Stockton University announced Tuesday that Trump Entertainment was seeking to block the transformation of the shuttered Showboat Casino into an "island campus" for the university - a move touted as a game-changer for the embattled local economy and the school.

Trump Entertainment will use a 1988 legal covenant with Caesars Entertainment - Showboat's former corporate parent - to prevent Stockton from reopening the property as a school and hotel, according to the university. The covenant would prevent the property from being used as anything other than a first-class casino-hotel, the school said.

"Stockton tried to establish a full campus in Atlantic City six times during my tenure as president and got kicked in the teeth each time," Herman Saatkamp, Stockton's president, said in a statement. "This time, we were stabbed in the heart."

In December, Stockton bought the property from Caesars Entertainment for $18 million. Saatkamp said in his statement Tuesday that "we were led to believe" Caesars and Trump had resolved the 1988 covenant.

"However, it did not, and Trump Taj Mahal does not want a university campus near its property. As a result, Trump Taj Mahal is going to enforce the covenant," he wrote.

"Stockton University and, I believe, Atlantic City are caught in the middle of two corporations," he said.

Representatives for Trump and Caesars did not return calls Tuesday evening for comment. Saatkamp was not available for an interview because of a previous commitment, a university spokeswoman said.

City and state officials had praised Stockton's plans when they were first announced late last year. When the purchase was completed, Assemblyman Chris A. Brown (R., Atlantic) said it was "a positive step toward diversifying our economy and putting people to work."

The school planned to reopen the 1.73 million-square-foot Boardwalk casino-hotel for some classes this summer, with a full opening this fall.

Stockton also intended to run a hotel on the site, a potential resource for students in the university's hospitality programs.

Saatkamp has said the site could host 4,000 to 6,000 students in about 20 classrooms, 10 lecture facilities, and studios and instruction rooms for music, dance, choral, and theater programs.

Atlantic City Mayor Don Guardian hailed it as "a game-changer."

As the news broke Tuesday, Chris Filiciello, the mayor's chief of staff, responded: "It's an important project for Atlantic City and would be mutually beneficial for everyone in the city."

Saatkamp said that university attorneys "assure us we will prevail" but that a delay could be too costly.

The president told the Atlantic City Press, which first reported the legal challenge, that Stockton has about 2 1/2 weeks to sign contracts for work on the property in order to open this summer.

Saatkamp was scheduled to present Stockton's vision for Showboat to Atlantic City business leaders on Wednesday. The event has been canceled.

If Stockton cannot resolve the dispute, Saatkamp said in his statement Tuesday, the school will sell the property.

"Simply stated, we would be saddled with an all-cash outlay with no revenues in return. It would be unconscionable to submit Stockton University's financial stability to this risk and delay," he said. "Doing so endangers the cost of student tuition and creates the potential for job loss among faculty and staff. We cannot afford to just hold this building with no incoming revenues while the two casinos play their own gamesmanship."

If a quick sale of the property is not possible, Saatkamp wrote, Stockton would close the building, letting it sit empty while awaiting a resolution.

"The result of this morass is that Atlantic City will lose a major economic and community engine, and Stockton students lose out on some wonderful academic opportunities," he said.

Still, a small window remains for resolution.

Saatkamp's statement, which opened with the words "With immense sadness" as he announced the impasse, ends with a glimmer of optimism:

"I still hope this will turn around."

jlai@phillynews.com

856-779-3220 @elaijuh

www.inquirer.com/campusinq

Inquirer staff writer Amy S. Rosenberg contributed to this article.