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Another One Bites the Dust: Trump Taj Mahal Left with No Options

Oct 01, 2014 - by Monica Erdei
Don Guardian has rejected a proposal to revive the Trump Taj Mahal Casino Resort

Don Guardian has rejected a proposal to revive the Trump Taj Mahal Casino Resort

The situation of the Trump Taj Mahal seems hopeless after Atlantic City officials refused to reduce taxes in order to save the casino.

In May 1984, when Trump Plaza opened its doors to customers, it became Atlantic City’s 10th casino. The venue’s financial problems became evident this year, and by the middle of September owners were left with no other option but to close it.

The entire city is dealing with a huge budget deficit and several casinos have gone out of business this year, as the gambling Mecca is falling under the pressure of competition from neighboring states. In order to recover from the financial disaster, workers will be laid off and taxes on homes and businesses will be raised, as local authorities are planning to cut $40 million from the city’s budget over the next four years.

Out of the state’s 12 casinos, four have already closed. The Trump Taj Mahal Casino and Resort would be the fifth one, with Trump Entertainment threatening to shut it down mid-November. So far, all plans to save the venue have failed.

ABC News: AP: Mayor Nixes Tax Break to Save Taj Mahal Casino

According to the latest gambling news, Atlantic City Mayor Don Guardian has rejected a proposal to revive the Trump Taj Mahal Casino Resort. The city cannot afford to meet the owners’ demands for reduced taxes, the mayor explained in an interview with the Associated Press.

In the proposal, the venue’s owners asked local authorities to reduce the tax assessments of Trump Plaza from $248 million to $40 million. The hotel and casino complex closed at the middle of September. In addition, the company asked for another reduction – from $1 billion to $300 million – for the Taj Mahal.

“Given the difficult economic situation in Atlantic City, we are not in a position to accept these requests,” Mayor Don Guardian told reporters. “We cannot afford those demands.”

With these plans being rejected, the city will most likely say “no” to another offer proposed by billionaire businessman Carl Icahn, leaving the struggling venue with no other options. The entrepreneur has promised to bail the casino out with a $100 million investment, but the project comes with strings attached.

Now it looks like Trump Entertainment could close the Taj Mahal at the middle of November.

CTV News: Billionaire may invest $100M save Trump’s Taj Mahal Casino

Billionaire businessman Carl Icahn is considering spending $100 million to save the now-bankrupt Trump Taj Mahal Casino Resort, but his offer comes with considerable strings attached. The investor said he will bail the venue out “if and only if” he gets givebacks from the workers’ union, $25 million in funds from an agency in New Jersey, and tax breaks regardless of the state’s current taxation and gambling laws.

At a recent appearance in bankruptcy court, Trump Entertainment Resorts presented a letter from the businessman’s lawyer, detailing his conditions for saving the casino and asking that the debt he owns in it be converted to equity that would give him ownership.

“Notwithstanding the fact that putting more money into the Taj is a questionable business decision, we share the company’s desire to see the Taj Mahal remain open and preserve the jobs of the company’s employees,” the attorney wrote, adding that failing to get the concessions “would make it impossible to operate a viable company at this time.”

The court filing paints a dismal picture of the casino’s current financial situation and argues there is no hope for survival without Icahn’s investment. Trump Entertainment said it was going to close the venue in November, leaving 2,041 full-time and 825 part-time employees without work.

Union president Bob McDevitt warned that the businessman is “seeking to take advantage of the Atlantic City crisis to do away with the health care thousands of south Jersey casino workers and their families have fought for and relied upon for over 30 years,” and added that his proposal aims to cut total compensation for workers.

Wall Street Journal: Trump Eyes Possible Return to Atlantic City

Billionaire Donald Trump is considering buying back two casinos in Atlantic City, both of them bearing his name, but still wants his name removed from the properties. The businessman hasn’t been involved in the management of either the Trump Taj Mahal, or the Trump Plaza for seven years now. Moreover, he told the Wall Street Journal that he disagrees with the way the venues are being run.

“We have a very high standard” in the licensing contract, he told reporters, “and they don’t operate it to our standards.”

“I’d fix them and bring them back to a very high standard,” Trump said. While acknowledging that Atlantic is in a “very difficult place”, he added: “I think a smaller Atlantic City maybe has a chance.”

Trump’s lawyers argued in court that the licensing contract requires operators to maintain “the highest levels of quality, luxury, prestige, and success,” which the plaintiff believes were not met. Inspectors of Trump AC have found a “serious deficiency in quality” and demanded that they be fixed. The casinos responded, claiming they had a plan to address the “deplorable conditions” at the Plaza, but further notices culminated in a lawsuit where Trump asked for his name to be removed from the business.

The casinos were originally developed by Trump and have come close to bankruptcy before. The real-estate mogul is no longer involved in the management of these casinos, but still owns 5% of Trump Entertainment.

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