Florida Developer Glenn Straub Appears Set to Own the Revel Casino
Revel Casino goes before a bankruptcy judge this week to determine who will be its next owner. On Tuesday, Revel Entertainment filed an emergency motion to terminate its agreement with Brookfield Management out of Toronto.
If so, then Revel Casino’s strange legal and financial history will see one more twist. Revel Casino only stayed open from April 2012 until September 2014. The $2.4 billion project was an albatross before it opened its doors. Morgan Stanley, which owned 90% of Revel Entertainment in the beginning, walked away from its $932 million investment while it was still under construction. Now the casino might be worth less than $100 million, if the original bidder in the bankruptcy auction ends up the owner.
Brookfield Management
In October 2014, Brookfield won a two-party bankruptcy auction for the right to buy the Revel Casino. Brookfield Management bid $110 million, while Florida real estate developer Glenn Straub bid $94.5 million. Straub had earlier been the sole bidder, so he was the stalking horse bidder, meaning he would receive $3 million if anyone else entered the bidding and won.
Brookfield pulled out of the deal last month, because of a dispute with bondholders over energy rates from a power plant. The bondholders wanted to continue charging Revel Casino $3 million a month for its energy costs. Brookfield stated that was unsustainable.
Polo North Back in the Picture
Glenn Straub’s Polo North had the second bid. At the time, Straub and his lawyer were vocal about the negotiating process. Straub eventually sued, claiming the process was conducted in a less than above-board way, because the other bidder was allowed private time with the Revel Casino’s owners. The implication was his bid might have been frozen out.
In those circumstances, Polo North seems to be interested in going ahead with its plan, or else the lawsuit might not have been filed. At the same time, distrust and hard feelings might exist between Polo North and Revel Casino’s owners, because each might believe the other broke unspoken rules of business. Judge Gloria Burns approved the bid in subsequent weeks, though she was not present for the auction process itself (which was held at Revel Casino’s lawyers’ offices in New York City).
Competing Plans
The future of Revel Casino will be much different, if Glenn Straub is set to re-enter the picture. Brookfield Management, which owns Atlantis Casino in the Bahamas and operates a Las Vegas casino, had planned to reopen Revel Casino as a gambling establishment.
Polo North, on the other hand, had plans to make the Revel Casino building into a rail link. Also, another building would have been built on the site to house a startup college. Straub told reporters at the time that he envisioned a think tank that would consider global issues.
Atlantic City’s Non-Gaming Future
In many ways, the Polo North project sounds more in keeping with plans by Atlantic City’s political and non-gaming business leaders. Mayor Don Guardian is leading an effort to transition from the casino gambling economy which Atlantic City has used since 1975, to a non-gaming economy based more on attractions, night clubs, and family-style tourism.
The Toronto-based Brookfield Management is a global company with a great deal of experience managing casinos, but it also was attempting to embrace a business model which had failed in the past. The northeast casino gambling market is saturated, with Pennsylvania and New York casinos absorbing much of the traffic which once went to Atlantic City. Such circumstances will be considered by Judge Gloria Burns when she hears the case on Friday.
Glenn Straub Scouting Profile
At the same time, Revel AC, the current owners of the bankrupt Revel Casino, might have preferred to sell their property to Brookfield Asset Management–and not just because of the money. In his short time dealing with the business and political community of Atlantic City, Glenn Straub has developed a reputation for testiness. When the bankruptcy auction took place, Glenn Straub and his lawyer came out of those deliberations with many complaints about the way Revel AC and its lawyers handled their business. Soon after, a lawsuit was filed by Polo North.
Whatever the case, Glenn Straub and Polo North are now the only potential buyer in town. Revel AC is going to have to make due with the stalking horse buyer, whatever they might think of his business style personally.
