Do the math!
Revel, Showboat, Trump Plaza = 5,900 JOBS
5,000 JOBS PROMISED at Revel Alone!
Chris Christie loses a big Atlantic City bet, posing another challenge for 2016 run
By Paul Kane September 5
ATLANTIC CITY — Underneath the gleaming new tower on the north end of the boardwalk, Gov. Chris Christie (R) placed a bet that this down-on-its-luck city was about to turn around. Revel, a massive $2.4 billion casino willed to completion by Christie, was supposed to provide
5,000 “permanent” jobs and fuel a revitalization to the entire city.
“The completion of Revel and its opening is a turning point for Atlantic City and a clear sign that people once again have faith in the city’s ability to come back,” Christie
said before the 2012 grand opening, which featured a performance by megastar Beyoncé.
Two years later, the Revel is shuttered — wiping out thousands of jobs amid an economic implosion of the gambling industry here. Rather than serve as a shining example of Christie’s economic stewardship, Revel now stands as a 57-story example of failure in a city that has bedeviled New Jersey governors for decades.
This particular governor, however, is on the brink of deciding whether to run for president and is already struggling with a political scandal over the closure of the George Washington Bridge. His handling of the Revel case creates more problems for his preferred image as a can-do executive who gets results, even if it means working with Democrats.
The casino’s collapse also leaves the tough-talking governor open to criticism from social conservatives in early primary states such as Iowa and South Carolina, who oppose gambling as a vice and who already distrusted Christie’s centrist leanings. Libertarians, meanwhile, question the role of a state government in attempting to prop up such a risky private endeavor.
Even those sympathetic to Christie’s efforts here criticize him for listening to
Wall Street analysts, who were bullish on Revel and its ability to transform the city. “He got duped,” said Bob McDevitt, president of Unite Here Local 54, a local union with about 9,000 casino workers.
McDevitt said unions warned Christie and his predecessor, Democrat Jon Corzine, that it was too risky to open a massive casino at a time of economic turmoil and expanding competition from nearby states. “It fell on deaf ears,” he said. “They’re all complicit in it.”
The governor has organized a closed-door, bipartisan summit to be held here Monday designed to figure out what to do with Revel and three other casinos that have closed or will soon do so.
The answers coming out of the gathering could go a long way toward determining whether Atlantic City’s troubles will become an anchor weighing down Christie in a potential 2016 bid.
“I’m certainly not ready to throw in the towel on this. We have a lot of work to do,” Christie said at a mid-August news conference just days after the announcement that the
Revel, Showboat and Trump Plaza casinos would all close in September. About 5,900 jobs will disappear, amounting to about 20 percent of the casino workforce in Atlantic City.
Christie’s advisers say he has tried to make the best of a very bad situation. By the time he took office in January 2010, Revel was half-built on the boardwalk, a hulking mass of steel that was losing its financing. Morgan Stanley decided to take a nearly $1 billion loss on the project rather than spending more than $1 billion more to finish the project. One option was to halt construction — leaving an unfinished project looming over a boardwalk already struggling with blight.
Instead, Christie’s administration pushed forward and found new investors by early 2011, luring them with the
promise of up to $261 million in tax incentives.
The incentives could only be claimed if the project was profitable, which never happened. The governor’s advisers believe he can escape conservative criticism by saying that no taxpayer dollars were lost on the project.
State Senate President Steve Sweeney (D) and other key politicos from both parties supported the plans.
At the time, Christie boasted of the government’s role in sealing the deal, asking his idol,
the liberal musician Bruce Springsteen, to perform at the new casino. “I think Bruce, if he’s true to his lyrics, would love the fact that
the state used taxpayer funds to invest in this place to create jobs for working men and women,” he said.
Revel’s backers believed that they had created an antidote to many of the problems with Atlantic City’s casinos, which were premised on the convenience of gamblers who would make day trips in buses from Philadelphia, New York and Baltimore to play slots for a few hours and return home.
Outside the casino walls lay a city that was still struggling, with little draw to tourists. The average Las Vegas visitor spends three nights there, while the Atlantic City visitor stays 11 hours, according to William J. Pascrell III, a lobbyist representing gambling clients.
For decades, the Las Vegas-based companies that ran most of the casinos here vacuumed up the gambling profits but did little to promote redevelopment of the surrounding area, preferring to keep customers inside. “That was a Las Vegas mentality,” Atlantic City Mayor Don Guardian said.
Revel was designed to appeal to well-heeled tourists looking for nice rooms to stay in, high-end restaurants and popular entertainment acts in the casino’s club. Some state officials feared the Revel would be so successful it might cannibalize other casinos on the boardwalk and take dollars away from competitors on the western edge of town by the marina, such as Borgata and Harrah’s.
Instead, Guardian said, “The building just didn’t come together.”
Those convenience gamblers from neighboring states drifted away, draining nearly half the $5.2 billion wagered in Atlantic City in 2006. Big-dollar gamblers did not like Revel’s odd designs — the casino was six floors up — and its restriction on smoking.
Staggering debt payments made it impossible to turn a profit, not to mention a specialty energy system to heat and cool the tower that added $30 million a year in costs. Five months after Christie christened the casino as a “game changer” for the city, Wall Street downgraded its debt. Springsteen never performed there.
All this came as the city saw some measures of growth, according to Elizabeth Cartmell, president of the Atlantic City Alliance, the marketing group whose “Do AC” campaign has tried to drum up customers.
But there just aren’t enough gamblers to fill the blackjack tables and slot machines when 14 new casinos were added to the Mid-Atlantic region in the past decade. Overall revenue for slot machines increased less than 9 percent since 2001, despite 50 percent more slot machines in the region. “What you see is a clear shifting in where the dollars are being spent,” Cartmell said.
This week, Christie traveled to Mexico on a trade mission. He will hope to find some answer to the Atlantic City problem, both to boost the city and for his own national ambitions.
“We are, I believe, at a nadir,” said McDevitt, the union leader. “If it’s followed up with real action, I think it will be a positive story for Governor Christie. If nothing changes, the city’s languishing, sure, it’s a problem.”
http://www.washingtonpost.com/politics/chris-christie-loses-a-big-atlantic-city-bet-posting-another-challenge-for-2016-run/2014/09/05/d7471a7a-33b0-11e4-8f02-03c644b2d7d0_story.html?wpisrc=nl_pmpol&wpmm=1
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