NJM Archives: Donald in Wonderland

From July 1990: Donald Trump’s Atlantic City gamble.

Courtesy of Trump Entertainment Resorts
The Trump Taj Mahal finally opened its door in April 1990.

Editor’s Note: This story first appeared in the July 1990 issue of New Jersey Monthly. The Trump Taj Mahal filed for bankruptcy in 1991. In the years that followed, Trump consolidated his three Atlantic City casinos under a publicly traded company, Trump Hotels and Casino Resorts. In 2004, the entity filed for bankruptcy with $1.8 billion in debt. Trump Marina was sold in 2011; it is now the Golden Nugget. Trump Plaza closed for good in 2014. More recently, the Trump Taj Mahal had been owned by a subsidiary of Icahn Enterprises; it closed on Monday, October 10, 2016.

Frank Dumont is standing inside the Taj Mahal two weeks before opening day, and his Marty Feldman eyes, after all this time, still betray a sense of wonderment. This place–this edifice–is Frank Dumont’s creation, his Boardwalk masterpiece.

Inside Donald Trump’s Emerald City, the paint is fresh and the carpet just laid and the colors are a kaleidoscope of pastels, as if someone had put a rainbow in a bowl, turned on an electric hand mixer, and pointed it at the walls. “It’s just a fabulous building” is all Frank can say.

It is. Not fabulous, let’s say, in the way you might describe a trip to the Orient. Fabulous in the way the late Malcolm Forbes might have described his birthday party in Tangiers. Huge. Splashy. Excessive. Fabulous.

Frank walks into an empty space where workmen are painting. “We even have chandeliers in our coffee shop,” he gushes. “I tried to make all of our spaces very interesting. Like this coffee shop. We didn’t want to make it seem like you’re in a coffee shop. So it’s called the Bombay Cafe, and it’s like being transported to another world.”

Another world. That’s ironic phrasing coming from Dumont, who was first told he would be selected as the architect for the Taj project eight years ago at sèance in Northfield thrown by the witty, portly British psychic Roger St. John Kent Webster.

Dumont, who up until this project had designed homes but never a casino, snagged it while it was still under the auspices of the original owners, the Crosby family. When Trump took over in 1986, he kept Dumont on –provided the architect was willing to add more marble and more chandeliers.

Even by casino standards, the Taj has become a benchmark for glitz in a business that markets the quality as aggressively as its favorable offers. Its seven penthouse suites are named for King Tut, Napoléon, Kublai Khan, and Cleopatra, among others; each has two bedrooms, two baths, a spa, a sauna, a dining room, and a bar. There are six animal-themed suites, 21 Lanai suites, 25 Raja suites, 178 Viceroy suites, and 980 deluxe rooms. There are twelve restaurants, including the Safari Steak House on the second floor, where the jungle motif includes chandeliers made out of real antlers and a full-sized tree in the middle of the room. There are assorted bars and lounges; an 80,000-square-foot arena, which can seat 5,200 (Elton John appeared there in May); and twelve retail shops, including Tiffany’s.

While the Taj is meant to evoke the days of the maharajas, its main purpose–as with everything in this town– is to suck in the gamblers. But while the Taj’s immediate competition is certainly with its Atlantic City brethren, Trump has set his sights on loftier goals. Because what has yet to be mentioned in the avalanche of new stories about the Taj is that in order to bring in the estimated $1 million a day in revenues he needs to make the casino profitable, he’s going to have to expand the city’s tourist base–and that means stealing customers from Las Vegas. More specifically, that means attacking the Mirage, the Las Vegas palace erected by the Golden Nugget CEO Steve Wynn, who sold his Nugget casino to Bally’s in 1986 after declaring Atlantic City a losing enterprise. Wynn went back to Vegas and built the Mirage, a Taj-like gambling palace with an indoor waterfall, palm trees, a volcano, and enough glass to fill the World Trade Center. Wynn was operating the Golden Nugget in Atlantic City when Trump– then a not-so-well-known developer from New York– arrived to stake his claim. Wynn dismissed Trump as a flashy upstart; Trump conjured up images of Wynn as a dinosaur out of touch with the wants and needs of Atlantic City patrons. Their sniping kept a lot of microcassette recorders running on overdrive.

But Trump was right. Las Vegas is, in fact, a different animal. While A.C. saw casino gambling as a means to revitalize a dying city, Las Vegas came into existence because of gambling.

