Atlantic City Boxing Venue News: Revel Bankruptcy Sale Fails Again, $21 Million Lost
By Robert Brizel, Head Real Combat Media Boxing Correspondent
Atlantic City, NJ (February 13th, 2015)–The Revel Hotel and Casino is for sale, at a 96% discount over its 2.4 billion U.S. dollar construction price. For the second time in three months, a potential buyer has lost his deposit when the courts held up the intended closing and purchase of the now shuttered resort. Internal squabbles over the restaurant and nightclub leases, and the costs and lease on the Revel power plant, have also doomed the intended buyers. The Revel closed its doors on September 2, 2014, after two years of operation and two bankruptcies.
In November 2014, Brookfield Asset Management of Toronto gave up on a $110 million deal to buy The Revel due to a still unresolved dispute over debt from the construction of the power plant, forfeiting an 11 million dollar deposit.
On February 10, 2015, The Revel’s owners canceled a deal to sell it for $95.4 million to Florida developer Glen Straub, the original bidder before he got outbid by Brookfield.
Revel is the latest setback for Atlantic City’s gambling market, which shrunk by nearly half over the past eight years. The A.C. casino revenue fell from $5.2 billion in 2006, to $2.74 billion in 2014, a year that saw four casinos including Revel go out of business and lay off 8,000 workers.
Stuart Moskovitz, Straub’s attorney, said Straub was unable to complete the purchase due to uncertainty over whether he would have to assume the leases of former business tenants at the casino, including a nightclub and restaurants, as well as a power plant that is the building’s only source of utility service.Straub’s deal fell apart on Monday after U.S. District Court Judge Jerome Simandle refused to let the proposed sale go through without taking into account the legal rights of the tenants, who are appealing a previous court ruling stating the sale can go forward ‘free and clear’ of their leases.The judge issued a temporary stay Monday, allowing the sale to proceed-but also saying the sale could not proceed without taking the appellants’ rights into consideration in the purchase, which left Straub unable to close on a deal, according to his lawyer. When the sale deadline passed, Straub forfeited his 10 million dollar deposit.
The Revel appeals to be one of those ‘too good to be true’ deals. Its sale price is cheap, but court orders from the lessors associated with Revel, and issues involving the lease on the Revel power plant, cannot be resolved by the Revel’s owners in bankruptcy. If the courts keep blocking the sale, the potential buyers are left holding the purchase money when the contractual sale deadline passes.
If the court orders from the lessors keep blocking the sale, The Revel is a real estate trap sucking the money from buyers, who should not be punished when the judge refuses to let them buy the place and the purchase deadline passes, owing to continual court orders. The end result is The Revel is going to devalue and devalue, and if enough time passes in controversy, The Revel will be a worthless reminder of Atlantic City’s fall from casino grace into unpopular gaming oblivion due to state to state competition for gaming customers, which is wiping it out. So far the other casinos seem to be surviving, but clientele and income are not what it used to be. Monopoly, as we all know is easy to play, but not easy to win. The Revel took a walk on the boardwalk and failed, it did not pass go, and it did not collect the money it thought it would. Such is life.
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