Steve Sweeney and James Whelan Are Sponsoring a Tax Bill Which Might Stave off the Closing
Trump Entertainment Resorts has pushed back the closure of Trump Taj Mahal eight days, fueling speculation that a last-minute deal is in the works. In a bankruptcy filing, the owners of Trump Entertainment pushed the close date to December 20. The filing added that the closing of Trump Taj Mahal might be pushed back again, if signs pointed to a deal being brokered.
In the filing, Trump Entertainment said the push-back date is due to progress with state officials on financial breaks for the casino, which might make the business economically feasible. Would-be owner Carl Icahn has tried twice to get others to change the economic equation. He asked Mayor Don Guardian of Atlantic City for hundreds of millions of dollars in tax breaks, but was rebuffed. Then Icahn got a court order forcing its union workers to give up their health care and pension plans, only to meet with angry opposition from his 3,000 employees. The casino continues to negotiate with the Unite Here Local 54 on the health and pension plans.
Tax Breaks for Trump Entertainment Resorts
Now it appears that the state government might be able and willing to give Trump Taj Mahal the financial breaks which Carl Icahn and Trump Entertainment Resorts say are needed. In the Trump Entertainment Resorts filing this week, the company made a statement: “The debtors continue to make progress with respect to various efforts that are critical to the success of these chapter 11 cases and their ability to keep the Taj open, and therefore it remains possible that the current proposed closing date for the Taj…will be further extended.”
Hard Rock Restaurant Motion
The direct reason for the filing was a motion by the Hard Rock restaurant in the Trump Taj Mahal. The motion was filed to compel a decision soon on whether the casino will keep Hard Rock’s lease or reject it.
The casino had plans to close on December 12. That date was set after an original bankruptcy filing indicated Trump Taj Mahal would close on November 13 or in the week or two following that date. Therefore, the casino has pushed back the close date on two occasions and up to six weeks in time. The ownership does not seem convinced the business is a failure just yet, though a final decision could be approaching soon.
Steve Sweeney and James Whelan
Carl Icahn and Trump Entertainment Resorts’s Board of Directors appear to see a recent legislative initiative in a positive light. State Senate President Steve Sweeney and State Senator James Whelan are co-sponsoring a bill that would give Atlantic City casinos a tax break of sorts. The bill would stabilize the tax situation, allowing executives and potential creditors a clear picture of what the tax liability would be from year to year.
Under the Sweeney/Whelan plan, Atlantic City casinos would pay a flat $150 million in taxes, instead of a variable tax. The $150 million payments would last for the first two years of the plan. For the next 13 years of the plan, casinos would pay $120 million per year. Such a plan is meant to give clarity, along with a bit of a tax break.
Avoiding a Fifth Casino Closing
Atlantic City has had 4 casinos close this year, including the Atlantic Club in January, The Showboat Casino in August, and both Revel Casino and Trump Plaza in September. New Jersey leaders are trying to forestall the 5th closing of the year, though it is requiring imaginative efforts to create a workable plan. Business leaders, union workers, and politicians have pointed fingers at one another, as the various players try to protect their own interests, as well as their public image.
Getting Its Act Together
Under those circumstances, outsiders might have gotten the impression that New Jersey lacks direction, that its leaders will not be able to get a plan together before it’s too late. The ongoing negotiations belie that impression. It might be that the final decision hinges on the new gaming tax bill.
If the December 20 close date isn’t pushed back once more, that would mean 3,000 more Atlantic City workers would lose their jobs just 5 days before Christmas. Given that the Trump Taj Mahal workers are united and vocal about their dislike of Carl Icahn, that would prove a public relations disaster for business and political leaders.
One has to think such a closing would not happen, if only for public relations reasons. But Atlantic City has shown in recent months, with bankruptcies, failed bankruptcy auctions, surprise closings, and public demonstrations, any twist is possible. Resident John Mire said it best to a reporter recently: “Who knows with Atlantic City casinos? Nothing would surprise me.“
