Revel casino, which is badly in the red just 4 1/2 months after opening, is asking its lenders for up to $100 million to make it through this year and 2013.
The $2.4 billion Las Vegas-style gambling palace, heralded as "Atlantic City's future" by many - including Gov. Christie, who directed more than $300 million in state assistance toward getting it built - said Monday that it had entered into discussions and expected to receive $70 million in additional financial commitments.
Wall Street gaming analysts say Revel needs the money to avoid defaulting on its loans.
"We appreciate the support of our investors," Revel chairman and chief executive Kevin DeSanctis said in a statement. "Upon completion of this [credit] facility, we will have significant liquidity cushion through 2013 and beyond.
"We are excited about what we have delivered from a product and experience perspective," he said, "and remain confident our strategy and differentiated economic model will result in significant value creation for our stakeholders."
The $100 million request comes on top of the $50 million revolving line of credit that Revel received in February from a consortium of banks. And it follows Friday's release of a New Jersey Division of Gaming Enforcement report showing that Revel had a gross operating loss of $35 million, or $18 million excluding onetime pre-opening charges, for the second quarter. The loss means that Revel is not generating enough cash to pay for operating expenses including labor, gaming taxes, vendors, and marketing.
Since it opened April 2, gaming-revenue numbers have been anything but rosy. Even in the Shore's peak summer season, Revel generated just $17.5 million last month in total casino revenue, compared with $54 million for Borgata. That was up only slightly from $14.9 million in June.
Thus far, revenue figures are nowhere near the $30 million a month that analysts say Revel needs to generate to stay solvent. It has consistently ranked eighth in revenue among the dozen Atlantic City casinos, just ahead of much smaller venues with far less debt, including the Atlantic Club (the former Atlantic City Hilton) and Trump Plaza. And the casino soon will face hefty interest payments in the fall and winter, when business slows down significantly at the Shore.
John Kempf, a gaming analyst with RBC Capital Markets L.L.C., said Monday's development "means the lenders have decided they will support the company. I think the liquidity through 2013 is very important."
So does Christie, who said he was not yet overly concerned about the slow start. The state's assistance to Revel included $261 million in tax credits toward its completion announced by the Republican governor in February 2011, when just a shell of a casino was standing.
"I always thought that Revel would take a year to get going anyway," Christie said Monday during a stop at the Asbury Park boardwalk to promote the state's beaches and the Shore economy. "It's a totally different model from what's been done in Atlantic City before. It's not a model centered around gaming. It's a model set around the resort aspects of the hotel."
The governor made Revel - with its 14 restaurants, retail mall, and 10 swimming pools, among other non-gaming amenities - a critical piece of a five-year plan to overhaul Atlantic City to make it family-friendly and offer more than just gambling.
"We are trying to turn Atlantic City into a resort that has gaming, not a gaming venue that could be a resort," Christie said. "Now, that's going to take some time. I'm confident that the investors in Revel believe in the concept and believe in the management, and that they are going to stand behind it."
Revel's critics say its high-end attractions have failed to attract gamblers and non-gamblers alike. Some say it is trying to be too like Las Vegas in a middle-of-the road, drive-in market, eschewing casino staples such as buffets and instituting a total no-smoking policy (other Atlantic City casinos allow smoking on 25 percent of their floors). Others complain it lacks moderately priced restaurants and say its hotel rooms are too expensive.
In defending the state's aid to Revel, Christie said the tax credits kick in only once the casino starts turning a profit.
"The maximum amount of money, ultimately, is capped at $261 million in tax credits, but that's only if they are wildly successful," he said.
Last year, the New Jersey Legislature passed several measures, including creation of a state-run tourism district, to back Christie's plan. In April, the new Atlantic City Alliance launched a $30 million-a-year marketing campaign to tout non-gambling attractions that included several vibrant images of Revel.
"Obviously, the need for additional money is not good news," said State Sen. James Whelan (D., Atlantic), a former mayor of Atlantic City. "We would have liked to see a stronger start.
"The hope is they can get the dollars they need," he said, "to not only continuing operating, but also make whatever changes they need to make to strengthen their position.
"Whether they need to invest more dollars into advertising, or have more events, or attract more conventions, clearly, they've got to make some adjustments."