Trump Taj Mahal casino's parent company is seeking to block Stockton University's creation of an Atlantic City campus next door to the Taj Mahal because it doesn't want to contend with underage college students trying to gamble, the company said Wednesday.
Stockton's president says he still hopes to see the Showboat Casino property turned into a branch campus for thousands of students.
Trump Entertainment Resorts "does not think having a college next door to the Taj is good for our company," it said in a statement. Stockton purchased the shuttered Showboat Casino property in December.
"Having kids under 21 who will attempt to gain entry to the casino and engage in activities reserved for those only 21 and older would create numerous problems we do not want and could damage the Taj's ability to attract customers and regain its financial health," the Trump company said in its statement.
"You do not see a college on the Las Vegas Strip," the company said.
Stockton president Herman Saatkamp announced Tuesday that Trump Taj Mahal was threatening to invoke a 1988 legal covenant that restricts use of the Showboat property to a first-class casino-hotel.
Saatkamp said Wednesday that he had believed the covenant would not be an issue and that he remained hopeful the university's Showboat plan can proceed.
"This is important - and I want to emphasize - our first preference is to build the island campus, and that's still a clear possibility," Saatkamp said in an interview.
If the university can't develop a campus at the site, others may be interested in acquiring the property. Several people with knowledge of the Showboat redevelopment said Stockton had been approached with a deal to exchange that property for the Trump Plaza site.
A Trump Entertainment spokeswoman said Wednesday that "the company has no interest in swapping Showboat for the Plaza," and the university did not comment.
According to the purchase and sale agreement between Stockton and Caesars Entertainment, Showboat's parent company, Stockton acknowledged the covenant's existence. Caesars would try to get Trump Taj to release the covenant, according to the contract.
Until the covenant is released, the contract says, Caesars "shall indemnify, defend, and hold harmless" Stockton "from any liabilities arising out of or in connection with any claim or action by Trump Taj . . . to enforce the use covenant against the property."
That indemnification may provide some cover for Stockton, Saatkamp said, but only as a last resort.
"We could still try and fall back on the indemnification, but that's certainly not our preference. Our first preference is to build the island campus," Saatkamp said.
As for whether Stockton could undo the purchase, Saatkamp said it was too late; the university owns the property.
Trump Taj Mahal said in its statement that its bankrupt status meant it could not simply waive the covenant, which Caesars requested in December.
"We advised that because the Taj is in bankruptcy, as a matter of our fiduciary responsibilities to our creditors, we could not waive our valuable rights under this covenant without obtaining bankruptcy court approval and without receiving appropriate consideration," the statement says. "We were not offered any consideration for this waiver."
Saatkamp said "there had initially been the consensus that [the covenant] would not be an issue." In his statement Tuesday announcing the news, he wrote, "Candidly, Caesars Entertainment was to resolve a 1988 covenant with Trump Taj Mahal, and we were led to believe that had happened."
A representative for Caesars did not respond to requests for comment.
Stockton's "island campus" would house students in multiple academic programs, including full degrees offered entirely at that campus. It planned to reopen the 1.73 million-square-foot Boardwalk casino-hotel for 23 summer courses starting July 1, followed by a full opening this fall.
Stockton also intended to run a hotel - a potential resource for students in the university's hospitality programs.
"It's a great idea, and it's still a great idea," said Assemblyman Vincent Mazzeo (D., Atlantic).
"The idea was to bring in a different dimension into Atlantic City. . . . There's not going to be 12 casinos any more in Atlantic City. There's eight now, and who knows what's going to happen?" he said. "The fact of the matter is that we thought 2014 was a down year, and we thought, coming into 2015, that we had some good things headed our way. And that was probably one of the bigger things."
To prepare academic spaces for use this summer and fully renovate by fall, work contracts need to be finalized in the next two weeks, Saatkamp said.
Stockton cannot simply delay the opening, he said.
"I wish I could do that, but financially I don't think that's feasible. We have operating costs; we have employees over there," Saatkamp said. About three dozen employees already are in the closed casino for maintenance and security, he said.
If the covenant is not waived, Saatkamp said, he will look to sell the property.
Florida developer Glenn Straub, who once attempted to buy Showboat, said Wednesday that he supported Stockton's redevelopment plan for Showboat. "That university's got the right idea," he said.
Straub has been trying to buy the bankrupt Revel Casino Hotel and convert it to nongaming entertainment. He did not say Wednesday whether he was still interested in the Showboat property.
He was critical of the move to block Stockton by relying on an old covenant.
"For someone to jump on that and not think about the hurt they are causing people, people who need jobs - I think they've got their heads screwed on wrong," Straub said. "They need to look out their limousine windows."