Trump Taj Mahal To Shut Post-Labor Day

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Friday, August 19th, 2016 | Written by Stephen Smith

The Trump Taj Mahal in Atlantic City is slated to close its doors permanently on Labor Day, which falls on Monday, September 5. The reason for the closure? Well, it depends on who you ask. While Carl Icahn, the owner of the Trump Taj Mahal, lays the blame squarely on the shoulders of the Local 54 labor union, Atlantic City’s casino industry, nevertheless, has been struggling in recent years. In fact, casino revenues are currently dramatically down from where they were 10 years ago, and in 2015 Atlantic City casinos generated only $2 billion in revenue compared to their peak of $5.4 billion in 2006.

Dispute with the Union

In October 2014, Trump Entertainment won the right to eliminate health benefits and pension packages for its employees as a part of bankruptcy proceedings. The judge determined that the resort could not afford to continue paying the compensation; however, the union cried foul, as Trump Entertainment had required the union to sign away the right to raises for 12 full years in order to secure the benefits in the first place.

After the bankruptcy proceedings, Carl Icahn reportedly tried to strike a bargain with the union by offering a much less attractive benefits and pension package for members. The package put forth was deemed unacceptable by the union back in July, marking the start of a strike that continued unabated, leading to Icahn railing against the workers, saying that they were standing in the way of profitability. By deciding to close the resort as of Labor Day, he is clearly trying to let the union know who he blames for the closure.

A Different Story at the Tropicana

In June 2016, Carl Icahn managed to reach a rather peaceful agreement with the union at the Tropicana casino in New Jersey. The compensation package, which included a pension and medical benefits, was passed with ease. When you look at the difference between the two situations, there is really only one factor that is different–in the case of the Trump Taj Mahal, Icahn had permission from the court to do away with benefits. It seems that this gave the billionaire investor the upper hand, and he approached the union from a stance that he owed the workers nothing; they should take whatever he offered. As Tropicana Entertainment’s CEO Tony Rodio, which operates the Taj Mahal, commented:

“Icahn Enterprises saved the Tropicana, and to date has lost almost $100m trying to save the Taj when no other party including the prior equity owners who put it into its recent bankruptcy were willing to invest even one dollar to save it. Currently the Taj is losing multi-millions a month, and now with this strike, we see no path to profitability. Unfortunately, we’ve reached the point where we will have to close the Taj after Labor Day weekend.”

Atlantic City’s Decline

Many industry insiders believe that the failure of the Trump Taj Mahal was inevitable. They state that Icahn is using the union as a scapegoat to cover over the fact that business did not improve despite all of the protections put in place by the bankruptcy agreement.

No matter what the final nail in the Trump Taj Mahal’s coffin was, the fact that 2,100 people from the Atlantic City area will be out of work as of Labor Day does not bode well for a city that is already on the verge of bankruptcy or a state takeover. The news about the closure is a sad final chapter for the hotel that Donald Trump called the eighth wonder of the world when it opened in 1990.

Trump Paid Just $5M in Overdue Taxes

In other Trump Taj Mahal related news, it was revealed this month that when Chris Christie became New Jersey governor in January 2010, the state had already been attempting to collect overdue taxes from the casino for several years. The outstanding amount covered from 2002 to 2006, a period when Donald Trump was the company’s chief executive, and all told, including interest, the casino was said to owe New Jersey around $30 million.

By December 2011, however, Governor Christie agreed to accept just $5 million by way of a settlement, with the steep discount raising eyebrows amongst legal experts, with some citing the close relationship between Trump and Cristie. Professor David Skeel from the University of Pennsylvania Law School, for instance, commented on how striking it was that “this one was written down so much.” As Christie explained after endorsing Trump’s Republican nomination in February:

“Donald and I, along with Melania and Mary Pat, have been friends for over a decade. He has been a good and loyal friend.”