Mohegans show interest in Trump Marina site

The Mohegan tribe, which owns one of the most successful casinos in the country, is looking to make a move in Atlantic City.

The fact executives from the Mohegan Sun in Connecticut have been eyeing the Tropicana in A.C. has been widely reported since that casino was forced to put itself up for sale in December.

But the Mohegans also have been speaking with Trump Entertainment Resorts about purchasing Trump Marina, according to three people familiar with the talks who asked not to be identified be cause the discussions are preliminary. Some analysts think Trump Marina could make more sense for the tribe because the casino is smaller and would cost less.
Through a spokeswoman, Trump Resorts Chairman Donald Trump refused to comment, as did the company’s chief executive, Mark Juliano.

Mohegan officials also declined to say whether they were specifically eyeing a Trump casino. But they were not shy about their interest in A.C., where they have made frequent trips in recent weeks to scope out opportunities.

„Atlantic City has always been appealing to us,“ said Mohegan’s chief executive, Mitchell Etess, who started his casino career at Trump Plaza in Atlantic City. „We’ve always felt that there would be a tremendous amount of synergy. It’s just a matter of finding the right fit.“

Time for Trump?

Trump Resorts has struggled since emerging from Chapter 11 bankruptcy protection in May 2005. Last year, its three Atlantic City ca sinos — Trump Marina, Trump Plaza and the Trump Taj Mahal — lost an average of 5.5 percent in ca sino revenue. Trump Resorts has been trying to sell at least one, if not all, of its A.C. casinos for the past year.

But finding a buyer has been difficult, even before the recent tur moil in the credit markets. The company’s high debt of USD 1.5 billion and expensive bond covenants have been a turnoff to prospective buyers. In addition, Trump has veto power over the sale of any of the three casinos. If he waives that right, the company would have to pay him up to USD 100 million to cover taxes he would owe on a sale.

During the past year, Trump Resorts has been in talks with several prospective buyers who even tually walked away. Industry observers say there could be renewed interest in one or more of Trump’s casinos now that the Tropicana sale has drawn the attention of prospective buyers from across the country.

Tropicana’s conservator, former New Jersey Supreme Court Justice Gary Stein, has said he has received dozens of inquiries about the casino. The Mohegans were the first to publicly state their interest. But so far, only two groups — Colony Capital, owner of Resorts and Hilton, and Joseph Palladino, who has yet to identify his backers or operators — have submitted offers.

Some analysts think the Tropi cana could fetch USD 800 million or even USD 1 billion, whereas Trump Marina’s price tag would be closer to USD 350 million.

Another reason Trump Marina may be attractive is be cause MGM Mirage owns 14 acres next to it that a buyer could use to expand the casino. And it is lo cated in the Marina District, where Borgata and Harrah’s are currently expanding and MGM has plans to build a USD 5 billion resort.

„It’s a high-growth area among industry heavyweights,“ said Joe Weinert, vice president for the ca sino consulting firm Spectrum Gaming. „I can see why Mohegan management would like that property.“

No deals yet

Mohegan’s chief operating officer, Jeffrey Hartmann, cautioned the company is still studying the Atlantic City market. Chief among the concerns is how A.C. will fare after more slot parlors open in nearby Pennsylvania — specifically two in Philadelphia, which will debut in the next few years.

Even without casinos inside the Philly city limits, slot parlors introduced at racetracks in the Philadelphia suburbs and in New York caused Atlantic City revenue to fall 5.7 percent in 2007 — the first drop in 29 years of gambling at the seaside resort.

Mohegan also is trying to determine how the market will react if Revel Entertainment, Pinnacle Entertainment and MGM Mirage make good on their plans for new, multibillion-dollar casino resorts.

„It’s a moving target,“ Hart mann said. „The market is going through a lot of change. I think long term it will be a strong market.“

Industry analysts, however, said Atlantic City would be a good fit for the Mohegans. Besides its flagship in Connecticut, the Mohegan tribe was the first to open a slot parlor at a Pennsylvania racetrack. Analysts said an Atlantic City casino would allow the tribe to market to gamblers throughout the Northeast.

„They want to diversify,“ Lehman Bros. analyst Jane Pedreira said. „And it would be good for cross-marketing.“

The Mohegan tribe emerged as a gambling powerhouse after opening the Mohegan Sun in 1996. Along with Foxwoods, which is owned by the Mashantucket Pequots, the Connecticut casinos took the gambling world by storm when the two tribes opened Las Vegas-style resorts and quickly be came two of the largest casinos in the country.

Mohegan and Foxwoods compete directly for Atlantic City gamblers in New York City, and both have moved aggressively in recent years to enter other gambling markets.

But the Mohegan Sun is the one that now holds the title for glitz and glamour. Its arena at tracts top entertainment. Its gambling lures high rollers. And its advertising campaigns are a constant reminder to the rest of us that Mohegan, with its moniker „A World at Play,“ is just a few hours away.