The Trump Taj Mahal, originally founded by Republican presidential candidate Donald Trump for a cost of $1 billion, yesterday announced that it will be closing its doors following Labor Day Weekend in early September.
The property is owned by billionaire Carl Icahn's Icahn Enterprise and operated by Tropicana Enterprises who in a statement blames the shutdown on the ongoing strike by nearly 1,000 workers of the UNITE Here union since the Fourth of July weekend. With no end in sight to the strike, president and CEO of Tropicana Entertainment Anthony Rodio believes there is no "path to profitability," and that due to the casino bleeding millions of dollars a month the closure is necessary to meet "fiduciary duties to their shareholders."
Trump Taj Mahal History
The Atlantic City casino has experienced many difficulties ever since construction began in 1983 by Resorts International, who owned the neighboring Resorts Casino Hotel. The budget at the time was set for $250 million with James Crosby, then the international chairman of Resorts International, speculating the property would likely be called the United States Hotel.
The project immediately struggled with construction difficulties. When Crosby passed away in April 1986, Resorts International became a prime target for takeover with Trump beating out other bidders to acquire the company for $79 million in July 1987. At the time, Trump publicly stated he would complete the integrated casino resort in about a year after he was appointed as the chairman of Resorts International.
This was not meant to be, and for a few reasons. According to Atlantic City law, Trump was prohibited from owning more than three casinos. Trump at the time already had his footprint deep in Atlantic City, operating two casinos including the Trump Plaza Hotel and Casino and Trump Marina with Resorts Casino Hotel having become his third casino property.
Meanwhile in 1988, the estimated budget for completion inflated to $930 million with $550 million needed to complete the property. The threat of bankruptcy was on the horizon. After failing to secure financing, Trump offered to purchase all outstanding shares of Resorts International for $22 a share and finance the remaining construction with the caveat that he owned 100 percent of the property.
This began a battle between Trump and television host and media mogul Mervyn Griffin, Jr., who offered a much more substantial $35 per share for Resorts International. After numerous lawsuits were filed between the two, a settlement was reached in November 1988 whereby Griffin acquired the Resorts International and sold the Taj Mahal to Trump for $273 million.
Shortly thereafter, Trump then was able to complete the construction of the property. The doors finally opened on April 2, 1990 thanks to the raising of $650 million in junk bonds with a high 14 percent interest rate.
The casino was easily the largest in Atlantic City with 120,000 square feet of gaming space alone, and was the highest grossing casino until 2003 when the Borgata Casino Hotel & Spa opened its doors in 2003.
Despite its size, the casino continued to experience difficulties after opening, primarily due to not generating enough income to pay its creditors. This resulted in a bankruptcy agreement in 1991 whereby the junk bond holders received 50 percent of the property in exchange for lower interest rates and a longer payback period.
For more than a decade, the Trump Taj Mahal was the main attraction of Atlantic City with very few reported problems. A restructuring took place in 1996 when new publicly traded company, Trump Hotels & Casino Resorts, acquired the property at a valuation of $890 million.
By the time 2009 rolled around, Trump extinguished his entire ownership of the casino resort outside of a 10 percent stake in return for the use of "Trump" in the property's name.
Struggles continued to mount until September 10, 2014 when Trump Hotels & Casino Resorts filed for bankruptcy. At the time, the group announced the Trump Taj Mahal would close on November 13, 2014 unless there was an agreement from union workers on concessions.
While the company's Trump Plaza Hotel and Casino was one of four casinos to shutdown during an epic downsizing in Atlantic City, the potential closure of the Trump Taj Mahal was ultimately averted by Icahn.
The potential closing date was pushed back several times with a hard deadline date of December 20. Two days prior to the deadline, Icahn committed $20 million of much needed funds to the casino while union workers agreed to concessions.
In March 2015, Trump Hotels & Casino Resorts appeared to be saved by Icahn Enterprises after Icahn agreed to take over the company by converting $292 million of debt into equity and infusing $13.5 million into the Trump Taj Mahal. As part of the agreement, Trump no longer would receive any benefits from the casino though it would still be allowed to continue using his name.
One year later, in February 2016, the bankruptcy court released the company under the new ownership.
To the public eye, things appeared to be going well with the casino's poker room reopening in May 2016 after its shutdown in February 2015. However, it appeared that while more expansion was potentially planned, the casino's operators also began expressing skepticism surrounding the state's legislature considering to allow casinos in the northern part of the state.
The potential turnaround for the casino was further thwarted when the nearly 1,000 union workers went on strike on July 1 demanding certain benefits to be restored and better conditions. As noted, the casino's ownership and operators now state they are unable to see a "path to profitability" under the current conditions and have announced plans to close permanently.
Lead image courtesy of Wikipedia.org.