In a move that couldn’t be worse timing for The Donald, the Associated Press is reporting that Carl Icahn is shutting down the Trump Taj Mahal casino in Atlantic City. While Trump currently has no stake in the casino (he lost his ownership to bondholders in a previous bankruptcy filing) we have a sneaking suspicion that his rivals will take advantage of this opportunity to highlight his previous failed business endeavors. For his part, Icahn acquired his stake in the Trump Taj Mahal during it’s previous bankruptcy filing. Icahn is attributing the closure of the casino to a strike by its unionized workers over wages and health insurance costs. The casino is expected to be closed after Labor Day and will result in 3,000 job losses for the struggling Atlantic City.
In comments made to the Associated Press, Icahn said that he lost nearly $100 million on the Taj Mahal in the past 18 months, including money he spent to keep it afloat during bankruptcy court before he even owned it, added that “It was a bad bet. How much good money do you throw after bad?”
Tony Rodio, CEO of the casino, said that Icahn has spent $100mm trying to save the Taj in Atlantic City. He continued:
“Currently the Taj is losing multimillions a month, and now with this strike, we see no path to profitability. Our directors cannot just allow the Taj to continue burning through tens of millions of dollars when the union has single handedly blocked any path to profitability.“
According to NBC, Trump once owned three Atlantic City casinos, but cut most ties with the city by 2009. Having lost ownership of the company to bondholders in a previous bankruptcy, Trump resigned as chairman of Trump Entertainment Resorts, retaining a 10 percent stake in return for the use of his name. That interest was wiped out in bankruptcy court when Icahn took over in March.
Hope Hicks, a spokeswoman for Trump’s presidential campaign, told the AP, “Mr. Trump made a tremendous amount of money in Atlantic City during its prime. He has not been involved for seven years, with many people giving him great credit for his timing and success.”
Bob McDevitt, President of Unite Here Local 54, which represents about 1,100 workers at the casino, called the closure “petty” and an attempt to break their labor strike.
“This titan of Wall Street is utterly incapable of making a decision unless it is mean-spirited and benefiting him alone. The great dealmaker would rather burn the Trump Taj Mahal down just so he can control the ashes. In the end he’ll have to live with what he’s done to working people in Atlantic City. The Boardwalk is littered with empty monuments to his greed.“
Atlantic City, once the U.S. East Coast’s only casino gambling site, is struggling to pay its bills and has until November to devise a fiscal recovery plan or else face possible state takeover. Its property tax base eroded when its gambling industry lost value because competing casinos began opening in neighboring states. Atlantic City Mayor Don Guardian said in a statement that it is “unfortunate and disappointing” that no resolution has been found to keep the Taj Mahal open, but ended optimistically: “Atlantic City has been resilient for over 160 years and we will continue to do so, as we rise to meet any challenge ahead of us.”