Wynn deal could doom city he once salvaged

Steve Wynn single-handedly saved struggling Atlantic City in the 1980s. He opened the Golden Nugget, considered at the time to be the Boardwalk’s most opulent hotel-casino.

On Tuesday, Wynn saved gaming in Philadelphia. He took control of a sinking casino project on the city’s south side near the Delaware River and the Walt Whitman Bridge, breathing life into a failing development.

The move also drove the final stake through Atlantic City’s heart.

Wynn Resorts Ltd. will manage and be the general partner in a casino that was originally led by the Indian tribe that runs Connecticut’s Foxwoods Casino. The tribe couldn’t finance the $670 million cost.

Pennsylvania gaming regulators were ready to pull the plug on the project’s gaming license until Philadelphia Entertainment and Development Partners brought in Wynn.

Most analysts figure Wynn, with his banking relationships and financial wherewithal, will provide capital to get the casino venture off the ground.

"Wynn will fund this deal on its balance sheet, which clearly has the capacity," Goldman Sachs gaming analyst Steven Kent said.

Wynn gave few details in the announcement. Two days later, he said the casino would have 3,000 slots, table games, and will be a "Wynn signature presentation" without a hotel.

Wynn was seeking a casino on the East Coast for the past year. Pennsylvania became more plausible after state lawmakers gave their slot machine-only casinos approval to add table games.

Images of a Wynn-operated, full-scale casino in Philadelphia sent colder shudders through Atlantic City than any nor’easter.

Philadelphia and its 1.5 million residents are just 62 miles from Atlantic City, providing one of its major feeder markets.

A second Philadelphia casino, the $310 million SugarHouse, began construction in October and is expected to open this year with a 100,000 square-foot casino.

JP Morgan gaming analyst Joe Greff tried to be diplomatic in his assessment of Atlantic City’s future in a research note after Wynn Resorts announced the deal.

"A Wynn-branded casino in Philadelphia will put continued pressure on the Atlantic City market and probably puts major pressure on the higher end of that market, namely Borgata," Greff said.

He also doesn’t believe Wynn’s Philadelphia project is a good sign for Borgata’s 50-50 joint venture owners, Boyd Gaming Corp. and MGM Mirage. Borgata accounts for all of Boyd’s equity value per share. MGM Mirage wants to sell its stake in the casino, and a booming Philadelphia gaming market could reduce the asking price.

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.