Although Donald Trump may have authored "The Art of the Deal," it was the Seminole Indians who struck an exceptional business deal when they acquired a lavish casino built by the current President of the United States.
The Trump Taj Mahal, a casino located in Atlantic City, the gambling hub of New Jersey, was originally built by the billionaire for a staggering $1.2 billion in 1990. However, its current value is only a fraction of that amount, representing a mere fraction of its former glory.
The Securities and Exchange Commission filings disclosed that the closed casino was sold to Hard Rock International for a staggering amount of 50 million dollars, according to the documents submitted. Undoubtedly, the sale generated a significant amount of controversy at the time, but it can be viewed as a lucrative deal given the construction value.
During the casino's grand opening, Trump famously dubbed it "the eighth wonder of the world." However, in 2009, he would sever ties with the establishment, although he retained a minor stake in the business pertaining to the right to use his name.
Last year marked the end of that minuscule portion of the business when Icahn acquired Trump Entertainment Resorts, a company that had fallen into bankruptcy. Icahn and the labor union representing the primary casino in Atlantic City were unable to reach an agreement to secure tax and healthcare benefits. Consequently, the union decided to initiate a strike.
In October, Icahn made the decision to shutter the casino, citing an inability to turn a profit, while also expressing regret over the staggering losses reaching $350 million. Despite the closure, Icahn still retains ownership of the former Trump Plaza casino, which ceased operations in September 2014.
Hard Rock, owned by the Seminole Indian Tribe of Florida, has plans to reopen the Taj Mahal casino in 2018, following the resolution of casino-related matters and the removal of all references to Trump.
Hard Rock plans to invest $375 million in renovations that will showcase some of the world's largest music collections. Hotel guests will even have access to Fender electric guitars to play in their rooms.
In addition to recognizing an opportunity in a market that appears to be stabilizing following the closure of five out of its twelve casinos since 2014, this venture also holds significance for the Hard Rock in another regard.
The company that has entered into a partnership with Meadowlands Racetrack operator Jeff Gural intends to develop a casino resort in East Rutherford, situated just outside of New York City, should the voters of New Jersey opt to amend the state constitution to allow gambling in casinos beyond Atlantic City.
Despite the resounding defeat of a referendum in November aiming to allow such a maneuver, hope remains high. The defeat has not dampened the optimism surrounding the possibility.
Even though the forthcoming legislation is presumably designed for the next casino expansion attempt, the regulations enacted last year provided existing casino owners in Atlantic City with the initial opportunity to acquire one of the two new licenses that would have been established once the proposed measure was approved.
Having acquired the former Taj Mahal, Hard Rock will be well-positioned to operate a North New Jersey casino license if the legislative path aligns with expansion. If the legislative landscape aligns favorably, Hard Rock's ownership of the former Taj Mahal puts them in a prime position to pursue a casino license in North New Jersey.
