Let’s face it nobody likes to pay a big electric bill. But Toronto-based casino operator Brookfield Property Partners may have reason to complain the company reportedly could withdraw a $110 million offer to buy an Atlantic City, New Jersey, casino over a potentially massive power bill. With such a hefty power bill, the Revel Casino deal may be in jeopardy.
Bankrupt Revel Casino
Brookfield, which owns the Hard Rock Casino in Las Vegas and the Atlantis resort in the Bahamas, recently made an offer to purchase the bankrupt Revel Casino, a multibillion-dollar American gaming complex that closed its doors in September.
During the due diligence process, Brookfield discovered that Revel’s agreement with its utility provider, ACR Energy, requires the company to pay $24 million per year in debt and electricity costs. That’s more than twice what one major competitor pays the utility. The utility agreement has not yet been modified in the bankruptcy proceeding.
That power bill, and what Brookfield calls “inflexibility” on the part of the utility, has put the deal in jeopardy. Without concessions from ACR, the $110 million offer may be rescinded.
That could mean big problems for the Atlantic City gaming community, which has been hit hard by economic setbacks and closings. Four casinos have shuttered in 2014 alone, putting thousands of people out of work. A fifth casino could also close soon, and at least one more bankruptcy filing is expected.
The proposed Revel deal was a bright spot in what has been a grim year for Atlantic City – once the undisputed East Coast capital of gaming. New gaming resorts with modern amenities in surrounding areas have sapped Atlantic City’s revenues, which have declined by roughly half in the last decade.
Should the Brookfield deal be approved, it will provide a signficant lift for the Atlantic City community. Along with jobs and much-needed tax revenue, the opening of a major gaming complex would provide a symbolic boost, as Atlantic City attempts to rebuild its reputation as an international casino destination.