Casino executives in Atlantic City, who blame the greed of local politicians for the lack of progress in improving the town, are tired of being compared with their western sister. Las Vegas, in turn, has made a stunning assault on Atlantic City by playing on the fact that their town is new and bright no matter where you go. When he left Atlantic City, Wynn–unbeknownst to anyone–left a surprise behind. While he sold his property to Bally’s, he kept possession of nine billboards he owned near Atlantic City and on the Walt Whitman Bridge leading from Philadelphia to New Jersey. Shortly before the Mirage opened last year, he used the billboards to display a message: “The Mirage will open in Las Vegas on December 1st. Until then, please try to enjoy yourself as best you can.”

What most people don’t understand is that in the war for customers, the battlefield isn’t Las Vegas or Atlantic City. It’s the Midwest, the South, Canada, even abroad. Luring the “premiere customers” (a.k.a. the ones who have biggest bucks to blow) is the key to any casino’s success. The blue-haired ladies who arrive by bus and brunch at the Taj’s New Delhi Deli give Trump the crowds he needs to make his casino look successful. But only the high rollers can improve the bottom line. Which is why the battle for the big spenders is so important–and why Las Vegas’s portrait of Atlantic City as a slum had been a major weapon in the war.

Can the Taj change that? And if it does, what will the result be for the other casinos in town, as well as for the area’s hotels and resorts?

“We’re all concerned about what the effect will be,” says David Gardner, vice president of government affairs for the Casino Association of New Jersey, the industry’s lobbying arm. “Will the Taj attract more people here, or will it simply be a vacuum cleaner to take the existing people away?”

Roger Gros, managing editor of the New Jersey Casino Journal, says there are two schools of thought on the subject. “One is that the Taj will draw away from the established properties and cause the less successful to get into even more trouble,” he says. “I think the Taj Mahal is going to draw people into Atlantic City who haven’t been here for quite a while. I think that’s one of the problems the city has faced­– everybody has seen everything already. In the long run, maybe, it could turn serious, unless Atlantic City starts marketing itself as a destination resort.”

Atlantic City’s vulnerability to Las Vegas’s negative advertising rests with the city itself. While the casinos are mandated by law to funnel huge amounts of money into the Casino Reinvestment Development Authority (CRDA), a state agency set up to renew the city, they are powerless to control how it’s spent. In fact, after paying hundreds of millions in real estate taxes to the city through 1985, the casinos demanded a management audit of the city in 1986. (Through 1989, the industry has paid $552.2 million in real estate taxes to the city.) What the audit found was that most of the money went to salaries for a wave of new employees the city fathers claimed they needed to deal with the strain caused by the casinos.

Compounding the political problems is the fact that 1989 was a sluggish year for the casinos, due to the general downturn in the economy, a lack of big-name entertainment, the opening of the Mirage, and the bad press surrounding the closing of the Atlantis casino and the slide into bankruptcy of Merv Griffin’s Resorts casino. Revenues in 1989 grew by a paltry 2.9 percent, less than the rate of inflation. And figures for this past January show an even worse start, with only six of the city’s eleven casinos posting revenues above $20 million, the industry’s watermark for financial health. Growth stopped dead in the first quarter of 1990 with the casinos posting revenues of $654.3 million–$2 million less than the first quarter of 1989.

“Are people nervous about the Taj?” Dave Gardner ponders, when asked about its impact on some of its shakier neighbors. “It depends. I think the people farthest away down the Boardwalk aren’t delighted. They’re trying to prepare for the day when the emphasis shifts to the other part of town. And it will.”

For the area’s hotels, the biggest issue is that the Taj is dumping more than 1,000 hotel rooms in a market struggling from overdevelopment and a shrinking tourist trade.

“The Taj is an attraction in and of itself, and it has already brought a lot of interest,” says Jerry Greenberg, the president of the Atlantic City Hotel/Motel Association. “But is it going to open up the convention business? Hmmm. I guess it will–for that end of town. But the ripple effect? I don’t know if that is going to happen.”

There’s a good reason for the skepticism. Casino gaming was supposed to bring boomtown times to communities near Atlantic City, and hotels like Marriott’s Seaview Golf Resort, the Sands Country Club, and the Residence Inn sprouted in communities such as Galloway Township, Northfield, and Somers Point. But overwhelmingly, the noncasino hotels have proved to be mostly white elephants.

In 1989 alone, two noncasino hotels were forced into Chapter 7 bankruptcy; another two–one in Atlantic City, one just out of town–are in Chapter 11.

