seen and will be the center of fun and excitement in our fabulous city,” Gomes said in a statement. “I have a passion for Atlantic City and believe in its future. I have disagreed with the doom-and-gloom analysts who have painted a bleak picture of our city.”
Mark Juliano, chief executive officer of Trump Entertainment Resorts, called the Resorts’ deal “a vote of confidence” in Atlantic City’s future.
“I think it’s a good thing,” Juliano said. “It’s given us some traction and shows that there are still some people who are willing to make an investment in Atlantic City.”
Atlantic City’s overall gaming revenue is down nearly 8 percent this year. The sluggish economy and rival casinos in Pennsylvania, New York and Delaware continue to hammer the city’s gambling houses, particularly the weaker casinos such as Resorts, the Atlantic City Hilton Casino Hotel and Trump Marina Hotel Casino. Wall Street analysts have repeatedly warned that Resorts, the Hilton and Trump Marina are likely to go out of business unless they secure new owners and capital investment.
The Hilton, which stopped paying its mortgage last year, is facing a court fight with lenders who want to force it into receivership and sell it. Trump Marina, the weakest of the three Trump Entertainment casinos, is back on the market now that its parent company has emerged from Chapter 11 bankruptcy protection under new ownership.
Casino values have plunged in Atlantic City’s depressed real estate market. Trump Marina, for instance, was nearly sold two years ago for $316 million to the New York gaming group Coastal Marina LLC. The price was later dropped to $270 million in hopes of salvaging the sale, but the deal collapsed altogether last year. Most recently, Trump Entertainment has been shopping the Marina for $75 million.
Gomes would say only that he is buying Resorts for less than the $140 million that former owner Colony Capital LLC paid in 2001. Colony acquired it from Sun International Hotels, which had paid $301 million to buy the property from celebrity CEO and “Jeopardy” creator Merv Griffin in 1996. Griffin also struggled as the owner, taking Resorts through two bankruptcies in attempts to cure its financial troubles.
Resorts faces enormous challenges stemming from the age of the property and its small size compared to other Atlantic City casinos. The casino was carved out of the remains of a 1920s hotel called Haddon Hall. Colony Capital, though, built a new 400-room hotel tower in 2004 as part of a $125 million makeover of the gaming hall. In addition to the casino-hotel complex, Gomes is getting 10.5 acres of vacant oceanfront property that could be used for future expansion.
Gomes said that Colony Capital and its partner, Nicholas L. Ribis, kept the property in good shape. Colony surrendered ownership when the lenders took over. Ribis continued to run the casino for the lenders and had expressed an interest in buying Resorts. Under Gomes’ ownership, Ribis will not be part of the casino.
“The people with Resorts’ management have done an unbelievable job of maintaining the quality of the physical assets there,” Gomes said. “When I walked through it, I was amazed by the great condition of things and the quality of the rooms, the restaurants and the casino.”
Customers, however, said Resorts needs even more sprucing up to overcome its dated appearance.
“I think it’s not the most modern of the casinos if you look at the others,” said Jennifer Harascak, of Hazleton, Pa. “This is old school.”
Harascak suggested the casino should add attractions for families with children — “Something to make it more interesting,” she said Monday after the sale was announced.
Carmen Facciolini and his partner, Carol Smith, both from Narvon, Pa., were also visiting Resorts on Monday. The couple, in the midst of a three-day stay, said they gamble at Resorts every month or two.
Smith said the hotel’s older section could use a facelift, but she noted they were staying in the more recently renovated part of the property.
If they could have the ear of the new owners, they both said they would tell them to take care of the employees.
“The employees here are wonderful,” Smith said.
Facciolini, who plays roulette and the slot machines, added that he wouldn’t mind “a comp every month.”
“Treat the low rollers as you do the high rollers sometimes,” he said.
Staff writer Trudi Gilfillian contributed to this report.
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