Ten months after losing control of Tropicana Casino and Resort, the company is back in Atlantic City looking to regain its license and its former property. Or is this a new company? A new chief executive officer has taken charge, the board of directors has been revamped and the much-vilified owner has lost power and is on his way out.
"Except for the name Tropicana, we are an entirely new company," assured Scott C. Butera, a former Atlantic City casino executive who became the new CEO in March. "We have a new board, we have all new senior management and we have a whole new approach to the business."
Now the restructured company is trying to round up political and community support to make another run at grabbing control of the troubled gaming hall. Tropicana Entertainment hopes to persuade the New Jersey Casino Control Commission that it deserves a second chance at operating the casino. It has hired a team of high-powered New Jersey lawyers and public relations strategists to help it make its case.
In a stunning move last December, the commission stripped Tropicana Entertainment and its corporate affiliates of their licenses for a series of regulatory violations and other offenses. Former CEO William J. Yung III was the target of blistering criticism for making hundreds of layoffs that he thought would boost profits but actually left Tropicana down in the dumps - woefully understaffed and dirty.
Lacking a license, Tropicana Entertainment and Yung were forced to surrender control of the casino to a state-appointed conservator who is now overseeing the property's sale.The sale, however, remains in limbo following the New Jersey Supreme Court's decision this month to hear Tropicana Entertainment's appeal of the commission's denial of its license. Oral arguments are scheduled for Nov. 17.
Tropicana's sale cannot be completed until all legal appeals are exhausted. No one knows how long it will take the Supreme Court to make a ruling. Tropicana Entertainment estimates the case could drag on for a year, although the commission has asked the court to expedite the appeal.
Joel H. Sterns, a prominent New Jersey attorney who represents Tropicana Entertainment, said the appeal gives the company more time to prove that it has removed Yung and fixed the problems the commission and its sister agency, the Division of Gaming Enforcement, found objectionable. Referring to Yung, Sterns bluntly stated, "We got rid of the bad owners."
"Our point is, he's left. He's gone," Sterns said. "Now there's another company with the same name. It's still called Tropicana, but it's a new company, with new people from top to bottom and with management that is responsive to what the commission and division have wanted."
But is Yung really gone? He has been replaced as CEO and ousted from the board of directors. Yet Yung technically continues as the company's 100 percent owner and will remain so until it emerges from Chapter 11 bankruptcy under a new ownership structure, Butera said. Yung's association with the company, however tenuous, is seen as critical if Tropicana Entertainment has any hope at all of winning Casino Control Commission approval to regain control of Tropicana.
Butera said Yung has signed an irrevocable agreement that strips him of all equity rights and ensures that the Yung family will have no ownership in the company in the future. Further, Yung would not receive one dime if Tropicana is sold, Butera and Sterns noted.
"We get the question from time to time, 'Well, isn't Mr. Yung the equity owner of the company?'" Butera said. "The answer is, Mr. Yung has ceded most of his rights - all of the important ones - with regard to his equity ownership. So he can't function as an equity owner in the sense that he can't replace the board, he can't add somebody to the board and he can't replace a manager."
Purging the Yung legacy is just one of the challenges Tropicana Entertainment is facing in its bid to take back Tropicana. Butera and his cadre of lawyers, public relations specialists and newly minted company executives have been meeting with local politicians and labor leaders in hopes of gaining their support.
One of those politicians, Republican Atlantic County Executive Dennis Levinson, accused the company of trying to stack the deck by aligning itself with allies of southern New Jersey Democratic powerbroker George E. Norcross III, of Camden County. Levinson claims Tropicana Entertainment believes it can exert influence over the Casino Control Commission by exploiting Norcross' friendship with the commission's chair, Linda M. Kassekert, also a Democrat from Camden County.
"I would say they have an inside track at this time because of the Camden County influences, not only at the Casino Control Commission, but also with certain elected officials here in Atlantic County whose campaigns were financed almost entirely by Camden County," Levinson said.
In response, Kassekert issued a statement blasting Levinson for making accusations that are personally offensive to her and "an affront to the entire Casino Control Commission."
She added that the commission has a long history of strictly adhering to the New Jersey Casino Control Act and that its decisions are immune to political considerations or pressure.
"Politics has no place and plays no role in licensing decisions," Kassekert said. "It never has and, certainly as long as I am chair, it never will," she said.
Levinson also pointed to Tropicana Entertainment's hiring of the New Jersey law firm Parker McCay, which is headed by George Norcross' brother, Philip A. Norcross, to support his claims of political influence.
"They certainly didn't choose Parker McCay by accident," Levinson said. "It's for sure that their present group has the right political connections."
Damon G. Tyner, a lawyer in Parker McCay's Atlantic City office, disputed Levinson's allegations. Tyner said he is representing Tropicana Entertainment, not Philip Norcross, at Parker McCay. Tyner noted that he has teamed up with Sterns, a founder of the Trenton law firm Sterns & Weinroth, as the company's lead lawyers.
"In Joel Sterns, they've sought out the dean of New Jersey gaming law, someone with the highest level of integrity in the legal community and the gaming industry. Likewise, I believe that my reputation for honesty and integrity in the community cannot be challenged," Tyner said.
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