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Press of Atlantic City - September 4, 2010
Resorts purchase marks return of Morris Bailey to his hometown, Atlantic City
ATLANTIC CITY -— As a boy growing up in Atlantic City in the 1940s and early ’50s, Morris Bailey held odd jobs selling newspapers and groceries. His father, Joseph, was a salesman who owned a gift shop in the old Haddon Hall hotel.
Morris Bailey is about to outdo his father. He will soon own all of Haddon Hall, better known these days as Resorts Atlantic City. Haddon Hall was reincarnated in 1978 as Resorts, Atlantic City’s first casino.
Bailey, now a New York real estate developer, is teaming up with former Atlantic City gaming executive Dennis Gomes to buy Resorts for $35 million from a consortium of banks that took control last December after the casino defaulted on its mortgage.
Gomes Gaming Inc. announced Wednesday that it is partnering with Bailey’s JEMB Realty Corp. to finance the deal. JEMB will add the casino to its $4 billion portfolio of hotels, resort properties, residential buildings and commercial office space.
For the 72-year-old Bailey, his purchase of Resorts is a return trip to the shore town where he was born. As a youngster, he spent many hours on Atlantic City’s beaches, Boardwalk and at the old amusement piers.
“I had my formative years there,” Bailey recalled. “I loved it. I thought the Boardwalk was paradise. I remember going with my parents to the Steel Pier and Heinz Pier.”
His family left Atlantic City when he was 14, after the death of his father. Bailey, his six siblings and his mother, Esther, relocated to Brooklyn, N.Y., to be close to relatives. Bailey still lives in Brooklyn.
Bailey’s rise as a businessman once included his ownership of 52 Burger King franchises in New Jersey. Although his development company has focused more on New York City, Bailey has been trying to get into the Atlantic City gaming market for several years. In 2007, he and Gomes attempted to buy the three Trump Entertainment Resorts Inc. casinos but ultimately were unsuccessful.
Gomes and Bailey originally tried to redevelop the JEMB-owned Pocono Manor Inn & Golf Resort into a Pennsylvania slots parlor in 2006, but didn’t win a gaming license. When he first met Bailey, Gomes said, he sensed “this was not only a powerful guy, but someone with integrity.”
“It was like this instant connection,” Gomes said. “It’s hard to say exactly what it was at that point, but what I saw was a very confident guy, but a humble guy at the same time. He was someone who said exactly what was on his mind. I’m like that, too.”
In buying Resorts, Bailey and Gomes maintain they are getting an extraordinary bargain on a casino that sold in 2001 for $140 million and went for $301 million in 1996. The current sale price of $35 million illustrates Atlantic City’s depressed real estate market amid a four-year slump in casino revenue.
Resorts, which opened as Atlantic City’s first casino on May 26, 1978, is carved out of the old Haddon Hall hotel, a building that dates to the early 20th century. Fearing that the aging structure would be in terrible shape, Bailey said he was completely surprised when he found the condition to be just the opposite.
“I had expected a pretty run-down property that we would have to put a ton of money into it for it to be acceptable,” he said.
Bailey anticipates returning Resorts to profitability in a year. The casino suffered an $18 million operating loss in 2009 and has lost $10.8 million so far this year. Under Gomes’ management, the turnaround strategy includes adding more entertainment and upscale dining to complement the gambling attractions.
Resorts’ gaming revenue has plunged 17.2 percent this year, worst among the city’s 11 casinos. Bailey believes that Resorts’ fate depends in large part on the entire Atlantic City gaming industry recovering from its economic meltdown. He blamed the casinos for their own demise, arguing that they failed to react quickly enough to the sluggish economy and tougher competition from gaming in surrounding states.
“I think the industry wasn’t ready for a downturn and didn’t really prepare for the competition that was coming,” he said. “They sat back and counted the money as they saw the clouds forming.”
Despite the city’s setbacks, Bailey expressed confidence that the gaming industry will be revived by an improving economy, new investment and plans by Gov. Chris Christie for the state to create a new tourist district to oversee the casino and entertainment zones.
“This decline has been a wake-up call for everybody,” he said. “It is a panic mode.”
Reiterating the same complaints heard about Atlantic City for years, Bailey said it is essential to clean up the blighted areas outside the Boardwalk district and restore the town’s image as a top tourist destination. He envisions Atlantic City recapturing the cachet it enjoyed when he was a boy here.
“Atlantic City has always been a destination resort on the East Coast,” he said. “It’s always been No. 1, going back 100 years. It is an extraordinary beachfront, Boardwalk and tourist environment, even absent gaming.”
Contact Donald Wittkowsk
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