New Jersey Senate President Steve Sweeney and activist shareholder Carl Icahn are in a war of words over the future of the Atlantic City casino industry. The immediate cause for their public rhetoric is Icahn's attempts to keep the Trump Taj Mahal open after November 13, when bankruptcy documents show the casino is set to close.
Steve Sweeney was in Atlantic City to visit with union workers at the Trump Taj Mahal late last week. He was visiting with employees he expects will lose their jobs in November. According to WCBS 880's Levon Putney, Sweeney made remarks to the workers which were highly critical of Carl Icahn's handling of the resort's financial situation. Sweeney said about the closing of the Trump Taj Mahal, "It would shock me if it didn't, the way this guy's playing it now--Mr. Icahn's playing it."
Icahn Poised to Control Trump Entertainment
Trump Entertainment has said it will close the Trump Taj Mahal on November 13. After that announcement, Icahn said he would provide the casino with $100 million to keep it open, but in return, he asked for tax credits and union givebacks. The aid would have amounted to $25 million, but it was the concessions he wanted from casino workers which offended Sweeney. Under Icahn's plan, the works would stop corporate payments into their pension and union health fund.
Steve Sweeney Resents Icahn's Demands
Steve Sweeney believes investments should come for the struggling Atlantic City casinos free of strings attached. Icahn replied that the investment cash went into the Tropicana Casino & Resort. He'll be in court this coming week trying to force the concessions on Atlantic City.
Sweeney said on Thursday that Icahn is holding the city hostage in its time of need. He added, "And if he doesn't get everything he wants' he's closing anyway--what he's basically said. But if he can get all this money from the taxpayers and the workers, then he'll make an investment in the property."
Icahn Says Sweeney Sold Out the Boardwalk
Carl Icahn responded on Friday that Sweeney had "sold out" Atlantic City with his plans for a casino in North Jersey. Even though Sweeney promised over $1 billion in tax revenues to be directed to Atlantic City over a 10 year period for use on city infrastructure costs in retooling the economy, those would not be the kind of renewable revenue stream that could sustain a city long term.
Icahn's full statement read, "Sweeney is selling out Atlantic City to northern New Jersey on the one hand, and now he’s telling all these employees in Atlantic City that Carl Icahn is to blame, when I’m the only one that took a risk with $80 million when no one else would."
Saying Steve Sweeney has shown the ability to play for a North Jersey casino while pretending to comfort the Atlantic City gaming employees, he likened Sweeney's current actions to "a remarkable act of contortionism". Icahn went on to say, "Harry Houdini would have been proud."
Carl Icahn's Investment in Trump Taj Mahal
Carl Icahn currently holds about $285 million of Trump Taj Mahal's debt. Trump Entertainment designed a plan that would allow Icahn to take control of the bankrupt property, with the investor providing $100 million in cash. The city would have to give significant tax concessions, though. The plan also calls for union concessions. Under a longstanding agreement, any concessions made by the union in one casino would become a citywide concession. Thus, casino workers throughout Atlantic City would see their employers stop funding their pension plans.
Such finger-pointing is perhaps inevitable when leaders are confronted by a collapse as dramatic as the Atlantic City casino industry. The city went from an all-time high of $5.4 billion in revenues in 2006 to something in the range of $2.86 billion in 2013. That was in a year with 12 casinos in the city. By the time 2015 gets here, Atlantic City is likely to have only 7 casinos left.
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