The Atlantic City region is on the brink of a short-term
economic disaster.
Atlantic City made history 36 years ago when it opened the
first legal casinos in the United States outside Las Vegas.
Now it's doing so again as casino employment - which for
years exceeded the number of city residents - drops precipitously after a
decade of steady decline.
The closing of three casinos, starting with Showboat and
Revel this weekend followed by Trump Plaza two weeks later, and the rapid-fire
loss of 5,700 jobs, draw historic comparisons to longer-term collapses of U.S.
industries such as steel.
"This is a massive economic body blow to Atlantic City
on par with the hit to the national economy during the Great Recession,"
said Mark Zandi, chief economist at Moody's Analytics in West Chester.
Beyond the thousands of job losses, which will spread into
related industries and the general economy, Atlantic City will soon be left
with four empty buildings (including the shuttered Atlantic Club) that have no
clear future.
"What we've got in Atlantic City is unprecedented. It
hasn't happened before in this type of context, where they are going to shutter
them up and literally can't give them away for pennies on the dollar, like
Revel," said Alan Silver, a former casino-industry executive who teaches
at Ohio University in Athens, Ohio.
Silver and other casino-industry experts said there was
little precedent for reusing casinos for anything other than hotels.
David G. Schwartz, director of the Center for Gaming
Research at the University of Nevada in Las Vegas, could point to only one
former casino in the United States - the Golden Phoenix in Reno - which was
turned into condominiums.
In addition to condominiums and time-shares, experts are
quick to mention boutique hotels, which have become increasingly popular in Las
Vegas and other cities.
"It's nice to do all these things, but you've got to
have supply and demand and you've got to have the various attractions there to
get people to come to Atlantic City," Silver said.
Atlantic City Mayor Don Guardian, who has adopted a
salesman-in-chief attitude since taking office in January, spoke optimistically
last week of openings expected next year, including a Bass Pro Shops location
and Harrah's Conference Center, that could create 1,300 jobs in the city.
Guardian expressed confidence Friday that Revel would be
resurrected as a casino under a new name, projecting that it would sell for $25
million to $50 million. That would also reduce the job losses.
"At $50 million, it's certainly a bargain-basement
price for a brand-new facility. It's finding the right buyer, meaning having
the financial wherewithal, and then that buyer finding the right brand to come
in and run it," he said.
Fitch Ratings estimated Friday that $280 million of the $457
million gamblers lost during the last 12 months at the casinos that are closing
would be captured by the survivors. That will help boost profits, and perhaps add
some jobs at those properties.
Caesars Entertainment Inc. said more than 470 of the 2,068
Showboat workers had found jobs at other Caesars operations, mostly in Atlantic
City. That announcement Friday reduced anticipated losses from 6,100.
Those transfers will soften the blow, but Atlantic City -
which lost 1,600 jobs when the Atlantic Club closed in January - still must
brace for historic job losses.
"This concentration both in terms of number . . . and
almost within a single month probably, is unprecedented" in New Jersey,
said James W. Hughes, dean of the Edward J. Bloustein School of Planning and
Public Policy at Rutgers University in New Brunswick.
Hughes, coauthor of one of the earliest studies of New
Jersey's public policy gamble on casinos, said downsizing in the steel and auto
industries was typically gradual, reducing shifts, closing units.
In Bethlehem, Pa., for example, jobs at Bethlehem Steel
Corp., whose operations once stretched five miles along the Lehigh River,
dribbled away from a peak of more than 30,000 during World War II. There were
13 when the plant closed for good in 1998, the Allentown Morning Call reported
at the time.
"Here, it's like falling off a cliff," Hughes said
of the situation in Atlantic City.
In the 1990s, employment in Atlantic City casinos hovered
around 45,000 most years, though it peaked at more than 49,000 in 1997. During
that period, the city had about 38,800 year-round residents, according to
census data.
The casino jobs that will be lost in the next two weeks will
bring the total down to around 26,000. The losses represent more than 4 percent
of Atlantic County's labor force of 131,800.
Zandi said the loss in the Atlantic City region would rise
in the next year as consumer and government spending falls, possibly matching
the 6 percent job loss nationally from the start of 2008 through mid-2009.
"Atlantic City has admirably weathered many economic
storms - unfortunately, another big one is coming," Zandi said.
Source: Philly.com
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