N.Y. firm is new top bidder for Tropicana

An investor group led by New York developer Joseph Palladino is bidding $950 million to buy the Tropicana Casino & Resort.

The offer, submitted to Tropicana trustee and conservator Gary Stein on Jan. 15, also calls for spending a minimum of $150 million on upgrades for the Atlantic City casino. It tops the first formal bid of $850 million submitted Jan. 9 by Colony Capital Acquisitions L.L.C., of Los Angeles.

Colony is the parent of Resorts International Holdings L.L.C., of New York, which owns the Atlantic City Hilton and Resorts casinos on the Boardwalk.

"It's a really great opportunity to help our investors and shareholders from our standpoint, and to really give those jobs back that were pulled," Palladino said yesterday from New York. "Nine hundred workers have been dismissed, and that casino has been run off a balance sheet.

"It's the worst way to run a business," he said.

Palladino, 47, is principal director of acquisitions for Private Family Office of New York, a private capital group that serves the business affairs of about 70 ultra-wealthy families throughout the world. He said he worked on behalf of a few of the families in PFO.

Palladino is also developing a 400-room hotel at New York City's Hudson Yards and an office-commercial condominium on Fifth Avenue in lower Chelsea in the Flat Iron District. He is the developer behind a 200-room beach resort hotel in Brick, N.J., that will break ground by spring.

He said that he was stepping up his investments in the hospitality world and considered the Tropicana "first and foremost a casino-hotel."

"We will run it as a hospitality business that happens to have gaming," he said.

Palladino said he had assembled a team of licensed operators that are well-known in New Jersey and versed in both financial and casino operations to run the Tropicana should they emerge as the winning bidders. He plans to name his chief executive officer in a few days, and said his brother, Frank Palladino, currently a CPA at Ernst & Young L.L.P., would act as chief financial officer.

He said the investor group was composed of himself, his brother Frank, the casino operator, and an equity fund manager.

"I'm confident we have put a good team together and that the commission will approve them, and that all the financing will fall into place," he said. "Once we do this, we will live up to our end of the bargain to put a lot of people to work and really help the local economy."

Palladino said Joan Haberle, a former secretary of state of New Jersey, was acting as his group's agent in the casino sale process.

Stein took over daily operations of the Tropicana on Dec. 12 after the five-member New Jersey Casino Control Commission denied its former owner, Columbia-Sussex Corp., a license renewal. Stein, a former New Jersey Supreme Court justice, was also put in charge of finding a suitable buyer for the troubled casino.

Under the statute, the commission and Stein have four months from the date that the Tropicana's license was revoked to find a buyer, but they can extend that deadline as needed.

Last week, the commission approved two members of Wall Street investment firm Bear Stearns Cos. Inc. to serve as financial advisers to Stein in vetting bids for the casino. Three former gaming executives also were brought on board as consultants.

Palladino said Kenneth Shea, the financial adviser from Bear Stearns, called him yesterday to get acquainted with his group.

Palladino, who plans to move to New Jersey from New York, said he toured the Tropicana last week and saw great potential in the Quarter - the retail, dining and entertainment complex that is attached to the casino.

"The potential is tremendous. If you position the experience better, the hotel will turn around over time," he said. "It's not being positioned as an experience right now, but more like a gas station where you come in, fill up and leave."

He also said the seaside resort could better compete with Las Vegas for regional dollars.

"The fact of the matter is, not everyone is going to Las Vegas," he said. "If they have an extra thousand dollars in their wallet, people are not going to put it all on airfare.

"They could put more than half of it in the bank," he said, "and they can take the rest to Atlantic City and have a great time."