David G. Schwartz was convinced from the start it didn’t make sense for Hard Rock International — or anyone else — to build a new, small-scale casino in Atlantic City. After taxes, wages and other expenses, the leftover revenue from a smaller gambling operation would hardly justify the cost, he said.
Hard Rock’s long-term plan was to start out with 208 hotel rooms and build a second tower within two years, bringing the total hotel size to 850 rooms. They planned to do so using one of two “boutique casino” licenses created last year by the Legislature. However, the boutique casino route wasn’t Hard Rock’s only opportunity to enter the Atlantic City gaming market — far from it.
During testimony before the Casino Control Commission in November 2011, Commissioner Edward J. Fanelle asked Hard Rock Chairman Jim Allen why the company didn’t just buy an existing casino and hotel. Allen admitted that “five to six, maybe more” of the city’s casino operations had approached Hard Rock about such a deal. He said they looked at one property, but ultimately declined all offers.
“And basically the reason is that we think that new construction is what’s going to change the perception of Atlantic City,” Allen told the commission.
He said Hard Rock has a strong brand that wouldn’t fit into an existing building.
“We just did not feel that the bones — you know, the basic structures of any of the properties that have gone through some challenging times — could have really been rebranded enough to change the image,” he said.
Schwartz thinks they should have thought harder about acquiring an existing hotel, citing the very low selling prices fetched by the city’s casinos in recent years. Resorts Atlantic City sold for $31.5 million in 2010. Trump Marina Hotel Casino sold for $38 million last year.
“Even if you spend $100 million in renovations, you’re going to come out ahead,” he said.
Landry’s Inc. spent $150 million to renovate the former Trump Marina and rebrand it as Golden Nugget Atlantic City.
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