Dennise Williams, Staff Reporter
Trump
COULD SETTING up shop in Jamaica be the ticket to turning around the cash crunch at Trump Casinos? Rumours abound that 'the Donald', Donald Trump, is looking to secure a licence from the Government to operate a casino in Harmony Cove. Such a rumour has been published elsewhere just this week. The question is what does Jamaica and Mr. Trump stand to gain from the partnership? Obviously, Jamaica gets the prestige factor of having a Trump casino on the island.
However, Trump Hotels & Casino Resorts Inc., operators of Trump Marina, Trump Plaza, Trump Taj Mahal and Trump Casino Indiana, is currently staring bankruptcy in the face. Second quarter financial statements for the period ending June 30 released on July 28 reveal that the publicly traded gambling conglomerate had net losses of US$17.6 million, which is 76 per cent higher than the quarter before. Revenue for the quarter was US$293.2 million down from US$306.9 million in the previous quarter. While that is still impressive by Jamaican standards, the company has US$81.1 million on hand but has a November debt payment of US$73 million. And that is just the tip of the US$1.8 billion debt the company must pay off. But there's a catch.
GAMBLING REGULATORS
According to The International Herald Tribune, "New Jersey (where three of Trump's casinos are located) gambling regulators require casinos to keep a reserve known as cage cash to cover unexpected payouts to winning bettors and to provide cushion for tax payments and payroll. The cage cash reserve at the Trump Taj Mahal and Trump Plaza, the two casinos responsible for this month's debt payment is about US$50 million."
The Associated Press reports, "Trump, the company's chairman, chief executive and biggest shareholder, blamed the bad performance on high gas prices and other inflationary pressures that left customers with less money to gamble at the beginning of the important summer season in Atlantic City."
Trump Casino's woes don't end there. In July, Pennsylvania passed legislation for an additional 61,000 slot machines to complement their racetrack industry. Note that Pennsylvania is an hour's drive from Trump's casino hotels Trump Plaza, Trump Marina and Trump Taj Mahal in Atlantic City. The Associated Press reports, "Atlantic City has to give people a reason to pass up a race track with slots to come there. And Trump's cash crunch has left it unable to keep up with improvements made by rival casinos that could lure customers from Pennsylvania."
GAMBLING STATES
This is not a problem in Jamaica. Speaking with the Financial Gleaner on the condition of anonymity, an economist in the financial sector who keenly studies gambling states, "In Jamaica, especially in Harmony Cove, he (Trump) would be on the ground floor. He would benefit hugely from our tourism product. He could go into the Harmony Cove Marina and bring other high end developers with him." Harmony Cove, consisting of over 1,400 acres in Trelawny, is the Government's ultra high-end tourism product designed to cater to wealthy visitors. The Harmony Cove plan, unveiled on June 16 will consist of three major luxury hotels, three themed boutique resorts, two golf courses, more than 200 exclusive residential homes (manors and villas), more than 200,000 square feet of retail, dining and entertainment venues, as well as a world-class marina. The Jamaica Information Service reports, "The decision to publicly invite proposals from joint venture partners both locally and overseas has so far met with 30 expressions of interest from companies from the United Kingdom, the United States and Jamaica.
COMPLETE RESORT COMMUNITY
The development, which is intended to be a complete resort community, will have a private airstrip at Braco, its own sewerage plant, back-up electricity, full water supply, security and will be protected from land, sea and air with the latest available technology. Furthermore, the properties on all sides of the property are being acquired to further ensure security."
The economist continues, "In terms of casino gambling, Jamaica is virgin territory for someone like Trump. And he could get any kind of financing for his Jamaican casino. Remember, Mr. Trump's biggest moves are made with other people's money." Indeed, referring to the Associated Press, "A lot is riding on a proposed $400 million investment from Credit Suisse First Boston's private equity fund, DLJ Merchant Banking Partners III, L.P. Trump said the infusion would help the company reduce its expensive debt and provide additional cash flow to invest back into the properties." The economist believes that Jamaica is "prime as nobody else would have Mr. Trump's level of experience" he also is of the opinion that Mr. Trump would get a number of concessions from the Government. "I could easily see Mr. Trump getting duty waivers, import waiver and even one to two years tax free. It really depends on how much money Mr. Trump brings into Jamaica."
