So what did Stockton University President Herman Saatkamp know, when did he know it … and did he tell his board?
Those are the big questions in Atlantic City these days.
Late last year, Saatkamp signed an $18 million deal to buy the Showboat Casino Hotel and turn it into Stockton’s “Island Campus.” But in recent weeks, folks in AC, particularly in legal, real-estate and political circles, have been whispering about a 1988 agreement that requires the Showboat to be run as a casino hotel.
That, of course, poses a bit of a problem for the dynamic Stockton president, who planned to keep part of the Showboat open as a hotel but not as a casino. The Stockton board of trustees has scheduled a special meeting for Wednesday to discuss the issue.
The deal is now in jeopardy, with Trump Taj Mahal saying it plans to enforce the still-valid 1988 covenant and that it never wanted to be next door to a college in the first place. According to legal experts involved in the drafting of the 1988 agreement between the former Resorts International, the Showboat and the Trump Taj Mahal, the point was to ensure that there was a cluster of casinos at the north end of the Boardwalk and that no one gambling house would be stranded by itself.
Stockton initially denied to Press of Atlantic City reporter Dianne D’Amico that the old agreement posed any problem and contended that it had been resolved, but it certainly seems to many that the university failed to research the deal fully or, at the very least, signed an $18 million deal that had some awfully fuzzy language in it. In what appears to be an attempt to defend itself, last week Stockton released its sales agreement with Caesars Entertainment, which owned the Showboat. In that agreement, Caesars pledges to work out the issue with the Trump Taj Mahal on its own and holds the university harmless.
But Caesars and Stockton apparently under-estimated Carl Icahn, who isn’t known for giving away much for free. The Taj is expected to emerge from bankruptcy with Icahn in control, and as Kathleen McSweeney, a Taj vice president said in an email to D’Amico. “Before spending $18 million, did Dr. Saatkamp ask to see a piece of paper ‘resolving’ the issue?”
Good point. The Taj is now saying it doesn’t want a campus full of potential underage gamblers right next door. Some figure Icahn just wants cash and may even be trying to force Stockton to buy the shuttered Trump Plaza, which he also effectively owns, instead.
What a mess.
Saatkamp has certainly raised Stockton’s profile – and its enrollment. But he has raised eyebrows as well, and there is no shortage of local folks who believe that his big two investments of college money in the private sector simply sound too good to be true.
National lodging and golf companies passed on the purchase of the famed Seaview Resort and Golf Club in Galloway Township outside of Atlantic City. But Saatkamp bought it for $16.2 million in 2010. He hired Dolce Hotels and Resorts to run the hotel and two golf courses, and Stockton houses approximately 250 students in hotel rooms in the facility. Saatkamp claims the deal is meeting financial projections. Others wonder how that can be – unless the projections were low-balled to start with.
And now there’s the Showboat deal … which clearly involves a lot of wishful thinking. Elected officials praised it as a potential game-changer for AC. But others are just shaking their heads and wondering how it could possibly work. The Showboat is a massive, three-tower, 1.7-million-square-foot facility. Maintenance costs alone are astronomically high. The place has 46 elevators – Stockton could end up spending more on elevator maintenance than it does on classics professors.
If, that is, the deal stands.
Jim Perskie is the former editorial-page editor of The Press of Atlantic City.