Recent deals may mar MGM’s Borgata sale
Tilman Fertitta and Landry's Restaurants didn't do MGM Resorts International any favors.
The Houston-based company, which owns the Golden Nugget casinos in downtown Las Vegas and Laughlin, is acquiring the Trump Marina in Atlantic City for $38 million. Fertitta's company will spend another $150 million to rebrand the troubled hotel-casino as a Golden Nugget.
The deal -- which is still subject to approval by New Jersey gaming regulators -- comes two months after a group led by longtime casino executive Dennis Gomes took over the aging Resorts Atlantic City for $31.5 million.
These bargain-basement prices can't be good news to MGM Resorts, which has been trying to unload its 50 percent stake in Atlantic City's Borgata since last summer. A potential deal with Los Angeles-based private equity group Leonard Greene & Partners for $250 million might be unraveling.
MGM Resorts Chief Financial Officer Dan D'Arrigo said in an interview last week other bidders have entered the picture. He knows Wall Street is worried that the Borgata sale closing could be drawn-out.
Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors that recent Atlantic City casino deals and the deteriorating market, which has seen gaming revenues decline 29 straight months, could scuttle the sale.
"We remain fearful the buyer could re-evaluate the purchase price or walk away from the deal," he said.
For Fertitta, a cousin of the Station Casinos founding Fertitta family, the investment is cause for celebration in Atlantic City.
If Landry's accomplishes with the Trump Marina what it did with the downtown Golden Nugget, spending $300 million in upgrades, expansions and renovations, including a 200,000-gallon live shark aquarium and the 500-room Rush Tower, New Jersey might erect a statue in Fertitta's honor.
Gov. Chris Christie is creating a tourism district around the Atlantic City casinos to help halt the marketwide decline. Any investment is being hailed.
For Fertitta, the deal completes a five-year quest to expand the Golden Nugget outside of Nevada.
Landry's, which operates some 300 restaurants, including the Chart House and Rainforest Cafe brands, sought a casino site in Biloxi, Miss., and another troubled Atlantic City resort, before settling on the Trump Marina.
The $38 million price is probably what it cost Trump Marina developer Donald Trump to build some of the hotel-casino's ballrooms when he opened the resort as Trump Castle in 1985.
But the price is a sign of the times.
MGM Resorts just hopes the signals aren't crossed.
Howard Stutz's Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.
