Stockton University's $22 million sale of the former Showboat casino in Atlantic City to developer Bart Blatstein will not make the university financially whole, its president said Friday.
Legal issues continue to trouble the property, and the sale proceeds will not cover the university's Showboat-linked costs, which will total millions more. Stockton paid $18 million to buy the property from Caesars Entertainment in December; a $26 million deal to resell it fell through.
School and local officials praised Friday's announcement, calling it a big step toward ending a months-long roller-coaster ride for the school.
"One of the things we absolutely wanted to do, in addition to recapturing as much of the cost as we could, was have a buyer who has a demonstrated committed to developing in Atlantic City, and Bart Blatstein meets that criterion," Harvey Kesselman, interim president of Stockton, said in an interview.
Blatstein's Tower Investments is scheduled to close on the property on Nov. 9. The university said earlier this week it had a buyer, but held off announcing Blatstein's name and details of the deal until Friday, after a due diligence period ended.
Reached by phone, Blatstein would not comment on his plans for the Showboat, but he called struggling Atlantic City "a sure bet."
Kesselman said he expected Blatstein to play a major role in the city's revitalization. Stockton, too, will play a role, he said, citing visions of building a residential campus elsewhere in the Shore town.
Stockton will first have to resolve ongoing legal battles, which Kesselman suggested could result in the university's recouping some of its money.
Since buying the property, Stockton has spent hundreds of thousands of dollars a month on operations, maintenance, security, and other costs.
In a legal filing, Stockton said it had spent nearly $3 million in its first five months of ownership - more than $590,000 a month, though officials say the monthly costs are lower now.
Including legal and administrative fees, the school has racked up about $25 million in Showboat costs, Kesselman said.
Any money not recouped will not come off students' backs, Kesselman said.
Kesselman said that he expects the deal to be completed and that Blatstein is known to close a deal once he signs it - an oblique reference to Florida developer Glenn Straub, who agreed to buy the Showboat earlier this year. That deal fell through, with Straub suing Stockton for not doing more to clear away the complex legal web surrounding the property.
A state judge dismissed that suit, but Straub's lawyer said Friday that Straub might appeal appeal.
Blatstein would not discuss the Showboat property's legal problems, including dueling restrictions on its use:
A 1988 covenant involving Caesars Entertainment and Trump Entertainment Resorts requires that the property be a casino-hotel.
A 2014 deed restriction placed by Caesars and agreed to by Stockton bars the site from use as a casino.
The agreement says Stockton has no responsibility to clear up the contradictory restrictions, "and buyer is required to purchase the property subject to the use restrictions."
Straub's lawyer, Stuart J. Moskovitz, was in court Friday for another Showboat legal case, seeking to compel Stockton - or whoever inherits the Showboat - to allow Straub to connect the property to the shuttered Revel casino, which he owns.
That would let Straub siphon unused electricity and cold and hot water from the Showboat, Moskovitz said, as he said Stockton had agreed in its original agreement with Straub.
Blatstein would not say whether he would provide energy to Revel.
Moskovitz criticized Stockton for agreeing to sell the property for $22 million.
"It's kind of foolish on their part, because we had guaranteed them $26 million if they simply extended the time, and they just gave up $4 million for nothing," Moskovitz said.
Kesselman dismissed the comparison, saying the Straub deal had fallen through. He also pointed to additional provisions of the agreement with Blatstein - tucked in it are the outlines of a continuing affiliation between Stockton and Blatstein.
The agreement allows Stockton to use the House of Blues concert space at the former casino free for events up to six times a year over the next decade.
Stockton and Blatstein also agree to work on a deal to use Stockton students as interns at the property and to refer guests to the Stockton Seaview Hotel and Golf Course, the university's hotel in Galloway, where its main campus is situated.
"I hope that Stockton, and the Showboat under [Blatstein's] leadership and ownership, will have a long relationship - years of relationship," Kesselman said.
Last year, Blatstein failed to win a casino license for the building he owns on Broad Street that is The Inquirer's former headquarters.
Asked whether he would seek a casino license in Atlantic City, Blatstein responded: "Is this a reaction to losing in Philadelphia? No."
Blatstein said buying the Showboat is a way to continue investing in Atlantic City, following his purchase of the Pier at Caesars, which he opened this summer as the Playground, a complex of bar, music, and food venues.
"When I go into areas that are challenged, I purchase a critical mass of real estate," he said, "because of the economies of scale of having a lot of real estate that you're working with. As far as I'm concerned, Atlantic City is a sure bet."
He said his purchase of the Pier property has been successful, even though the largest music venue in the half-empty mall is no longer scheduling shows.
The political will in the city, reeling from the closings of four casinos, is united in its mission, he said: "Everyone wants Atlantic City to come back."
State Sen. Jim Whelan (D., Atlantic), a former mayor of Atlantic City, praised the Blatstein deal Friday.
"I think it's great that someone with his energy and vision and nerve - because it takes nerve at this point - is committed to Atlantic City."
Blatstein has also put in a bid for the Garden Pier across from Showboat, now the home of the Atlantic City Historical Museum and Art Center.
Whelan said he hopes Stockton will find another place in the city for a residential campus.
"They have a presence now in Atlantic City, but having a full Stockton presence in Atlantic City would be good for the city," he said, citing Temple University in North Philadelphia and University of Pennsylvania and Drexel University in West Philadelphia as examples of colleges being catalysts for local development.
Kesselman said it could happen, but in a scaled-down version of the now-collapsed dream of converting the shuttered Showboat into a residential campus.
"We're certainly not purchasing another casino. We would build as our next initiative," he said.