Atlantic Club Bankruptcy Auction can’t produce Buyer: PokerStars laughing
The Atlantic Club Casino continued its downward spiral after a bankruptcy auction failed to produce a buyer. The Atlantic Club was put up for auction two days ago, but initial attempts to sell off the ailing casino have been unsuccessful.
As if this isn’t bad enough, a union named Local 54 of Unite-HERE is now protesting the auction altogether. Local 54’s problem is twofold: 1) the union says that they were never consulted about the sale, and 2) they believe the auction should be stopped if it doesn’t include continued contract terms for hotel workers.
The Club originally filed for bankruptcy after posting a loss of $2.3 million in the second quarter of 2013. However, an un-named hedge fund stepped in and saved the company by putting up $15 million worth of operational money. But after seeing how little interest there is in purchasing the Club through an auction, it’s very unlikely that the hedge fund will recoup the $15 million.
All of this brings us back to a deal between the Club and the Rational Group, which owns PokerStars and Full Tilt. Rational made a deal with the casino’s parent company, Colony Capital LLC, to purchase the property for $50 million. This included $40 million of investment money that was to be spread out over five years, which would in turn protect between 1,800 and 2,000 jobs.
PokerStars sunk over $10 million into the Club before Colony Capital called the deal off in the spring of 2013. The hedge fund cited a stipulation of the contract that Rational must obtain a gaming license in New Jersey before a specific date. Rational failed to do this, so Colony Club was allowed to break the deal and keep the $10 million-plus of investment money.
Many speculated that Atlantic Club owners walked away from the contract because they eventually realized how much money was involved in New Jersey’s online poker market. However, it doesn’t appear that the current owners will ever get to realize these potential profits, seeing as how they can’t keep the casino open. In hindsight, it would’ve been much better to continue allowing Rational to purchase the casino.