Developer Blatstein poised to buy Showboat from Stockton

Developer Bart Blatstein is poised to buy the former Showboat casino property in Atlantic City from Stockton University, potentially ending a political and legal mess that has dogged the school for months.

The Philadelphia-based Blatstein is finalizing an agreement with Stockton for a price greater than the $18 million the school paid for it last December, a person with knowledge of the deal said.

Details of the agreement remained murky Monday evening, with Stockton's president and Blatstein both declining comment. NJBIZ.com first reported Blatstein's involvement Monday afternoon.

Harvey Kesselman, the interim president of the university, has said he is looking "for the right buyer" for the property.

Stockton's board of trustees held a special meeting two weeks ago to discuss multiple purchase proposals for the Showboat property, following a New Jersey judge's ruling that the university was free to market and sell the site.

Blatstein's purchase could end a long roller-coaster ride for Stockton, which bought the property from Caesars Entertainment with the goal of turning it into a residential "Island Campus" in Atlantic City for thousands of students.

The move would have allowed for a major expansion of the university, whose main campus in Galloway is surrounded by the ecologically sensitive Pinelands. Amid steadily growing enrollment each year, Stockton has pushed into Atlantic City and other Shore towns.

Stockton's president at the time, Herman Saatkamp, trumpeted the move. So did local and state officials, who said it would help diversify the region's ailing, casino- and tourism-based economy.

But months after the deal was signed - as Stockton was registering students for summer classes in the Island Campus - Saatkamp announced that the university was being blocked by the parent company of the Trump Taj Mahal, which is next door to the Showboat property.

"You do not see a college on the Las Vegas Strip," Trump Entertainment Resorts said in a news release, saying it did not want to deal with underage college students trying to gamble.

The company made it clear it would invoke a 1988 legal covenant to block the opening of the Stockton satellite. The 1988 agreement, involving Trump and Caesars, said the Showboat property can only be used as a casino and hotel.

Some lawmakers and faculty members began to criticize the deal - and what they described as a lack of due diligence and transparency. How, they asked, could Stockton have bought Showboat, knowing about the 1988 agreement?

More questions and criticism ensued when it was discovered that Caesars had itself placed a competing deed restriction on the former Showboat property: The site can be used for anything except a casino.

And Caesars, which had guaranteed to protect Stockton financially in the event of the 1988 covenant's being used, also declared bankruptcy, adding to the legal tangle surrounding the property.

Saatkamp stepped down as president in April, taking a medical leave of absence and announcing his resignation effective Aug. 31. Kesselman, then Stockton's provost, became acting - and is now interim - president.

Before leaving, Saatkamp announced that Stockton had entered an agreement with Florida developer Glenn Straub to sell him Showboat for $26 million - an amount reflecting the costs of upkeep the university had accrued.

The agreement gave Stockton three months before closing, with an escape clause saying the university could leave the deal if it resolved its legal issues.

It didn't.

Instead, Straub, who bought the Revel casino, sued the university after 90 days, saying Stockton had not done its part to clear the property for his purchase.

Superior Court Judge Julio L. Mendez ruled last month that the sale deal was no longer valid, dismissing Straub's complaint.

That ruling freed Stockton to find a new buyer, and Kesselman said immediately that the university had multiple "interested buyers."

One of those was apparently Blatstein, who already has a presence in Atlantic City. In June he reopened the old Pier Shops at Caesars as an entertainment, shopping and dining complex, dubbing it the Playground, though in an apparent stumble several concerts scheduled for the venue were abruptly canceled last month.

Blatstein, who is known for betting big on projects others consider risky and unlikely, is credited with sparking a revival in Northern Liberties, including by developing the Piazza at Schmidts.

Blatstein's purchase of the Showboat would take the site off Stockton's hands, but it is unclear how he would untangle the property from the complex legal web it is snared in, including the dueling restrictions on its use.

Straub's lawyer vowed to appeal Mendez's ruling, saying the developer was still interested in buying the former casino.

A meeting of the Stockton trustees is scheduled for Wednesday, followed by a closed-session retreat the next day in the president's office.