Jimmy Buffett and the Jersey Shore - perfect together?
Trump Marina Hotel Casino, beaten down by age and competition in Atlantic City, will be in the hands of a New York gambling company that will rebrand and rename it Margaritaville Casino & Resort.
The new owner, Coastal Marina L.L.C., is buying the casino from Trump Entertainment Resorts Inc., the casino company under Donald J. Trump, for $316 million, Trump officials said today.
In acquiring Trump Marina, Coastal will be faced with trying to turn around the worst performer among Trump's three casinos, one that sits next to the formidable Borgata Hotel Casino & Spa and Harrah's Resort in the city's Marina district.
The 23-year-old casino has consistently ranked as the lowest revenue generator among Atlantic City's 11 gaming halls. It also has the smallest number of hotel rooms - 728.
Last month, slots revenue at Trump Marina dropped 10.6 percent and table-game revenue was off 37.2 percent, compared with the same month a year ago.
Wall Street analysts praised the sale announcement, as the Marina District, about two miles from the famed Boardwalk, prepares for a new wave of competition.
Harrah's Resort debuted a $365 million hotel tower two months ago. A $400 million, glitzy new tower at the Borgata will open in about two weeks, and MGM Mirage has plans for a $5 billion casino on land that abuts Trump Marina.
"It's good because it helps the company reduce its debt load," said Andrew Zarnett, a gambling analyst with Deutsche Bank AG in New York. "It reduces their capacity in Atlantic City by about 25 percent, which means that they can now focus on the Taj Mahal and Plaza properties - a prudent strategy at this point."
Mark Juliano, Trump Entertainment's chief executive officer, said that the two sides began talking after the new year began and that a deal appeared imminent about six weeks ago.
"When this opportunity came up, it seemed like a natural fit," he said. "The brand is a perfect fit for the Marina, and [the new owner] thought the brand worked there better than at any other casino in Atlantic City.
"When you look at the location of the Marina and the Margaritaville theme, there is nothing better than having that cove," Juliano said. "It's really a terrific location."
About 8,800 Trump Entertainment employees were told about the sale this morning. About 2,100 work at Trump Marina.
Coastal Marina is an affiliate of Coastal Development L.L.C., a privately held company based in New York that has focused on financing and redeveloping resort destinations, luxury hotels and gaming facilities.
Coastal Marina is run by chairman Richard T. Fields, who said in a statement today that the casino offered vast potential to become "one of the most successful destination gaming resorts in Atlantic City."
Harrah's Entertainment Inc. is developing Margaritaville Casino & Resort in Biloxi, Miss., also with a Jimmy Buffett theme. That $700 million casino is scheduled to open in 2010.
Donald Trump, who is chairman of Trump Entertainment, said he was "very pleased with the transaction."
"It's terrific," he said. "It's a great site and a great location, with the only real usable water in Atlantic City and . . . the Marina. They are going to have a good time with this property . . . with building and redeveloping it."
The Trump casinos have been on the block for more than a year, and at least two deals fell apart. Tightened credit markets cut the number of potential suitors.
There had been speculation that the company was having a hard time finding a buyer for all three properties because of its onerous debt. The Taj Mahal, Trump's flagship casino, alone has a debt load of about $1.5 billion.
The sale would provide Trump Entertainment with badly needed capital. A lack of funds has hamstrung the company from making significant improvements to its Atlantic City casinos while competitors moved aggressively in adding towers and other nongambling attractions.
Construction began this year on the Taj Mahal's first expansion since opening in April 1990 - a $255 million, 786-room tower due to open Labor Day weekend.
Juliano said Trump Entertainment would invest the $316 million in the Trump Taj Mahal or Trump Plaza, make an acquisition or asset purchase outside New Jersey, or pay down debt.
He said new competition made it virtually impossible for Trump Marina to stay as it was.
"In the years to come, with the new tower at the Borgata, and the one at Harrah's, and the proposal by MGM, it would have required an enormous amount of capital for us to keep the property competitive," he said. "The balance sheet just did not allow us to do the improvements we needed."
Trump Entertainment reported a wider loss in the first quarter, blaming a general economic slowdown, competition from slots parlors in Pennsylvania and New York, and higher promotional costs associated with its year-old player-loyalty program, TrumpONE, which tracks customer play at all three Trump casinos.
"An incremental benefit will be that a number of Marina customers will migrate to the other two Trump properties," with the TrumpONE card as the driver, analyst Zarnett said.
MGM Mirage, which will develop the $5 billion MGM Grand Atlantic City Casino near Trump Marina, said today's announcement was evidence that the Marina District was on its way.
"The energy, creativity and new capital brought into the market by new investors is exactly what Atlantic City needs to continue to grow and thrive as a major tourist destination on the Eastern Seaboard," said Bill Hornbuckle, president of the planned megacasino, which will be linked to the Borgata by an enclosed walkway.