The newly launched Boardwalk hotel and casino resort may be facing financial troubles, owner reportedly looks for buyers
Ocean Resort Casino could be tangled in heavy financial woes just six months after its opening, according to reports from multiple local media outlets. The glitzy Boardwalk property launched on June 27 and was hoped to play an important part in Atlantic City’s comeback as a popular seaside gaming and entertainment destination.
However, despite original projections, Ocean has struggled to keep up with the other eight casino properties currently operating in the city in terms of revenue generated from its gambling options. Both its slot machines and table games have underperformed for the past six months, with August being the only exception. The property’s gaming revenue topped the $20 million mark that month.
Prior to its opening, Ocean’s owners said that they expected the property to generate gaming revenue of $384.6 million during its first fiscal year. Yet, the resort has so far lagged the original estimates, reporting just under $80 million during its first several months of operation.
Ocean occupies the building of the former Revel, a $2.4-billion hotel and casino resort that opened doors in 2012 to only survive (and never thrive) for two years. Revel was one of the unfortunate four Boardwalk casino properties to close doors in 2014.
Florida real estate developer Glenn Straub bought the failed resort the following year for $82 million, or just a fraction of what it had originally cost to be built. The businessman was determined to reopen it and succeed in what its previous owners had failed to accomplish – turn it into a profitable business. However, he even failed in reopening Revel, despite his very ambitious plans.
Colorado businessman Bruce Deifik acquired the resort in January 2018 for a reported price of $200 million and invested another $200 million into renovating and preparing it for relaunch. As mentioned earlier, the former Revel reopened its doors for guests and visitors in late June to great fanfare and promises for reimagined gaming and entertainment experience on the Boardwalk.
Overdue Payments, Lawsuits, and Sale Reports
Signals that Ocean might be drifting into choppy waters include reports that AC Ocean Walk LLC, the owner of the casino resort, owes more than $1 million in overdue payments to people who had worked on the property during its renovation.
According to Atlantic City records, there have been two outstanding liens filed by contractors and subcontractors. These demand from the property’s owners well over $1 million. At least four such liens were previously filed but have been discharged later on, records further show.
News emerged in December that a former partner in Ocean’s HQ2 club sued Mr. Deifik in the New York County Supreme Court over fraud and other wrongdoings. Joseph Morrissey, one of the big names in the US nightlife entertainment field, sought $10 million in damages for all counts and causes he listed in his December 6 lawsuit against the Boardwalk property’s owner.
Mr. Morrissey said in his legal motion that he was approached by Mr. Deifik in the spring of 2018 to help the Colorado businessman raise funds for the resort’s renovation. Mr. Morrissey was offered the role of manager of the HQ2 nightclub and was authorized to “take all action … reasonably required to perform the obligations of manager.” He also obtained ownership interest in the entertainment venue.
However, their relationship began to sour after Mr. Morrissey confronted Mr. Deifik over sexual harassment claims made by club employees against the Ocean’s owner. Following their confrontation, Mr. Morrissey was informed his contract was being terminated but that he could keep his job if he agreed to surrender his ownership interest in the club, court papers read.
Mr. Morrissey said that one of the reasons why his contract was terminated was because his ownership interest was not disclosed in a loan agreement between AC Ocean Walk LLC and JP Morgan. The nightclub manager further explained that he had reasons to believe Mr. Deifik was looking to sell Ocean and that he wanted to eliminate anyone with ownership interest who could prevent a future sale of the property from taking place.
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