Another factor making competitors uneasy is Trump’s reputation for ruthlessness. Resorts, the Claridge, Bally’s Grand, and the Showboat–casinos that cannot afford to lose one customer–will be most affected if the Taj suddenly takes off. If Trump is to continue to produce the $1 million a day in obligations, it would appear he must kill off one or two of his neighbors. That’s because, despite all the histrionics and the bravado, Trump is feeling some pretty strong financial pressures.

The simple business fact is that he is over extended on the Taj. Trump twice delayed opening the casino hotel as he pulled the financing together, in the end forming a partnership (with himself as a sole limited partner) that issued $675 million in junk bonds to get the job finished. Now he must pay $94 million in interest on those bonds each year. At one point, Trump even said he was considering going public on part of his empire to raise capital–an astonishing notion for a man who has slapped his name on every property he could get his hands on. But last year things got serious when the Taj’s junk bonds, which posted a high of almost 104 in June, skidded to 87 by mid-November. Add to that the estimates that revenues are going to have to be 15 percent higher than those of Trump Plaza (one of the most successful operations in town), a stagnant market, an antiquated airport, and a rundown city, and it becomes apparent that Trump has a monumental task ahead of him. “There is still some question about him pulling this off,” Roger Gros says, “But if anyone can, Donald can.”

One way Trump is rumored to be thinking about reorganizing his holdings and giving the Taj a better chance of success–is by selling Trump Castle to Barron Hilton, who originally developed the property but was denied a gaming license because of his ties to an attorney who allegedly represented organized crime figures. Insiders are now talking about a proposal that would allow Trump to swap Trump Castle for the Flamingo Hotel and Casino in Las Vegas, owned by Hilton.

While the deal would not raise any additional revenue for Trump, it would accomplish three things: It would allow him to concentrate on getting the Taj on track without the burden of the Castle, his least successful Atlantic City enterprise. It would allow him to build or buy another casino hotel in town, since he would then own only two (state regulations bar anyone from owning more than three casinos). And it would allow him to enter the lucrative Vegas market, where he has been dying to take on Wynn for quite some time.

While Trump may have hoped the success of the Taj would offer a happy distraction to his marital problems, just the opposite has been true. The day after his much ballyhooed April opening, the casino’s 3,000-plus slot machines were shut down in an accounting snafu that cost Walter Haybert, the Taj’s president, his job. Haybert was demoted to chief financial officer, in part because of the snafu and in part, sources say, because he was not the polished speaker and “showman” Trump needed to ensure that the building would remain high profile after the initial wave of attention subsided.

The new man at the top is Williard “Bucky” Howard, who made a name for himself both at Trump Castle and at the Showboat as a dapper wheeler-dealer who has the magic to lure blue-chip gamblers from around the world. Among Howard’s first crises–aside from the slots­–was the near-trampling of singer Michael Jackson, who–on a private tour the day after the opening–came off an elevator and into a screaming swarm of fans who almost crushed him.

But these are short-term problems. The serious issues–such as whether the Taj will still be generating $1 million a day in November–are still there.

“We’re going to grow the market,” says Haybert, the new CFO. “In addition, we’re going to be able to market to an individual who has not really come to Atlantic City in recent years.”

The likelihood, despite the gloomy forecasts, it that the Taj will indeed be a success, at least in the short term. It’s impossible to believe that anyone as savvy as Donald Trump would invest $1 billion–with a sizable chunk of his own money–into a project he felt had any chance of failure.

In the final analysis, despite the fireworks, the ballyhoo, and the electronic genies, what will sell the Taj is the Taj itself. That spectacular, colossal monument to supertackiness will determine its own success or failure. Either people will find it the most exotic locale on the East Coast and swarm to it, or they’ll find it too big, too loud, too garish, too Trump, and stay away in droves.

But if its owner can keep those 22 bus dockets full of blue-haired ladies who eat at Rock and Rolls (yet another Taj deli) and can fill the Alexander the Great suite with guys wearing diamond pinkie rings, he’s do just fine.

And if he fails? Then the building will stand as nothing less than a monument to the failure to bring legalized gambling to Atlantic City. Because, as ex-gaming analyst Marvin Roffman–who lost his job because he angered the Donald–once quipped, “Who would buy it? You can’t exactly turn it into a K mart.”

Michael Callahan is a former senior editor of Atlantic City magazine.

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