Hard Rock International unveiled plans this month for a $375 million makeover of Atlantic City’s shuttered Trump Taj Mahal Casino Resort, a move elected officials hope will help spur the debt-ridden Jersey Shore resort back to prosperity.
Jim Allen, chairman of Hard Rock International, said during the April 5 announcement that the renovation of the 17-acre Taj Mahal property, located a stone’s throw from the Atlantic Ocean, would be completed for a summer 2018 reopening. He expects the development, which will feature 2,400 slot machines and two separate music venues with 7,000 seats, to create more than 3,000 permanent jobs.
“Hard Rock’s willingness now to come in and invest significantly in Atlantic City shows you that they appreciated the hard things that have been done to restructure this city and to make it a place where investing makes sense,” said Gov. Chris Christie, who advocated for a state takeover of the city's finances last year. “This is an extraordinary brand that is coming to Atlantic City in a very, very big way.”
The Taj Mahal, which was formerly owned by President Trump, shut down operations in October after billionaire investor Carl Icahn's Tropicana Entertainment lost more than $100 million trying to save the casino after it emerged from bankruptcy in February 2016. That marked Atlantic City’s fifth casino closure in a two-year period.
Orlando, Fla.-based Hard Rock, which is partnering in the Atlantic City hotel/casino project with New Jersey developers Jack Morris and Joe Jingoli, is planning to spend more than $300 million to renovate the former Taj Mahal building. Hard Rock also proposed a casino at the Meadowlands Racetrack in East Rutherford, N.J., in 2015, a plan that fell through when New Jersey voters rejected an expansion of casino gambling beyond Atlantic City.
“Our commitment to Atlantic City has never been stronger,” said Allen. “We look forward to being catalyst for further growth and development of the area.”
Hard Rock is investing in Atlantic City five months after New Jersey’s Local Finance Board assumed state intervention, with power to alter outstanding debt and municipal contracts. The city faces $224 million in bonded debt and is planning a $72 million bond sale to pay for a settlement reached with the Borgata Hotel Casino & Spa on $165 million of owed tax refunds.
The $93 million in savings Atlantic City achieved from the Borgata settlement brokered by the state prompted a two-notch bond upgrade from S&P Global Ratings to CCC from CC, still deep in junk territory. Moody’s Investors Service rates Atlantic City debt at Caa3.
In addition to the Hard Rock development, Stockton University is planning to open a satellite campus near the boardwalk in 2018 and South Jersey Gas is relocating its headquarters to Atlantic City.
“’Atlantic City’s best days are still ahead of us,” Atlantic City Mayor Donald Guardian, who is up for reelection this year, said at the Hard Rock press conference. “I want to thank Jim Allen, Joe Jingoli, and Jack Morris and everyone else who made this possible for their commitment and love for Atlantic City.”
The new Hard Rock casino should fare better than some that have entered the Atlantic City market, given its name recognition and past success, industry experts said. The Revel opened to much fanfare in 2012 only to shut its doors two years later after two bankruptcy filings. The Revel was among four casino closures in 2014.
“The Hard Rock brand has a tremendous global identification and loyal customer base,” said Bob Ambrose, an instructor of hospitality and gaming at Drexel University in Philadelphia. "They will bring that model to Atlantic City within the framework of a total guest experience [since] it’s not just a casino, but also food and beverage, lodging, retail and great entertainment.”
Even though five casinos were shuttered in a two-year span, Atlantic City’s gambling industry revenue rose 0.4% revenue in 2016, according to figures from the New Jersey Division of Gaming Enforcement released in early April. Gross operating profits at Atlantic City’s remaining casinos were 7.3% higher than 2015 at $587.4 million, even when factoring in the Taj Mahal's closing in October last year. Revenue at the city’s remaining seven casinos jumped 15% in March from a year earlier, paced by a 40% rise in internet gambling.
“The Atlantic City gaming/hospitality model and its public perception since its decline is a work in progress,” said Ambrose. “It took years for Atlantic City to bottom out. Recovery for this resort city will not happen overnight.”
Ambrose said Hard Rock’s investment in Atlantic City signals that it sees momentum heading in a positive direction, even though a financial hole remains. The Hard Rock acquisition occurred one month after R&R announced plans for a hotel development at the old Atlantic Club Casino Hotel that features a 100,000-square-foot indoor water park and restaurants.
“Hard Rock has stood up and made a major commitment to Atlantic City,” said Ambrose. “It is also in recognition that other stakeholders over the past couple of years have also made the commitment to one degree or another in terms of investment, and I believe Hard Rock sees the landscape today on more solid ground.”
New Jersey Senate President Steve Sweeney, D-Gloucester, said during the April 5 announcement that when he informed friends during a trip to Washington D.C. about Hard Rock arriving in Atlantic City, the enthusiastic reaction showed how much credibility the company has. Sweeney, who advocated for a state rescue package last May that averted a default, said he had pushed Allen to consider Atlantic City as option for a new Hard Rock venue.
“This partnership is going to be extremely successful,” said Sweeney. “Their belief in staking an economic claim in Atlantic City is the clearest sign yet that the city is on the way up and better days are ahead.”
