Skyscraper key to Trump plan in AC

ATLANTIC CITY, N.J. (AP) - September 29, 2008 He says a federal bailout is needed, even though the free-market capitalist strands of his own DNA hate the idea.

And in Atlantic City, where the economy has been horrendous for nearly two years, a similar rescue may already be under way for his casino company, Trump Entertainment Resorts. But the government has nothing to do with it.

The company, which he chairs but no longer runs, plans a grand opening ceremony on Thursday for the long-awaited second hotel tower at its flagship property, the Trump Taj Mahal Casino Resort.

The tower's success or failure could determine whether the company survives in the cutthroat Atlantic City market, which is already under siege from slots parlors in Pennsylvania and New York, a tumbling economy, and a total smoking ban coming next month that's sure to chase even more customers away.

"There's tremendous competition in Atlantic City, and the smoking ban is going to be a disaster," Trump said. "That's why we're excited about the tower. We think it's going to do extremely well."

The $255 million tower, with 782 rooms, is the third major hotel project to be completed in Atlantic City this year, and not a moment too soon. Dubbed the Chairman Tower, in honor of - who else? - the tower joins Borgata Hotel Casino & Spa's stand-alone Water Club hotel, and Harrah's Resort Atlantic City's Waterfront Tower as expansions projects that were begun several years ago, before the economy headed south and credit dried up.

Trump has a lot riding on his new Atlantic City project.

Trump Entertainment's stock is trading for less than the price of a can of tuna fish; it closed at $1.29 a share Friday. The company is laden with $1.67 billion in debt, and it is selling one of its three Atlantic City casinos. Staff has been cut to 8,000 workers, down from 13,000 five years ago, and it is stingier with comps - the free rooms, meals or show tickets offered to attract gamblers.

Trump's stock has traded as high as $8.87 a share and as low as $1.04 a share within the past year. It is down nearly 77 percent over that period.

Through the end of August, Trump Marina Hotel Casino's revenue is down 10.5 percent, the Taj Mahal is down 6.9 percent, and Trump Plaza is down 0.4 percent.

"The Chairman Tower isn't going to be a magic bullet, but it certainly is key because if it isn't successful, Trump has no bullets left," said Frank Fantini, publisher of a gambling industry newsletter. He added he expects the tower to do well.

Ryan Worst, an analyst at Brean Murray Carret & Co., said the new tower should vault the Taj Mahal into the same league as the Borgata and Harrah's, with the added benefit of being on the boardwalk instead of the more remote marina district.

"It's a good addition to what is one of the premiere properties in Atlantic City," he said. "It should generate a good amount of additional cash flow for them."

Among Atlantic City's 11 casinos, revenue is up only at the Borgata and Harrah's, perhaps indicating that gamblers will still come for high-end hotels. But while that strategy has worked for a while, there's evidence it is starting to fade as well, with high-profile mega-casino projects in Las Vegas and Atlantic City being put on the back burner because they can't get financing in the current climate.

Atlantic City is rapidly moving away from day-tripper gamblers toward those who stay for one or more nights, and don't mind paying for it rather than demanding freebies. At the Chairman Tower, room rates range from $119 a night during the week to $469 a night on weekends.

Along with the new tower, the other crucial development for Trump Entertainment is the pending sale of the Trump Marina Hotel Casino to New York developer Richard Fields, who will transform it into "Margaritaville," using the singer Jimmy Buffett's resort brand.

The $316 million sale could close by the end of the year. Fields said he has lined up tentative financing for the project, and has decided to keep it open during renovations.

Trump Entertainment may use the proceeds from the sale to pay down debt. Or it could invest it in potential new projects outside the United States. The company recently signed a deal to develop a $400 million casino-hotel in Panama with a local Panamanian developer, and Trump Entertainment CEO Mark Juliano said other similar deals could follow.

Juliano said the company will be able to survive the current downturn.

"The product is great," he said. "People like it, and I believe we're weathering the storm from Pennsylvania. The Trump name is no less powerful now than it was before the economic downturn. There's no danger of Trump going anywhere anytime soon."


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