Trump Nearing Deal to Acquire Aladdin Hotel
After several years of trying to enter the Las Vegas gambling business, developer Donald Trump is on the verge of buying the troubled Aladdin Hotel, a top Trump executive said Wednesday.
But industry analysts and officials said that making such a move successfully would require a major investment and would be a gamble for the New York developer.
Trump’s purchase of the 1,000-room resort on the Las Vegas Strip is imminent, said Dennis Gomes, a veteran casino executive who currently heads Trump’s Taj Mahal casino-hotel in Atlantic City.
“We can expect some type of announcement next week relative to this,” Gomes said. “That’s how close we are to something.”
Gomes declined to comment on the specifics of Trump’s plans, but a source told Associated Press that the developer has a verbal agreement with the hotel’s mortgage holder to buy it for $65 million.
Trump plans to demolish the resort in phases and use a new, separate public offering to raise enough money to finance a new resort aimed at high-rolling gamblers, according to a source who asked to remain anonymous.
Gaming industry observers say Trump would have little choice but to rebuild the Aladdin to remain competitive with the neighboring themed resorts--such as MGM Grand, Luxor and Treasure Island--that have opened in recent months.
“If you are going to put your shingle out there, I imagine you’d want to put your best foot forward and not have people think it’s a rehabilitation of an old property,” said Henry Gluck, chairman of Los Angeles-based Caesars World, which operates Caesars Palace.
Trump would reportedly finance the purchase from money obtained in a planned public offering of investments in his Atlantic City casino properties. Trump’s New Jersey casinos emerged from bankruptcy proceedings in late 1992, and he recently reached agreement to regain 50% of the Taj Mahal casino, surrendered in a 1991 bankruptcy.
*
The Aladdin has been operated by a management company for Bell Atlantic-Tricon Leasing Corp. of Paramus, N.J., which owns the mortgage on the resort and has been trying to sell it for more than two years.
A 1991 attempt to auction the bankrupt resort failed when no bidders emerged with the minimum $53.5-million price. However, negotiations with several groups have been heating up in recent months as potential bidders were drawn by the Aladdin’s prime location on the Strip. It sits between resorts such as The Mirage, Caesars Palace, MGM Grand and Luxor.
“It’s a way he could capitalize on the attention Las Vegas is getting,” said William N. Thompson, a gaming industry expert and professor at the University of Nevada, Las Vegas. “But the idea of another half-billion-dollar resort is a little far-fetched right now.”
Despite the prospect of another major gambling resort, current casino operators said a major Trump property would only serve to attract more people to Las Vegas.
It would also be several years before Trump could finish building a major casino resort and compete head-on with well-established properties, said Tom Hantges, a gaming industry analyst at USA Capital Management Group.
“I think the question becomes whether Trump can do it and be successful,” Hantges said. “It’s more of a risk for Trump than for the people around him.”
Trump also needs to obtain a license from Nevada gaming regulators to operate or receive revenues from a casino in the state.
Trump launched an exploratory company in 1989 to try to find a Nevada property, but he abandoned the move when his financial empire ran into trouble. Trump was believed to be interested in buying the luxurious Mirage.
