A winner has emerged from the Revel bankruptcy auction and Glenn Straub isn’t happy.
Brookfield Asset Management was announced as the winner of the auction on Tuesday following a bid of $110 million. Straub is officially the backup bidder at $94.5 million. The $110 million is just 4.5% of the $2.4 billion that it cost to build the property.
Brookfield placed their $110 million bid on Tuesday with the caveat that it must be accepted by 6 am on Wednesday or they would withdraw it. The bid was accepted and Straub chose to end bidding on the property. The sale still requires approval by the bankruptcy court with a hearing scheduled for October 7.
Winner Has Experience in the Casino Industry
Brookfield was clearly the best fit for the former Revel property considering their background in the casino industry. They own the Hard Rock Hotel & Casino in Las Vegas and the Atlantis Paradise Island in the Bahamas.
According to the Philadelphia Inquirer, we can get some insight into what to expect from Revel based on what they did with the Atlantis. The company spent $8 million in upgrading the facilities and organized a preseason college basketball tournament to attract non-gambling patrons. The property’s hotel also became a member of Marriott International Inc.’s independent hotel network.
The company will also benefit from over $2 billion in debt that has been eliminated in Revel’s two bankruptcies. That, coupled with the deep pockets of the company, puts Brookfield in a great position to succeed in Atlantic City.
Auction Riddled With Controversy
Glenn Straub is still unhappy with the overall process of the bankruptcy auction, claiming a lack of transparency during the process. Straub filed multiple motions this week complaining about the auction process. He even tried to delay the auction, but was denied.
Straub told Reuters on Monday that he would challenge the results of the auction if he lost due to the lack of transparency. The bidding officially started on September 24 but Straub claimed that he and his staff were forced to wait around for six hours and were not even permitted to make a bid. The bidding was then suspended for the Rosh Hashanah holiday.
Even if Straub is unable to receive any legal remediation for his complaints, there is still the matter of the $3 million breakup fee. The bankruptcy court reluctantly agreed to the fee when it was apparent he would withdraw from the auction proceedings. At the time, there were no other potential bidders to challenge him.
Licensing Procedure Could Be Swift for Brookfield
The next step in the process is final approval and closing on the property. An approval hearing is scheduled on Tuesday, Oct. 7 in Camden, NJ. Judge Gloria Burns will oversee the hearing and make the final approvals. Should Brookfield receive approval and close on the property, the next step is licensing.
Matthew Levinson, chairman of the NJ Casino Control Commission, wouldn’t offer much insight into the licensing process but did say that they would be swift in the process. He stated, “It would be premature for me to discuss what might happen, since the bankruptcy court has not yet approved the sale. We certainly will do this as expeditiously as possible.”
With four properties closed and a fifth potentially closing, there is little reason to believe Brookfield would not be licensed. Atlantic City Mayor Don Guardian is optimistic on Brookfield, stating, “I think they are the right company for the property.”
Will Brookfield Tackle Online Gambling?
While the immediate focus is closing on the sale and reopening the casino, the Brookfield project does present the possibility of another player coming into the New Jersey online poker and gambling market. Due to financial pressures, Revel chose not to enter Atlantic City iGaming but it would seem counterproductive for the Brookfield project to take the same route.
The question is whether Brookfield will provide their own solution, contract a third party, or maybe become the new home for Betfair. Betfair is still seeking a partner following the closure of the Trump Plaza and they would provide a ready-made solution for Brookfield.
With PokerStars and Amaya on the cusp of entering Atlantic City, Brookfield’s project could provide a partner for Full Tilt. While there have been no discussions of bringing Full Tilt to the United States, Brookfield could open that door.
For now, the company must focus on closing on the property and getting their licenses in order. A timeline hasn’t been set on reopening the property, but a realistic estimate would be in early 2015.