Blatstein and Stockton Agreed to Delay the Purchase for the Sake of Tax Considerations.
The sale of the former Showboat Casino by Stockton University to Bart Blatstein has been delayed until mid-January. Harvel Kesselman, the interim president of Stockton University, said the delay was good news. He said it would allow his university to recoup more money in the short term, while it would allow Blatstein with tax benefits, by pushing all taxes on the purchase to the next year.
Purchase of Showboat Casino
Stockton University has been trying to sell the Showboat property since it learned that it could not use the former casino complex as a college campus. The seller of the property, Caesars Entertainment, had a 1988 deal with the Tropicana which stated the property could not be used for anything but a gaming facility. Herman J. Saatkamp Jr., Stockton’s former president from 2003 to 2015, claims Caesars led him and his lawyer to believe the 1988 deal would be no obstacle. A second deed to the property is likely to have caused the confusion.
Once the college took control of the property, Stockton learned it could not use the property as an urban satellite campus. Attempts were made by state lawmakers, Sen. James Whelan and Assemblyman Vincent Mazzeo, in July 2015 to do away with the deed restrictions, but they came to nothing.
Saatkamp Resigns
The fallout from the purchase, including the fact President Saatkamp did not inform the Board of Trustees about potential issues, has led to months of recriminations. Eventually, the president resigned. Since then, Stockton University has sought a buyer. Bart Blatstein, a Philadelphia developer with gaming interest in that area, stepped in to make the purchase. When it is all said-and-done, Stockton University is set to make several million dollars on the purchase, as Bartstein is paying $22 million a year after the property sold for $18 million.
Despite the happy turn of events from the school’s perspective, it remains a source of controversy for the student body, which wanted an urban campus during their time at the school. The Bartstein deal still leaves Stockton University without an Atlantic City campus.
Bart Blatstein
Bart Blatstein has a recent history in Atlantic City. He is the developer who a $50 million renovation to turn The Pier Shops at Caesars into “The Playground“. Pier Shops is a luxury shopping mall opposite Caesars Atlantic City.
After the renovation job, the Playground opened new themed clubs and bars, upscale retail outlets, and a concert venue. The development is part of an overall city transition pushed by Mayor Don Guardian. If the mayor has his way, Atlantic City will become a destination for non-gaming activities on the Jersey Shore.
Atlantic City’s Economic Downturn
Over the past two years, Atlantic City has been undergoing a serious economic downturn. Over a 9-month period in 2014, four Atlantic City casinos closed their doors. In the previous 8 years, half of the local revenues generated by Atlantic City’s casino gaming industry had been lost. For a city built on casino revenues, losing four major businesses was a disaster. Faced with a $70 million and ratings as the U.S. city with the worst local economy, Atlantic City had to take a $40 million loan from the State of New Jersey earlier this year. Part of the deal required the city to submit its budgeting and government services to state-controlled economic advisors.
As for the gaming industry, several casinos closed due to bankruptcy. A fifth entered bankruptcy, but was saved at the last minute by investor Carl Icahn. The Showboat Casino was profitable, but was closed by Caesars Entertainment because it owned 4 casinos in the city and wanted to consolidate its customer base. Caesars has a database for marketing to those gamblers, so it could close one casino and likely retain most of those customers. Under the circumstances, it could save on payroll and other operating costs.
Signs of Growth
In recent months, several positive signs have been seen. Carl Icahn’s purchase of the Trump Taj Mahal might signal worse benefits for workers, but also assures over a thousand jobs remain in a city which lost 9,000 last year (with a population of only 40,000). Glenn Straub purchases one of the closed properties, Revel Casino. When a lawsuit with its energy provider is settled, Revel Casino might well open up a gaming operation (or he might not).
Then there is the old Showboat Casino. Bart Blatstein is almost certain to open a gambling facility at the Showboat, since the deed restriction assures that is the only possible business which can operate there.
