Carl Icahn says union health and pension costs helped kill 4 Atlantic City casinos last year

Retirement Planning Associated Press

Billionaire investor Carl Icahn says a big reason four of Atlantic City's 12 casinos closed last year is the "exorbitant" payments they had to make to a union-run health insurance fund and an underfunded pension plan.

Continue Reading Below

Icahn told The Associated Press on Tuesday that Local 54 of the Unite-HERE union "is one of the main contributors to the problems in Atlantic City." His comments came a day after union president Bob McDevitt said Icahn is trying to "disembowel" Atlantic City to line his own pockets.

"McDevitt neglects to mention that one-third of Atlantic City's casinos closed in the last year in no small part because they were required to pay exorbitant contributions to his secretive, immensely profitable union-affiliated health care plan as well as the (National Retirement Fund) pension fund," Icahn said.

"Simply put, his union is one of the main contributors to the problems in Atlantic City, but instead of taking some responsibility or agreeing to make concessions that could save jobs, he is instead employing that age old strategy of pick a scapegoat, tell a lie and foment outrage. But I will not be intimidated."

The union had no immediate response Tuesday.

Icahn owns the Tropicana, and is acquiring the Trump Taj Mahal through bankruptcy court by swapping $286 million in debt he owns from Trump Entertainment Resorts for ownership of the company. Though he doesn't yet own it, Icahn is lending the casino money to stay open.

Continue Reading Below

Robert Griffin, CEO of Trump Entertainment, said union health and pension costs were a major reason why the company filed for bankruptcy last September, and one of several reasons why it decided to shut Trump Plaza on Sept. 16.

"We started talks with Local 54 very early in 2014 and we told them we couldn't afford the current plans," Griffin said. "We told them we can't afford to have three people do the job of one, and that we need to negotiate a new contract. We received no response. It was one of the leading factors that pushed us into bankruptcy."

Icahn said the pension fund to which the union belongs, and a union-run health care plan are unaffordable. Icahn said he pulled the Tropicana out of the pension plan "which has underperformed the S&P 500 by over 50 percent during the last five years, and is currently underfunded by billions of dollars." The Tropicana now offers its workers a 401(k) type retirement plan.

He also wrote to Taj Mahal workers Monday, saying their union-run health plan is unaffordable, and emphasizing that he does not yet own the company.

The union is appealing a judge's termination of health and pension coverage for Taj workers. Icahn has threatened to close the casino if the ruling is reversed.

___

Wayne Parry can be reached at http://twitter.com/WayneParryAC