Group plans to add A.C. casinoAn $85 million deal for 11 acres near the Atlantic City Hilton is expected to close in Nov.
By Suzette Parmley
Inquirer Staff Writer

Worthy winners in Philadelphia casino designs
ATLANTIC CITY - The real estate market may be cooling nationwide, but prospective casino developers keep spending hundreds of millions of dollars to buy property here.

The latest investor group poised to add a casino here has agreed to buy 11 acres from the Atlantic City Hilton Casino Resort for $85 million.

It is a group headed by Wallace R. Barr, the former chief executive officer of Caesars Entertainment Inc., and Curtis Bashaw, former executive director of the New Jersey Casino Reinvestment Development Authority.

People directly involved with the negotiations or familiar with them say the land purchase is expected to close in early to mid-November.

The parcel is three blocks south of the Atlantic City Hilton, bounded by Hartford, Atlantic and Trenton Avenues and the Boardwalk. Albany Avenue, or the Route 40 corridor, goes through the middle. It includes the site where other developers had planned to build the Dunes Casino Hotel. That project collapsed, and the partially built structure was demolished in 1991. The land also includes the site of the old Atlantic City High School, which is currently a parking lot.

Two Atlantic City executives familiar with the Barr-Bashaw group's plans said the new casino would be comparable in size and amenities to the new Red Rock Casino, Resort & Spa by Station Casinos Inc. in Las Vegas - a property that caters to the needs of gamblers who spend more time and money than day-trippers. It would include a hotel, shopping and multi-story parking garage.

This would be the latest in a string of high-profile efforts to develop new casinos in what is now a $5 billion industry here:

In April, Morgan Stanley acknowledged it was buying 20 acres from North Beach Holdings L.L.C. for $74 million to build a major gambling palace in the South Inlet area next to the Showboat Casino Hotel. The Wall Street firm closed on the land in mid-May.

On Sept. 5, Pinnacle Entertainment Inc. agreed to buy the Sands Casino and adjacent beachfront property from financier Carl Icahn for $250 million. The Las Vegas firm intends to close the Sands in mid-November, tear it down, and build a billion-dollar casino-hotel.

Earlier this week, Barr, who resides in Linwood, N.J., confirmed his group's intent to develop a casino next to the Atlantic City Hilton.

"I am a local investor," Barr said, and then referred all inquiries to his partner, Bashaw.

Bashaw, once a close adviser to former Gov. Jim McGreevey, did not return repeated calls to his offices in Cape May this week where he heads Cape Advisors Inc., a real estate development company.

People with direct knowledge of the deal said Barr and Bashaw began talks early this year to acquire the land from Colony Capital L.L.C., of Los Angeles, the parent company of the Atlantic City Hilton and Resorts Atlantic City casino.

A spokesman for Colony Capital, Eric Matejevich, declined comment.

Observers say the Barr-Bashaw project could set the stage for a new round of casino development in a gambling market that has added only one casino in the last 16 years. That was the lavish Borgata Hotel Casino & Spa, which opened in the summer of 2003. Morgan Stanley has acknowledged that its new property was being modeled after the Borgata and would target Borgata's chief clientele: young, affluent customers from Philadelphia and New York.

Several Atlantic City gambling industry executives who are familiar with Barr and Bashaw say they provide a potent combination. "They are a formidable team," said Larry Mullin, president and chief operating officer of the Borgata, the city's top-grossing casino.

Barr became president and CEO of Park Place Entertainment Inc., of Las Vegas, in November 2002. Park Place, which was later renamed Caesars Entertainment Inc., owned 27 casinos worldwide, including three casinos on the Boardwalk: the Atlantic City Hilton, Bally's and Caesars.

In June 2005, Harrah's Entertainment Inc. acquired Caesars Entertainment in a deal worth $10.4 billion. The new company sold the Atlantic City Hilton to Colony Capital. Following the completion of the Caesars acquisition, Barr walked away with a severance package worth about $26 million, according to a filing with the Securities and Exchange Commission.

The Atlantic City Hilton could use a neighbor. It sits dead last on the famous Boardwalk before residential neighborhoods begin. The next closest casino, the Tropicana, is nearly five blocks away.

Larry Ring, 53, a lighting technician at the Atlantic City Hilton casino showroom, worked for Barr when he ran the property. He said there have been rumors circulating for months that Barr would be starting his own casino that would displace the Hilton as the bookend property on the Boardwalk.

"He has a loyal following," Ring said as he strolled past the potential casino site this week during a break. "If anybody knows what it's like to be an end casino, it would be him, because he was with us before he went up the ladder at Caesars."

Tony Rodio, president of the Atlantic City Hilton and Resorts Atlantic City casinos, would not comment on the pending land sale. But he did say that having a new casino next to the Hilton would generate new traffic for that end of the Boardwalk.

"It would create more vitality in this neighborhood," he said.

Morgan Stanley and Pinnacle have said they plan to break ground on their casinos in late 2008, and complete them in late 2010 - about the same time that Philadelphia could have two new casinos as well as two racetracks nearby with slot machines.

MGM Mirage, which co-owns the Borgata, could join the mix. It owns 55 acres of undeveloped land next to the casino in the city's Marina District. MGM executives said they will soon unveil plans in Atlantic City for a project comparable to MGM's $7 billion CityCenter Project on the Las Vegas Strip that would include a casino, hotel towers, retail and condominiums.

So by 2010, Atlantic City could be home to four new casinos. With the Sands, due to close, 11 casinos would be operating in the resort by year's end.

Visitors to Atlantic City reacted favorably to having more gambling choices in town.

"It would be terrific," said May Smith, a slots player in her 60s from Staten Island, who spent Wednesday at the Borgata shopping and gambling. "I don't really think there's enough."

Across town, Philadelphia developer Sal DiBluffe, 34, had one suggestion for the newbie on the Boardwalk as he played craps at the Hilton: "They need to follow the Borgata model with their upscale clientele, ambience and good-looking employees."

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Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.