how Trump killed atlantic city ? [infographie]
May 12, 2017
It is the last Trump casino that was still operating in Atlantic City. However, it was just announced that The Trump Taj Mahal has closed its doors permanently at 5.59am on October 10, 2016. The reason for this are massive losses and a long strike of the employees who challenged the terms of the restructuring plan that had been approved by the bankruptcy court.
It must be acknowledged that the establishment had difficulties from the beginning, and the operator had already filed for bankruptcy four times. The casino succumbed to its fate after 25 years of massive losses and became the fifth casino hotel in Atlantic City to close its doors since 2014.
Donald Trump is an impressive businessman who manages everything. The billionaire is a real estate magnate, who owns several prestigious buildings that even bear his name. He is also involved in entertainment and hosted the reality TV show The Apprentice, that contributed largely to his fame, especially his famous reply: You're fired.
He recently took on a new challenge: to get into the White House, and to achieve this he does not fail to make good use of his golden boy image. During a debate in the US primaries, he attacked Jeb Bush by calling himself the strong man in the campaign because he created an incredible business. He specialises in short sentences with polarising statements, and never fails to sell himself. He also announced: I will be the greatest jobs president that God ever created.
So, is his performance as a businessman really that impressive? To answer this interesting question, we need to consider all the casinos in Atlantic City as well.
The time for promises
Donald Trump became involved in the casino industry in the city in the 1980s, following the liberalisation of gambling in New Jersey in 1978. He created the Trump Entertainment Resorts group in 1995 that looked after the management of three major casino hotels with his name:
- the Trump Plaza that opened in 1984 (and closed in September 2014),
- the Trump's Castle that opened in 1985, was renamed Trump Marina in 1997 (and was sold in 2001 and renamed Golden Nugget Atlantic City),
- the Trump Taj Mahal that opened in1990 (and has been having difficulties since its opening because of monumental construction costs).
The businessman saw the city as an Eldorado and was very confident about the future in the 1980s. He said he would create jobs in Atlantic City and make it the Las Vegas of the East Coast of the United States.
A sad day of assessment
Today, the city is in a catastrophic state. Four casino-hotels of the 12 in the city had to close down in the nightmarish year of 2014, which caused an earthquake in the local economy. The situation was a catastrophe for the Government of New Jersey, and the legislature even passed a rescue plan on December 1, 2014.
When taking a closer look at the results, you can see that the revenues of the casinos in Atlantic City have been rising sharply between 1978 (the year of the legalisation of gambling in the state) and 2006. They even reached $5,217,613 that year! But the next year was different, and for the first time in history, the revenues decreased. They were halved between 2007 and today, in less than ten years.
Good besides the crisis
Some will of course also point the finger at the financial crisis of 2007-2008 as the only reason for this decline, but it is clear that it is not the only factor responsible.
Las Vegas was also hit by the recession, but the situation is much better there. The local casino industry has even been growing again since 2009.
Employment in the gambling sector in Atlantic City has also steadily decreased from 2004-2005, after it has been growing since 1978, although it has had some minor fluctuations throughout the years.
A devastated city
What is worse is that we can also see that the difficulties of the casinos have an impact on all the other activities in the city and the number of jobs is on a sharp decline. Atlantic City is now the 10th most affected city by unemployment in the United States. It is at the edge of bankruptcy and under state supervision.
An undeniable responsibility
Again, some people will also seek to find external causes to explain this fiasco. These also include Donald Trump himself, who says that he is no longer the owner of Trump Entertainment Resorts. However, the businessman had to sell his company in 2009 as it was in great difficulty. That same year, the company was for the third time in its history put under the protection of Chapter 11 of the bankruptcy law, as it was not able to pay its debt.
You should also keep in mind that revenues of the three Trump casino-hotels have been plummeting since 2002. The financial crisis had nothing to do with their financial difficulties. What is worse is that the Trump Taj Mahal has been in a difficult situation since its opening, because the group failed to pay the first instalment in October 1990. The shares were first traded for $1,000 but then dropped to only $200. Today it is the only Trump casino that is still open and it loses $10 million per month. It is a real money pit that will probably never be profitable in its life.
So, although he was full of promises in the 1980s, Donald Trump did not win in Atlantic City. It is much worse than the expected Eldorado, as the city now finds itself in a very worrying state. So, what can we conclude from this assessment for a candidate for the US presidency? If elected, will the US be in the same worrying situation like Atlantic City in a few years?