- A tower of geniuses;
- a sports complex;
- a motocross track;
- a hotel and casino;
- an unspecific entertainment project.
When Revel first went up for auction in bankruptcy court, Straub placed what is known as a “stalking horse bid” on the property. A stalking horse bid is designed to get the ball rolling and entice other investors to make their own offers.
Straub loses Revel at auction
Straub’s $90 million offer was exceeded by Brookfield US Holdings, which paid $110 million for the barely two-year-old property that cost $2.4 billion to build. But in the end Brookfield backed out, as it was unable to come to an agreement with the energy company that supplied Revel with power.
Revel’s monthly energy bill was a staggering $1.25 million, and this didn’t even include the 20-year loan Revel was repaying to the energy company at an added cost of $1.5 million per month.
The power plant built next door was supposed to be a cost-saving measure, but it turned out to be an anchor around the neck of the casino. Revel ran out of money when it was only partially completed.
With no funds and a partially-completed power plant into which it’d already sunk tens of millions, Revel had to enlist the help of ACR Energy Partners to finish the project.
When the power plant was completed, Revel was stuck with a $158 million bill and was paying 11.67 percent annually for the bonds, and 15-18 percent for ACR’s equity investment.
The return of Straub
With Brookfield out of the equation, Straub swooped back in.
When all was said and done, Straub purchased Revel for just $82 million in February 2015, less than the original $90 million stalking horse bid he placed in September. But as tumultuous as it was, the sale turned out to be the easy part.
Straub’s Atlantic City struggles were only just beginning.
Here are the keys, but before you open…
Despite his many grand visions, Revel — since rebranded as TEN — will open as a hotel and casino and won’t undergo any major renovations to fix some of its major design flaws. These include the check-in being on the sixth floor and the fact that guests can reach their rooms without going through the casino proper.
It’s the licensing that is now holding up the project, as Straub and the regulators are at an impasse when it comes to who needs to be vetted for a casino license.
Straub doesn’t believe he needs to apply for a casino license since he’ll be leasing the casino portion of the property to a third-party vendor that will be licensed by the New Jersey Division of Gaming Enforcement and the New Jersey Casino Control Commission.
According to his attorney, Straub will not be involved in the operation of the casino.
The regulatory bodies disagree with Straub’s assessment and assert that, as the owner of the property, he is required to go through the casino licensing process.
On Nov. 29, Straub filed a lawsuit against the Casino Control Commission in Atlantic County Superior Court. This will likely delay the reopening, which was originally slated for Q1 of 2017.
This is unlikely to be the last time we report on the saga of the Revel/TEN.