Hard Rock International will pump $375 million into the recently acquired former Trump Taj Mahal casino and hotel with the hopes of rebranding the Boardwalk property into a world-class entertainment and gaming destination.
On Wednesday, company officials formally unveiled their renovation plans for the site, which, when completed in summer 2018, will feature two separate 7,000-plus-seat multipurpose arenas, a larger Hard Rock Café, redesigned hotel rooms and an updated casino floor that will include 2,400 slots and 130 table games.
Hard Rock says the property will lead to 3,000 permanent positions and 1,000 construction jobs, helping to counter the effects of the loss of approximately 3,000 jobs last October when billionaire investor Carl Icahn and management company Trump Entertainment Resorts closed the Taj Mahal due to poor performance and ongoing labor disputes over what local labor leaders claimed were inferior benefits included in recent contract negotiations.
One by one, company representatives and elected officials lined up at the podium Wednesday to sing the project’s praises. But how good of a deal is it? Let’s take a closer look.
When you look at other Hard Rock properties across the globe and then compare them to the renderings the company has released for the Taj Mahal site, it’s hard not to immediately think that Revel would have better served the project. It’s sleek, modern and easily fits with the Hard Rock theme.
No doubt someone could’ve turned that massive golf ball at the top of the building into one of the brand’s signature guitar logos.
Hard Rock Chairman Jim Allen has previously said in reports and reiterated Wednesday that the company did look at Revel, which has now been rebranded as TEN Atlantic City under new owner Glenn Straub, but has mostly left it at that.
While we don’t have details of the Taj sale, we know that Hard Rock plans to put $375 million towards the site to remake it as its own. That’s not a massive amount, considering that the casino opened in 1990 and its unique theme is heavily carried throughout the entire property.
Sources have repeatedly told us through the years since Revel’s closing that despite it still being the newest and shiniest of the bunch, the casino’s layout is dreadful and would require a huge capital investment just to correct its design flaws before anything else was touched up.
Consider that, in 2014, when Revel was going up for auction after declaring bankruptcy for a second time, industry experts told us that fixing the layout alone could cost a potential buyer approximately $200 million.
Hard Rock officials Wednesday referred to the Taj’s “good bones” and experts point out that the building former owner Donald Trump once referred to as the “eighth wonder of the world” used to also be the highest-grossing casino in the city until Borgata opened in 2003.
Sources say that a well-established gaming giant like Hard Rock should have little issue restoring the property into a moneymaker, as long as the Atlantic City market will allow for it.
Seems like a silly question, but the way things have been in Atlantic City, you never know.
At least, that’s the perception. One Allen quickly said was false.
“I want to make sure everybody understands. We've done amazing in-depth analysis. No one in Atlantic City is losing money. Everybody is positive at the EBITDA line,” he said of the acronym for earnings before interest, taxes, depreciation and amortization.
“And frankly, some properties are doing in excess of $250 million in EBITDA, that rivals anything in Atlantic City except for two places. Atlantic City is back, it’s profitable.
“Certainly, yes, I am from this area. But I assure you I would have never made this decision and recommended to the tribal council or the board of Hard Rock International if we did not think this would be an amazing addition and asset to the Hard Rock brand and family.”
So, the obvious answer is undoubtedly “yes.” There are 3,000 new permanent jobs being created to fill the void of the 3,000 permanent jobs that were cut due to the closing of the Taj. The 1,000 or so construction jobs on top of that are just gravy.
Elected officials from both sides of the aisle are calling this project a winner. Gov. Chris Christie and Senate President Steve Sweeney (D-West Deptford) had a bit of a Kumbaya moment Wednesday as each talked about their willingness to work with the other and make the hard decisions needed to revive the city.
“We’re bringing Atlantic City back,” Sweeney said. “We’re bringing jobs back.”
The project also got a thumbs-up from state Sen. Jim Whelan (D-Northfield) and even Mayor Don Guardian, who last year likened the Christie-imposed state takeover of Atlantic City to a “fascist dictatorship” and has remained critical of the governor, gave Christie some credit and said the project was a “great way to rebuild our city.”
Assemblyman Chris Brown (R-Linwood), who had been very critical of the Christie takeover of the city, was equally critical in telling the Press of Atlantic City that Hard Rock’s project was a “direct result” of last year’s ballot-box defeat of the referendum to bring casino gaming to northern New Jersey.
“There was talk of Hard Rock being interested in a boutique casino in Atlantic City. However, the interest waned when they had the option of building a billion-dollar casino in North Jersey,” Brown told NJBIZ.
Which brings us to our next question…
Yes. One source in the room Wednesday noted that he thought it was a little rich to hear Allen and other officials talk about Hard Rock’s commitment to not just New Jersey, but Atlantic City in particular when, less than two years to the date, Allen was unveiling the company’s plans for a $1 billion casino project at the Meadowlands Racetrack.
On Wednesday, Allen played up his Atlantic County roots and investors in the project, include the Jingoli family of Lawrenceville and the Morris family of Piscataway.
"We don't forget where we came from, and that's why we're back here," said Jack Morris, CEO of Piscataway-based Edgewood Properties.
That’s all fine and dandy, and the case can be made that any investment in New Jersey is potentially better than no investment at all, especially with last year’s proposal slated to pump a chunk of new revenue back into Atlantic City.
But that was then, and this is now. Despite its defeat, the referendum is sure to come up again in another couple of years and, as one source pointed out, Hard Rock could still be in line for a future casino in northern New Jersey if any future proposal is similar to last year’s in that only currently-licensed operators in the state will be permitted to apply for a new gaming permit.
Just some food for thought. For now, it’s all about Atlantic City for Hard Rock.
From a pure gaming revenue standpoint, Hard Rock’s place in Atlantic City is questionable.
In case you’ve been living under a rock for the last decade, the growth of Pennsylvania casinos has wreaked havoc on the city’s gaming market, and there is yet another massive property in the works coming soon to South Philadelphia.
Since the shuttering of four Atlantic City casinos in 2014, industry experts have noted that revenues have increased. But that’s mostly due to less competition, not a growing market.
Allen got out in front of that topic Wednesday, noting in his news conference that Hard Rock plans on attracting new customers to Atlantic City, as opposed to just poaching them from other existing properties.
“We are very confident that we can grow the market,” Allen said.
While that’s debatable, a point to consider that was repeated throughout Wednesday’s event, particularly by Christie and Allen, is that Hard Rock wouldn’t be entering the market and undertaking a massive renovation project if it didn’t think it could make money.
And though other existing properties may now have to deal with increased competition for customers, no one can deny that Hard Rock will bring a much-needed boost of energy and intrigue to the market that could, indeed, attract a new audience.
Nothing wrong with some healthy competition if it makes everyone else better, right?
For believers in the city, one of the best parts about Hard Rock’s entry into the market is that it’s not occurring in a bubble.
Elected officials will tell you that it’s not just Hard Rock. It’s Hard Rock, plus the Stockton University Gateway Project.
It’s Hard Rock, plus Boraie Development’s planned $81 million residential project in the South Inlet.
It’s Hard Rock, plus Philadelphia developer Bart Blatstein’s acquisition of the Showboat and other properties in the city.
There is finally momentum, even if it’s tough to quantify at the moment. It’s way too early to celebrate, but officials aren’t totally off base with their high levels of enthusiasm.
That’s how the dialogue starts changing from it being Hard Rock, plus a state takeover.