A day before New Jersey's oldest casino is expected to hand over the keys to its lenders, who haven't been paid in a year, the casino laid out just how bad its financial condition is.
In documents released Wednesday by the state Casino Control Commission, Resorts Atlantic City says it has serious doubts about its ability to continue to operate. The first United States casino to open outside Nevada says it owes nearly $337 million more than it has right now.
On Thursday, the casino commission is expected to approve a deal worked out by Resorts and its lenders that would transfer ownership to the lenders. Co-owners Colony Capital LLC will give up its interest in the casino to partner Nicholas Ribis, who will manage the casino and continue to own the gambling equipment inside it.
"The company has incurred recurring net losses, is in default of its loan agreements and has a net working capital deficiency," Resorts wrote in its quarterly financial report, which showed a staggering 78.7 percent decline in gross operating profits, to just above $700,000.
Compare that to $69.5 million in gross operating profits posted by the perennial industry leader, the Borgata Hotel Casino & Spa, and it quickly becomes clear how shaky Resorts' future is.
Over the past two years, Resorts' owners have refurbished it, updated gambling equipment and other amenities, and achieved cost savings. But they just weren't enough, the company said.
Expansions since 2007 at Borgata, Harrah's and Trump Taj Mahal casinos amid a declining market also hurt the company, it said.
Such a climate "put substantial pressure on the company to maintain gaming revenue market share," the company wrote. "The company continues to face competitive market conditions from competitors in neighboring states as well."
It now owes nearly $381 million on a mortgage that has not been paid since October 2008.
The lenders have formed a new corporation, RAC Atlantic City Holdings LLC, that is expected to be approved Thursday as the casino's new owners. It could receive a casino license on the spot.
An attorney for the lenders declined to comment Wednesday.
The handover would be the first in the 31-year history of casino gambling in New Jersey. Resorts opened in May 1978.
The 11 Atlantic City casinos reported a combined decrease of 11.7 percent in gross operating profits, which represent earnings before interest, taxes, depreciation, amortization and charges from affiliates.
Gross operating profits totaled $280.7 million for the three-month period compared with $317.9 million for the same period last year.
Harrah's Atlantic City reported gross operating profits of $48.4 million, a 7.2 percent decline; Bally's Atlantic City earned $40.4 million in gross operating profits, down 6.9 percent; the Trump Taj Mahal Casino Resort reported gross operating profits of $34.9 million, down 1.5 percent, and Caesars Atlantic City earned $34.6 million in gross operating profits, down 28.9 percent from a year ago.
The Showboat Hotel Casino reported $20.9 million in gross operating profits, a decline of 14.3 percent; the Tropicana Casino and Resort reported a 21.5 percent decline to $17.6 million; Trump Marina Hotel Casino earned $6.5 million in gross operating profits, down 14.4 percent, and Trump Plaza Hotel and Casino reported $6.3 million in gross operating profits, a 61.9 percent decline.
The Atlantic City Hilton, Resorts' sister property, which also is struggling badly, earned just $888,000 in gross operating profits in the quarter, down 72.6 percent from the same quarter a year ago. The Hilton also missed a mortgage payment this summer and has been trying to work out a deal with its own lenders to stave off foreclosure.