The previous owners of the former Revel Casino have revealed a number of mistakes that caused the closure of the luxurious property. The construction of Revel Casino was estimated to cost $2.4 billion but during the time when it was open it never turned a profit.
The disclosure statement, filed on Monday, reveals information about the key factors caused Revel’s bankruptcy. Apart from the energy contract, the poor management of the casino was also pointed as a major factor. According to the filing, the former CEO, Kevin DeSanctis, is to blame for many of the issues that have befallen the luxurious property.
Some of the other, more or less important reasons for the closure, were the expensive food and beverage, technology issues, small number of day-tripping players, etc.
However, the greatest failure, which had a long-term negative impact on Revel Casino’s affairs, was the contract signed with the utility provider. Namely the expensive maintenance of the power plant posed serious issues and made a prominent investor walk out of a deal for Revel’s acquisition.
Revel executives signed an agreement with ACR Energy Partners due to their inability to raise sufficient funds for building the power plant on their own. ACR provided 75% of the funds required for the construction but in turn, Revel had to work in collaboration with ACR for at least 20 years and purchase electricity, hot and cold water for the next two decades.
However, Revel filed for bankruptcy after only two years of operation and its new owner, Glenn Straub, was reluctant to continue using ACR services and proposed the casino to be supplied with electricity via portable generators. Currently, he pays serious fines as he is violating regulations related to fire safety.
As for the rest of the mistakes included in the filing, the lack of day-trip players was considered a main setback. It is a well-known fact that day-trip visitors had great contribution to casino revenues.
It was also mentioned in the filing that the amount Morgan Stanley got when he sold the property back in 2011 was $30 million.
The consequences of the financial mistakes were also pointed. It was said in the filing that Revel lost at least $100 million upon opening as previous budgeting irregularities were not revealed.
Revel was open for two years and during that time filed for bankruptcy twice in 2013 and 2014, respectively.
