Even if Revel Casino Hotel, which started its second trip
through Chapter 11 on Thursday, is virtually given away in a bankruptcy
auction, a new owner might have to spend $150 million to fix fatal flaws in its
design, experts said.
"I don't even know if $150 million gets you to where
you need to be," Alan R. Woinski, chief executive of Gaming USA Corp., a
consultant in Paramus, N.J., said Friday.
Woinski said he imagines another scenario for the $2.4
billion Revel that would have left Atlantic City better off, ultimately.
"The best thing that could have happened to that
property is Hurricane Sandy, instead of nailing Seaside Heights, would have
nailed that property. That thing should have wound up in the ocean instead of
the roller coaster," Woinski said.
"It's sad, but unfortunately that was the only way, to
completely knock the thing down and redo it," Woinski said.
It sounds harsh. But when Revel opened in 2012, it added
slot machines and gambling tables to the Atlantic City market without expanding
the market itself, industry executives said.
Instead, Revel siphoned gamblers from other local casinos,
jeopardizing jobs throughout the city's casino industry.
Now, Revel's hedge-fund owners, who took control of the
casino in the first bankruptcy, will attempt to sell the soaring
130,000-square-foot casino with court supervision. If that fails, a shutdown is
possible, Revel officials said.
"It's not a good day for sure when you're talking about
closing a property and throwing several thousand people out of work and,
frankly, nothing on the horizon to take its place," said State Sen. Jim
Whelan (D., Atlantic).
As of June 1, Revel employed 3,187, including 1,718 full
time. Revel's biweekly gross payroll is $3.3 million, plus $585,000 in tips
biweekly, Revel said in a bankruptcy court filing Thursday.
"The hope is that through the bankruptcy process a
buyer will emerge. I know they've had serious talks with a number of people,
but obviously they don't have anything done yet. It's troubling," Whelan
said.
"One of the major concerns there," he said,
"is that a lot of casino people have looked at [Revel], and they've said
there are design flaws there. That's more than a rebranding."
Revel's design faults, according to Woinski and other
critics, include a long distance between the casino floor and the hotel's front
desk, a casino floor that fails to engage gamblers, and vast empty spaces that
make Revel expensive to heat and cool.
"Unless you park on the right floor of the garage, so
you can walk right into the casino, people don't even know how to get into the
casino," said Saverio R. Scheri III, president and chief executive of
WhiteSand Gaming L.L.C., a consulting firm with offices in Atlantic City, Las
Vegas, and overseas.
A major gutting of Revel would not be worth it, Scheri said.
"You'll never make that money back," Scheri said. "If somebody
picks that property up at $100 million, which is like a nickel on the dollar,
that's not a bad deal. You could make money, if you're smart."
Another industry expert said that Revel could fetch as
little as $50 million to $60 million in an auction.
That is far from the $300 million to $400 million Revel's
owners were hoping to get, analysts at Union Gaming Research, of Las Vegas and
Macau, said in a report Thursday.
Big investments in Atlantic City casinos no longer ensure
easy profits.
Landry's Inc., an international restaurant and casino
operator, bought the former Trump Marina Hotel and Casino for $38 million in
2011 and spent $100 million renovating it, and still lost money in 2012 and
2013 despite revenue gains, filings with the New Jersey Division of Gaming
Enforcement showed.
Sen. Raymond Lesniak (D., Union) said he doesn't think a big
investment is coming Revel's way.
"Nobody's going to invest the type of money that's
needed to rebuild Revel," said Lesniak, who has long advocated for casinos
in North Jersey.
In 2011, Gov. Christie gave Atlantic City five years to get
its act together, to show that it could have a viable casino industry despite
the competition from surrounding states. Only then would he seriously consider
allowing a casino to open elsewhere in the state.
A Christie spokesman, Kevin Roberts, did not respond Friday
to a request for comment about whether Revel's second bankruptcy would cause
any changes to that five-year plan.
Source: Philly.com
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