Nov 21, 2008 3:13 pm US/Eastern
Economic Downturn Rips Into Atlantic City Casinos
ATLANTIC CITY, N.J. (AP) ―
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Casinos like the Tropicana are facing a grim future due to the economic downturn.
Saul Loeb/AFP/Getty Images
The worsening economy continues to batter Atlantic City casinos, with Resorts Atlantic City missing a crucial loan payment that could jeopardize the future of Atlantic City's first casino and the Tropicana Casino and Resort laying off 50 supervisors.
Those casinos have been among the hardest hit of Atlantic City's 11 gambling houses, and both lack the resources to compete with market leaders as the fight for every gambling dollar intensifies.
Resorts' parent company, Colony RIH Holdings, Inc., revealed in a filing this week with state casino regulators that it was unable to make its monthly interest payment to its lenders "due to the extreme impact of the current economic conditions." The amount of the required payment was not specified.
The company said it is negotiating with the lender, Column Financial Inc., over a course of action. The two-year, $10 million loan is backed by a mortgage on Resorts, Atlantic City's first casino, which opened in 1978 to begin the era of legalized gambling here.
According to Colony's filing, the entire $10 million loan could become payable at once if the company can't reach a deal with the lender. It was not clear whether the privately held company has, or can raise, the cash to pay off such a demand.
Company spokesman Owen Blicksilver declined comment.
Dan Heneghan, a spokesman for the state Casino Control Commission, said regulators are aware of the missed payment, have been monitoring the company's financial condition and have been "in regular contact with officers at Resorts about this," before declining further comment.
Resorts and the other Atlantic City casino Colony owns, the Atlantic City Hilton Casino Resort, have been Atlantic City's worst performers this year. The Hilton's gross operating profit was down a staggering 73.7 percent in the third quarter of this year, and nearly 60 percent for the first nine months of the year.
The picture is no less grim at Resorts, where the numbers are down 62.3 percent and 60.5 percent, respectively, for the quarter and the first nine months of the year.
The Tropicana said Friday it recently laid off 50 supervisors "due to the economic issues we are currently facing as a city and country," spokeswoman Diane Spiers said.
In 2007, no Atlantic City casino laid off more workers than the Tropicana. The former owners slashed nearly 1,000 jobs, but the resulting problems with cleanliness and service led to the loss of their casino license.
Since then, interim management has tried to rebuild the staff, bringing back at least 150 of the workers who had been let go in 2007.
The jobs eliminated by the Tropicana were designed not to hurt the casino's most important initiative: Improving its interactions with customers and winning back players.
"These layoffs will not impact any customer service," Spiers said.
The Tropicana's gross operating profit is down nearly 50 percent for the first nine months of this year, compared with nearly 20 percent for Atlantic City as a whole.
In terms of staffing, the Tropicana has about the same number of employees as it had at the beginning of the year, at approximately 3,540.
Other casinos have made far deeper job cuts. Earlier this month, the Borgata Hotel Casino and Spa laid off 400 workers across the board, also citing the worsening economy.
The four Atlantic City casinos operated by Harrah's Entertainment Inc. -- Harrah's Resort Atlantic City, Caesars Atlantic City, Bally's Atlantic City and the Showboat Casino Hotel -- along with Resorts, carried out layoffs totaling in the hundreds. The companies would not give exact numbers.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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