|By Donald Wittkowski, The Press of
Atlantic City, Pleasantville, N.J.McClatchy-Tribune Regional News
Feb. 17, 2013--The California development company that is buying Trump Plaza Hotel and Casino for the low price of $20 million plans to spend more than five times that amount to transform the aging property.
Donald Trump's name will be removed from the Plaza as part of its rebranding under the new ownership of the Meruelo Group, of Downey, Calif. However, Meruelo and its architect have not yet settled on a new name or new theme as they consider ways to revitalize Atlantic City's poorest-performing casino.
Xavier Gutierrez, president and chief investment officer of the Meruelo Group, estimated it will take more than $100 million to complete Trump Plaza's overhaul. Parts of the casino hotel will be renovated and possibly expanded to give it its first major facelift since the 1990s.
Gutierrez stressed that the company is committed to making a big investment in the property, but the scope and cost of the redevelopment project still must be decided.
One concept is to make a rejuvenated Trump Plaza the centerpiece of a new entertainment district that would link The Walk, the city's popular outdoor shopping complex, with the Boardwalk two blocks away.
"There is no reason why you have a phenomenally successful outlet mall and there is no connection to the Boardwalk," Gutierrez said. "We have an opportunity to connect to the Boardwalk, whether it would be a restaurant row, a physical extension or a redevelopment of Trump Plaza."
Such a connection would put Trump Plaza right in the middle of the action. The Meruelo Group also wants to make Trump Plaza one of the anchors of an urban enterprise district proposed in a master plan by the Casino Reinvestment Development Authority, the state agency that oversees the city's Tourism District.
"We truly believe we have to get Trump Plaza to be more interactive with the city, The Walk and the properties around it," said Paul Steelman, a Las Vegas architect who will redesign the casino for Meruelo. "Once we get that, we will create a new entertainment district pursuant to the master plan. It will enable Trump Plaza to be more of an entertainment district casino rather than a dark box."
Steelman is the son of a noted Atlantic City architect, the late Edgar Jones Steelman. He was born in Atlantic City and grew up in Longport. He is best known for designing the Sands Macau, the first Las Vegas-style casino in Asia. He also designed the 2007 expansion project at Harrah's Resort, including the striking glass dome that covers the Atlantic City casino's pool, spa and entertainment complex.
Steelman was part of an investment group that bought the Steel Pier, the iconic Boardwalk amusement park, from Trump Entertainment Resorts Inc. for $4.25 million in 2011. However, he is leaving the Steel Pier group in what he said is a friendly parting.
Describing the challenges ahead, Steelman said parts of Trump Plaza apparently have been untouched since the casino opened in 1984. Now woefully outdated, Trump Plaza has plunged to dead last in gambling revenue among the city's 12 casinos, grossing just $102.5 million from its slot machines and table games last year. The redevelopment plan is supposed to rescue it.
"We are looking to renovate a large portion of the building, creating a brighter, lighter, more friendly entertainment district casino," Steelman said. "One of the first things to do is to renovate the guest rooms."
Among the rebranding concepts that are being considered is an Asian-inspired casino, Gutierrez and Steelman said. An Asian-themed resort would capitalize on one of the most lucrative segments of the Atlantic City gambling market. Renowned for their zest for gambling, Asians represent a well-heeled niche market. Atlantic City's casinos have been adding Asian-themed gambling rooms in the past five years and regularly run buses to New York's Chinatown for customers.
"If we go down that path, that is obviously something that doesn't exist now in Atlantic City," Gutierrez said of the possibility of Trump Plaza becoming a full-fledged, Asian-style casino.
Another key for Trump Plaza's rejuvenation is capitalizing on its location in the heart of the Boardwalk casino district, at the foot of the Atlantic City Expressway entrance. Next door is Boardwalk Hall, the city's main sports and concert arena. Boardwalk Hall, recognized by Billboard magazine in 2009 as the top-grossing mid-sized arena in the world for a decade, offers potential business tie-ins that could be lucrative for Trump Plaza.
