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Aztar reports shutdown cost Tropicana $5M.
By DONALD WITTKOWSKI Staff Writer, (609) 272-7258
Published: Thursday, July 20, 2006
Updated: Thursday, July 20, 2006
ATLANTIC CITY — Tropicana Casino and Resort lost more than $5 million in revenue and $3.5 million in gross operating profit during the unprecedented shutdown of Atlantic City's gaming industry, its parent company reported Wednesday.
Despite the short-term revenue hit, business quickly rebounded after the three-day shutdown ended July 8, and the casino industry escaped further harm because state gaming taxes were not increased, Aztar Corp. said.
“I think the good news is, the regular customer we count on to fill rooms and to give us most of our revenue seems to be back in the fold,” said Gary Simpson, Aztar's senior vice president of finance and development.
Simpson discussed the impact of the shutdown, caused by New Jersey's budget crisis, during a conference call on Aztar's second-quarter earnings. The shutdown will be reflected in third-quarter earnings, but Tropicana disclosed the revenue loss Wednesday.
Simpson said the shutdown and the negative publicity accompanying it broke the momentum generated by a string of positive news reports in recent months — including an article in Time magazine — about Atlantic City's revival as a tourism resort.
However, he noted that the casinos avoided getting socked with higher gaming taxes once the state budget crisis was resolved. In addition, a tax on casino net profits expired in the new budget, which should save Tropicana about $2.5 million annually, he said.
Tropicana posted strong overall results in the second quarter, including a 17.4 percent jump in gross operating profit largely due to big gains in slot play. But bad luck at the table games caused a $6.4 million drop in revenue in that category, the company reported.
Atlantic City's Tropicana and other Aztar casinos in Nevada and Indiana are expected to be under the new ownership of Columbia Sussex Corp. by the fourth quarter. Columbia agreed to buy Aztar for $2.75 billion in May following a nine-week bidding war with three other rivals.
Columbia has filed for regulatory approvals in New Jersey, Indiana and Nevada to complete the deal, along with federal authorization. The deal is also pending approval by Aztar shareholders. Aztar's riverboat casino in Caruthersville, Mo., will be sold off as part of the Columbia takeover.
Aztar had to pay a $78 million breakup fee in the second quarter for aborting its merger deal with Pinnacle Entertainment Inc., which originally agreed to acquire Aztar before Columbia won the bidding war.
Largely as a result of the breakup fee, Aztar reported a quarterly loss of $66.1 million, or $1.84 a share, compared to a profit of $15.5 million, or 41 cents a share, in the same period last year.
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