Cordish's eye on Tropicana

N.J. casino loses gambling license, gets `hard look' by Gomes venture

December 14, 2007|By Lorraine Mirabella | Lorraine Mirabella,SUN REPORTER

A nascent gaming management company formed by Baltimore-based Cordish Co. and a prominent gaming industry veteran could make a play for Atlantic City's Tropicana Casino and Resort since the loss of its gambling license.

Gomes + Cordish Gaming Management LLC, formed by Cordish and gaming consultant Dennis Gomes, has been on the prowl since announcing its first venture - running an Indiana slots parlor - last month. Speculation has centered on Atlantic City as a target because both have interests there.

"We have been approached on multiple levels and are taking a very, very hard look," David Cordish, chairman of the Cordish Co., said in an e-mail yesterday. "It fits perfectly with our Atlantic City strategy and existing holdings in Atlantic City."

Gomes, now a consultant based in Atlantic City, headed Donald Trump's Taj Mahal there during the 1990s and later ran the Tropicana for its former owner, Aztar Corp. In that position he led development of The Quarter, the first retail, dining, entertainment complex to be attached to an Atlantic City casino, which opened in 2004. And Cordish Co. owns The Walk, a $110 million retail project in the resort's core.

The chance for a run at the Tropicana came with the refusal Wednesday by New Jersey's Casino Control Commission to renew the Tropicana's license, blaming regulatory and management lapses. The commission named a trustee to take control of the property, paving the way for a sale.

It was only the second time in 29 years that a casino in the resort has failed to win license renewal.

Yesterday, the current owner, Tropicana Casinos and Resorts, part of Kentucky-based Tropicana Entertainment, requested a stay in appellate court and said it will pursue an appeal. Loss of the license could push it into bankruptcy, the company said.

At the time Gomes + Cordish was formed, analysts said it would likely pursue casino resort development in Atlantic City, which is on the verge of following Las Vegas' lead in redeveloping older properties with more mixed-use, entertainment-oriented projects that include not only hotels and casinos but retail, restaurants and other entertainment.

Joe Fath, vice president and equity analyst at T. Rowe Price Associates in Baltimore, said that strategy would make sense because of Gomes' success running casinos in Atlantic City and Cordish Co.'s strength in remaking deteriorating urban areas into entertainment destinations.

In a research note yesterday obtained by the Associated Press, Deutsche Bank Securities Inc. named Gomes, as well as Wynn Resorts, as potentially interested buyers.

Gomes left the Tropicana in May 2005. Aztar and the Tropicana property had since become wholly owned subsidiaries of Tropicana Casinos and Resorts Inc., which is owned by William J. Yung III, according to the Casino Control Commission. Yung also owns Columbia Sussex Corp., which owns 70 hotels and resorts.

In the order barring a license renewal, casino commission chair Linda M. Kassekert accused Yung of "lack of cooperation on a grand scale that did nothing to earn regulatory trust in his ability to operate in this marketplace. Moreover, his decision-making process was seriously flawed."

The casino and hotel will remain open and continue to operate, she said.

Meanwhile, Tropicana Entertainment said in a statement that unless its appeal is successful by Dec. 19, the company will default on its senior credit facility. "There can be no assurance that the lenders will not accelerate [repayment], which could compel the company to seek alternatives, including without limitation, bankruptcy protection."

Gaming is one of Cordish Co.'s three divisions, along with real estate development - which has nine new projects in various phases - and a group that runs and owns restaurants, bars, clubs and performance venues.

Gomes had been president of Steve Wynn's Golden Nugget in Las Vegas in the late 1980s, before being hired away by Trump in 1991. Gomes was credited with nearly doubling operating profits at Taj Mahal during his tenure. When he joined Aztar, he ran the Tropicana in Atlantic City as well as the casino hotel by the same name in Las Vegas. Before that, he was a gaming regulator in Nevada and New Jersey.

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