"We are incredibly excited about our connection to Boardwalk Hall," Gutierrez said. "It is a spectacular venue. We would look to have more synergies."
Bob McDevitt, president of Local 54 of UNITE-HERE, Atlantic City's largest casino union, said he understands the Meruelo Group is planning a $150 million redevelopment of Trump Plaza. Gutierrez said no figures have been set but acknowledged that the casino needs more than $100 million of work.
"They have to put a lot of money into the property. If we end up with a property that looks like the Golden Nugget or what Resorts is trying to be, it will be a big win for the city," McDevitt said, comparing Trump Plaza's planned renovation to the transformation of two other Atlantic City casinos.
McDevitt said parent company Trump Entertainment overlooked the Plaza while concentrating on the flagship Trump Taj Mahal Casino Resort. Local 54 represents about 700 employees at Trump Plaza, but many of them have been out of work while the property continues to struggle, McDevitt noted.
"That property has been in hibernation for some time," he said. "They have been operating with a skeleton crew, with little or no marketing. They have been trying to hold it together."
Trump Entertainment tried selling Trump Plaza for nearly two years before the Meruelo Group emerged as the buyer. The deal was announced Thursday, along with the $20 million purchase price -- the lowest amount ever paid for an Atlantic City casino.
"It's an incredible deal," Steelman said. "I think it might be the most incredible purchase in the world."
Headed by California businessman Alex Meruelo, the Meruelo Group is a diversified holding and investment company. It has holdings in banking and financial services, restaurants, hotel-casinos, construction and engineering, real estate and private equity. It owns the Grand Sierra Resort casino in Reno, Nev.
"Alex Meruelo is exactly the type of guy Atlantic City needs," Steelman said. "He's bright, he's young, he's ambitious. He has all the tools for success. He represents the type of new thinking for our industry."
Gutierrez said Meruelo's purchase and refurbishment of the Grand Sierra Resort may serve as a model for Trump Plaza. The Meruelo Group bought the troubled former Reno Hilton casino hotel for $42 million in 2011 and invested $25 million to rebrand the property as the Grand Sierra Resort, including upscale decor and a remodeled casino floor.
The Trump Plaza deal, expected to close May 31, continues a string of heavily discounted casino sales in a market mired by a six-year revenue slump. Resorts Casino Hotel sold for $31.5 million in 2010, and the former Trump Marina Hotel Casino, since rebranded as Golden Nugget Atlantic City, went for $38 million in 2011. The Atlantic Club Casino Hotel is in the midst of being sold to the parent company of online global gambling giant PokerStars for an undisclosed sum.
Atlantic City's depressed real estate market has led to a series of tax appeals and the reassessment of casino property values. Trump Plaza's tax appeal, decided in June, cut its property-tax assessment from $725 million to $250 million. Other casinos have had their assessments slashed by hundreds of millions of dollars, city tax figures show.
Gutierrez said the Meruelo Group studied Trump Plaza for more than a year before the decision was made to buy the property. During that time, he added, the company got to know the difficulties that Atlantic City has confronted: competition from casinos in surrounding states, the sluggish economy and, most recently, Hurricane Sandy.
"We clearly see this as an undervalued asset," Gutierrez said. "There are so many positives about this property that stood out, not the least of which is the location on the world-famous Boardwalk. We believe, fundamentally, it is in the center of it all."
The prospect of Internet gambling and sports betting in New Jersey had no influence on the Meruelo Group's purchase of Trump Plaza, although both of those attractions would enhance the casino's redevelopment, Gutierrez stated.
"They are exciting developments, without a doubt," he said. "They would be exciting for our customers and the state. They would be complementary."
At the moment, New Jersey's sports betting law has been blocked by a federal lawsuit filed by the NCAA and the professional sports leagues. Gov. Chris Christie has conditionally vetoed New Jersey's Internet gambling law, insisting that it should be limited to a 10-year trial period. The state Legislature is expected this month to amend the Internet bill to comply with the governor's wishes and have him sign it into law.
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