Revel, once considered as the hope of Atlantic City, has fallen to such depths that they’re now being plastered as the poster boy for the gambling town’s struggles. And after Hurricane Sandy unleashed its fury on the AC, there may be nothing left of Revel once the dust settles.
According to the Philadelphia Inquirer, gaming-industry analysts have voiced their fears that Sandy may have landed the final haymaker that knocks Revel out. For a casino that has been dangerously towing the line toward insolvency for the past few months, hope seems to have been lost that Revel can avoid defaulting on the gargantuan debt it has incurred since it opened seven months ago.
Deutsche Bank AG’s Andrew Zarnett laid out the grim possibilities for the embattled casino resort when he told the Inquirer that the probability for the casino to default on its debt has increased. “There is no way to dispute that, given what has happened to Atlantic City the last two weeks,” he adds.
To be fair, it hasn’t been the easiest of times for any of the casinos in Atlantic City. But Revel has a unique predicament because, by and large, it’s been a colossal flop since it opened its doors to the public back in April. It’s already carrying the most debt of all the casinos, it doesn’t have an established clientele, and worst of all, it’s key demographic group are all probably spending their money on cleaning up their homes from the damage Sandy left behind on their own backyard.
But the tenuous reality for Revel is that, with or without Sandy, the casino has yet to make a dent on the Atlantic City market that it was supposed to save. For the month of October, Revel ranked 10th among the 12 casinos in casino revenue, generating only $9.3 million, putting it behind the likes of the Atlantic Club Casino ($9.9 million) and the Resorts Casino Hotel ($9.5 million), and just a smudge ahead of the Golden Nugget ($8.6 million) and the Trump Plaze ($6.6 million).
The $9.3 million haul for October also represents the lowest title Revel has generated in the seven months it’s been in business. More importantly, that number is a ravine’s drop from the $16.9 million in revenue they posted in September. It has yet to exceed the $20 million revenue mark in any given month. It has yet to finish in the top 7 in monthly revenue, and worst of all, the casino’s $850 million loan is now priced at around 52 cents on the dollar, a significant fall from where it was being traded just before Sandy arrived.
Robert Heller, the managing director and head of gaming and leisure at UBS Securities L.L.C, told the Inquirer: “Where the [loan] and bonds are trading indicates the market is quite concerned,” before adding that Revel is “challenged because of the stress in Atlantic City compounded by the storm damage, which sets the city back even further.”
If Revel were a boxer, he’d be the highly touted prospect that had all the makings of a future world champion, only to begin his career with seven straight losses. And these aren’t the decision-type defeats that could have gone either way; these are vicious maulings that all ended in TKOs.
At some point, Revel’s corner is poised to throw in the proverbial towel and with the way things have gone for the beleaguered casino, that white towel might be flying into the ring sooner than later.
