March 2, 2017

Taj Mahal Deal Value Means High Reconstruction Costs

Print More

Bill Sprouse/Route 40

Hard Rock International and the Morris and Jingoli families will invest more than $300 million to reopen the shuttered Taj Mahal casino in Atlantic City, with the bulk of that money spent on reconstruction, according to financial documents.

The Hard Rock, Jingoli and Morris team have not disclosed the price they paid to purchase the property, but it is not likely to be more than the $86 million combined valuation for both the Taj and Trump Plaza that their owner reported in a quarterly results statement on Wednesday.

The Taj Mahal, opened to big fanfare in 1990 by Donald Trump, closed its doors to a trickle of customers in October, capping the end of a lengthy labor dispute with Local 54 UniteHere.

Icahn Enterprises, the holding company of billionaire investor Carl Icahn, reported on Wednesday the value of its investment in the Taj and Trump Plaza fell $32 million to just $86 million at the end of December from September last year. The two properties were valued at $206 million just a few months earlier at the end of June. The Taj Mahal closed on Oct. 10. The Press of Atlantic City reported this week that the Trump Plaza could be demolished.

Icahn Enterprises also said it recorded a $106 million impairment to the property when it closed the Taj in October.

It is interesting to see from the financial statement that the value of Tropicana increased in 2016 (although it took a dip in the last three months of the year). Tropicana, which operates eight casinos, saw a pickup in business at its Atlantic City outlet during the Taj Mahal workers’ strike and after that casino closed (as Route 40 reported here). The statement says the Tropicana company was worth $862 million at the end of 2016, as valued at 8.5 times its core profit, up 9 percent from the end of 2015.

It is not clear how many of the former Taj Mahal workers will return to the property under new management, or how soon it might reopen. In a statement, Local 54 said it looks forward to working with the new owners. A spokeswoman for the casino’s new owners did not immediately respond to a request for comment.

The ‘Trump’ name has been removed from the casino over the last few weeks.



Comments are closed.