In this Sept. 1, 2014, file photo, Randy Chapman, left, of California, and John Krisel, of New York, walk on The Boardwalk after they checked out of the closing Revel Casino Hotel in Atlantic City, N.J.Mel Evans/The Associated Press
Find struggling casino, acquire for a song, fix up and make profitable.
That's the Brookfield Asset Management blueprint for gaming resorts, and the Toronto company will likely know by day's end whether it can add the bankrupt Revel casino in Atlantic City, N.J. to its growing stable of properties.
The company's Brookfield Property Partners arm is in the midst of bidding for the casino, a process that is expected to wrap up in a few hours. Investor Glen Straub is the stalking horse bid, and there are believed to be three other interested parties.
Brookfield already owns the Hard Rock Hotel and Casino in Las Vegas. In that case, Brookfield began as a lender and ended up taking over the property. It also owns the Atlantis resort in the Bahamas, acquired in the same way. Atlantis is now profitable.
Brookfield will no doubt try to apply the management expertise gleaned at those properties to Revel, should it win the auction.
Even with success in other areas, finding profits in Atlantic City will be a challenge, even if Brookfield pays only pennies on the dollar. Atlantic City is struggling mightily as a gaming destination. There are plenty of other casinos opening in nearby states like Pennsylvania, sucking away revenue. (According to the New York Times, gaming revenue in the city dropped 6.6 per cent in July from July 2013.)
At the same time, Atlantic City is facing overcapacity. There are too many rooms for rent and too much gambling space. Revel's closure a few weeks ago goes some way toward rectifying that problem, but that goes away once a buyer purchases the property and reopens it.