Atlantic City Discontent: Hard Rock CEO Allen Expresses Dejection Over Boardwalk Not ‘Rising to the Occasion’

Posted on: December 13, 2019, 05:29h. 

Last updated on: December 13, 2019, 06:09h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Hard Rock International CEO Jim Allen has a bone to pick with Atlantic City, N.J., the East Coast gaming hub and home to one of his company’s properties.

Hard Rock Atlantic City is doing well, but CEO Jim Allen isn’t pleased with the overall market. (Image: Philadelphia Inquirer)

The Hard Rock Atlantic City opened in June 2018 and the operator poured $500 million into sprucing up the venue that was formerly the Trump Taj Mahal. The property was acquired from billionaire financier Carl Icahn. In a recent interview with Global Gaming Business (GGB), Allen expressed dismay that the city hasn’t done more, given Hard Rock’s level of investment on the Boardwalk.

Candidly, we’re disappointed with Atlantic City,” said Allen in the interview. “There’s no other way to say it.”

Allen said Hard Rock is second in terms of gross gaming revenue (GGR) on the Boardwalk, saying the company has made a “major statement” in New Jersey. In the third quarter, the nine operators in that market posted gross operating profits (GOP) of $239.4 million, a 12.5 percent year-over-year increase.

Too Crowded

Allen isn’t the first CEO of a company operating in Atlantic City to complain about the market. Earlier this year, Golden Nugget CEO Tilman Fertitta said the Boardwalk isn’t a nine-casino area, and that the region is currently too saturated with gaming properties. Fertitta, who also owns the Houston Rockets, added that with so much competition for profits, operators don’t make the necessary investments in keeping properties fresh, explaining that’s how the city “got all run down” during previous eras of struggles.

A recent research project performed for the state of New Jersey by professors at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy noted the concentration concerns are relevant and that Atlantic City faces increasing competition from other nearby markets, such as Philadelphia and Delaware.

Allen’s quibbles with Atlantic City aren’t with concentration. But he did say the market is in worse shape today than it was two years ago.

“I think we’re happy with where we are in our gross revenue,” said Allen. “We certainly admire and respect the amazing job MGM created with Borgata.”

MGM Resorts International’s Borgata is the top revenue-generating property on the Boardwalk.

Frank Talk

Still, Allen has issues with the Garden State gaming mecca.

It’s a shame that they did not rise to the occasion of a company coming in, putting $500 million into that city,” said the Hard Rock chief executive in the GGB interview.

Allen was quick to note the Seminole Tribe, the parent group behind Hard Rock, did not borrow money to fund its Atlantic City venture, and that the tribe wrote a check for over $500 million to get it going.

“There were all kinds of promises (from) Trenton and the CRDA (Casino Reinvestment Development Authority) and the city that things were going to change,” said Allen.

The executive decried political corruption in the city and poor upkeep of local parks, among other issues.

“Pacific Avenue has the identical problems it had for the last 20, 30 (years ago), and frankly, it’s worse than it was 10 years ago,” said Allen.