Vol. 5, No. 7, July 2008
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Parrothead Purchase
Pending regulatory approval, Atlantic City’s Trump Marina to become a “Margaritaville” casino
Donald Trump’s company has sold one of its three Atlantic City casinos to Richard T. Fields, a onetime intimate and recent adversary whom Trump sued for allegedly pushing him out of a lucrative development deal. Fields, chairman of Coastal Marina, LLC, announced in June that he will pay $316 million to complete the transaction to buy Trump Marina. As part of the deal, Trump and Fields have agreed to “end prior unrelated litigation, with prejudice.” Pending approval, Trump Marina will become Margaritaville Resort and Casino, bringing musician Jimmy Buffett’s feel-good brand and cult-like following to Atlantic City. On the heels of the announcement, Donald Trump called the Marina “a wonderful building in a great location” with a loyal customer base. Yet in a neighborhood dominated by newer, more high-brow resorts like Borgata and Harrah’s Atlantic City, the resort has struggled to perform. Trump Taj Mahal has been the best performing of the Trump casinos, with gross gaming revenues last year of $508.5 million (fifth among Atlantic City’s 11 casinos). Trump Plaza was next, with $280.3 million. The Marina brought up the rear with revenues of $241.9 million in 2007, the lowest annual GGR of any of the 11 Atlantic City casinos. Coastal Marina spokesman Charlie Leonard acknowledged the property’s underperformance and promised a change. “The valuation from Coastal’s perspective was largely based on the underlying real estate and infrastructure,” Leonard told Casino Connection. “We believe there’s a significant amount of untapped potential that can be realized under an exciting new brand. Jimmy Buffett is a national and international entertainment icon and has an enormous following.” Interestingly, Buffett’s partner in a Mississippi casino project will be his rival here. The $700 million Margaritaville Casino & Resort in Biloxi, slated to open in 2010, is a joint venture of Buffett and Harrah’s Entertainment (soon to be Caesars Entertainment Corp.). Harrah’s is practically next door to the Marina, which could turn the Mississippi partners into competitors in New Jersey. It’s common knowledge that Trump has been fishing for an offer for at least a year. While declining to comment on the timetable for Margaritaville—or who will finance it—Leonard said the company expects to close on the Marina in “six to nine months… Then we’ll have more news about the expected timetable and about the refurbishment and rebranding of the property.” The transformation of Trump Marina into Margaritaville would give the property its fourth identity. Originally built by Hilton Hotels, it was acquired by Trump in 1985 after Hilton was denied a gaming license. At that time, Trump dressed up the place with medieval royal artifacts and changed the name to Trump’s Castle. By 1997, the castle theme wasn’t working and the property became Trump Marina. The casino was the first in Atlantic City to target a younger clientele. When most casinos were still stuck in the superstar-entertainment mode, the Marina’s program of rock concerts on the Deck was almost revolutionary. Trump Marina also became known for innovative slot club promotions, such as million-dollar dice rolls and random cash giveaways. Trump CEO Mark Juliano says cash from the sale will provide “the additional financial flexibility” the company needs to improve its remaining properties and consider opportunities outside Atlantic City. The sale ends speculation about Trump’s willingness to divest and marks the end of his 2004 lawsuit against Richard Fields. In the suit, Trump claimed his former friend hoodwinked him out of a deal to develop the Seminole Hard Rock Casino in Florida. Fields developed the property with Cordish Co. of Baltimore, and Trump sought damages that some estimated in the $1 billion range. Buffett Zone Judging by his most famous song, Jimmy Buffett is the most laid-back guy on the planet, with booze always in the blender and little more to occupy his day but the odd flip flop repair. Buffett has made a career with his party-guy persona, but under the ball cap is a wily businessman who’s turned his happy-hour schtick into a corporate kingdom. Buffett runs two restaurant chains (the Margaritaville Cafes and Cheeseburger in Paradise), produces his own beer (Land Shark Lager), has written several best-selling books (including—what else?— Tales from Margaritaville), and licenses Margaritaville tequila, shrimp and footwear. But his biggest ventures may be in casino gaming. In 2007, in partnership with Harrah’s Entertainment, Buffett announced plans to build the Margaritaville Casino & Resort in Biloxi, Mississippi (near his birthplace of Pascagoula). The proposed Margaritaville in Atlantic City will add millions to his net worth. When Buffett travels, he’s not hoofing it in flip flops. He’s winging it via his Grumman HU-16 airplane or Dassault Falcon 900 private jet. He has more in common with Warren Buffett than the beach bum he so happily portrays. No wonder the man is smiling.
