Economy Worries Atlantic City Casino Planners
Shaky economic indicators and the disappearance of financing may cause Atlantic City to slow its progression from a daytripper stop to destination resorts. As previously reported, Pinnacle Entertainment has voiced doubts about pursuing its $2 billion casino project under the current credit conditions; although Pinnacle chairman Dan Lee voiced confidence that the economy would certainly improve before scheduled groundbreaking, he did leave himself an out if full-fledged recession occurs.
The Atlantic City Hilton Casino Resort has announced it has scrapped plans for a $1 billion refurbishment, at least for the present time. The sudden concern about investment in Atlantic City has New Jersey Governor Jon Corzine, former chairman of Goldman Sachs rushing to make calming statements.
"Long-term investment decisions are rarely, if ever, made on the basis of short-term capital market conditions," Corzine said in an e-mail to The Associated Press. "We understand that today's markets are not receptive to heavily leveraged projects, such as new casinos, but we expect that appropriately structured and exciting projects, such as the Pinnacle casino, will proceed when conditions improve."
Other casinos are still pushing ahead with the redesign of Atlantic City. MGM Mirage, with no other major commitments requiring financing and a consistent flow of cash through current operations, says the %5 billion hotel and casino it has envisioned will still break ground later this year. Revell Entertainment has already begun construction on its $2 billion Boardwalk Casino, and finds itself in a tough position if construction were not to continue.
Perhaps the best news for the casino planners is that, even if the economy were to worsen, the financiers are likely to do all in their power to help complete projects; no one makes money on a foreclosed lot with steel beams exposed. And by the time these massive complexes are completed, economic data are sure to be far different than today.
