Straub puts up $26M for ex-Showboat casino, eyes $500M plan
ATLANTIC CITY, N.J. (AP) — A Florida developer who's buying Atlantic City's former Revel casino has put up $26 million for another shuttered casino next door and announced plans for a half-billion dollars' worth of redevelopment projects in the struggling seaside gambling resort.
But the deal announced Friday for the former Showboat Casino Hotel faces the same legal problem that sank it after Stockton University bought it.
Trump Entertainment Resorts, which owns the Taj Mahal casino and was part of a 1988 legal agreement specifying the Showboat can never be used for anything other than a casino, said it will enforce that legal restriction. That requirement forced Stockton, which bought the Showboat with plans to transform it into a satellite campus, to sell it.
Developer Glenn Straub said his move to acquire the Showboat from Stockton is the start of a $500 million bid to redevelop Atlantic City called The Phoenix Project. Straub and Stockton issued a press release Friday saying the move brings Stockton's plan for a satellite campus at the Showboat under the auspices of The Phoenix Project.
"As the name of the project signals, the Phoenix rises out of the ashes to be reborn and will evolve to include diversified collection of projects including eight parts designed to show that the American dream is still alive and well," Straub said.
The deal for the Showboat came a day after a federal bankruptcy judge approved Straub's deal to buy Revel for $82 million, a transaction expected to be finalized at a closing on Monday.
Stockton, located in the Atlantic City suburbs, has long wanted to establish a campus in the city. It bought the shuttered Showboat from Caesars Entertainment for $18 million in December and announced plans to establish what it called the Island Campus there. Last month, however, it became clear the legal restriction, which Stockton knew about but had expected to be resolved between Trump Entertainment and Caesars, had not been dealt with, and Trump Entertainment said it would block the deal.
Trump Entertainment CEO Robert Griffin said the company's stance has not changed. The company does not want a college campus next door to its Taj Mahal casino, fearing students under the legal age of 21 will sneak in to gamble and drink, exposing the casino to costly fines.
"We will not allow it," Griffin said.
Stockton, expecting continued legal problems, included a provision in its deal with Straub giving it an 18-month right to buy the building back or lease it for educational purposes. It also included a 90-day escape clause, allowing it "to continue with its plans to open a residential campus in Atlantic City beginning in the fall of 2015 while evaluating any possible legal challenges from Trump Entertainment."
"I am assured by counsel and others that we are on very firm ground should there be any legal challenges by any casinos regarding the 1988 covenant," Stockton president Herman Saatkamp said.
On Wednesday, the City Council is expected to approve a redevelopment zone designation for the Showboat site prohibiting it from being used as a casino and designating Stockton as an education-related redeveloper. It remains to be seen whether Trump Entertainment will challenge the move in court.
Straub said acquiring Revel and the Showboat are the first steps in a three-year plan to buy and redevelop parcels across the city.
He said he plans to submit a proposal to transform the former Bader Field airport site that will re-open part of it as an aviation facility. His plans also include an extreme sports complex, two marinas, a world-class equestrian complex, waterparks, universities and high-speed ferries and helicopter service connecting to Manhattan
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