Once again, bad luck has befallen Atlantic City's former Revel Casino Hotel.
Its owners, Revel AC, terminated a deal Tuesday to sell it to a Florida developer who wanted to re-open it as part of a mixed use facility combining gambling with tourism. Here's a look at what's going on with New Jersey's most star-crossed (former) casino:
Revel AC canceled the deal to sell the casino to Glenn Straub because Monday's deadline for the $95.4 million sale out of bankruptcy court to be completed had passed. Revel also pocketed Straub's $10 million deposit and says it's looking for a new potential buyer, which would be the third.
Both Revel and Polo North Country Club, Straub's company, will be in bankruptcy court in Camden on Wednesday, urging Judge Gloria Burns to side with them. Revel wants the judge to approve its termination of the sale (and its intention to keep the $10 million deposit), while Straub's lawyer will ask the judge to extend the sale deadline to Feb. 28, arguing that many thorny legal issues that no one has thus far been able to solve need to be sorted out before Straub can know exactly what he's buying. They involve the legal rights of business tenants at the former casino including a nightclub and restaurants, as well as Revel's lone utility supplier. They want the court to prevent Straub from booting them out if he takes ownership of the casino.
WHAT LED TO THIS?
Revel opened on April 2, 2012, with high hopes of helping to turn around Atlantic City's slumping casino market, which is being hurt badly by growing numbers of casinos in neighboring states. But it started construction just before the Great Recession hit, ran out of money and then had to borrow at interest rates it proved incapable of paying off when its casino revenues came in much lower than expected. Revel remained mired around seventh or eighth place among Atlantic City's then-12 casinos in terms of the amount of money it won from gamblers. Its initial strategy to focus on high-end leisure travelers at the expense of convenience gamblers also hurt it, and by the time it did a 180-degree turnaround in its marketing strategy, it was probably already too late. The casino filed for bankruptcy twice and shut down on Sept. 2, never having turned a profit. A previous deal to sell the casino to Toronto-based Brookfield Asset Management for $110 million fell through in November.
WHY DO THESE SALES KEEP FALLING APART?
Seemingly intractable legal issues involving debt and the right of former tenants to continue doing business at Revel under new ownership continue to bedevil potential buyers. Brookfield walked away after it could not reach an agreement with bondholders over debt from the construction of the power plant. That utility facility is also a major player in the current dispute; it has threatened to cut off service to the building unless its debts are paid. And the restaurants and the former HQ nightclub don't want to lose their $16 million investment, which they probably would have had Straub been allowed to buy the casino "free and clear" of their leases, as a previous court ruling — now overturned — would have allowed him to do.