In late 2014, the Richard Stockton College of New Jersey purchased the buildings that once housed the Showboat Hotel and Casino Resort, which operated from 1987 to 2014, with the intention of using them to create a satellite campus in Atlantic City to serve more students. After lagging profits, the Showboat closed for good on August 31, 2014.
But Stockton’s plans for its Island Campus, the proposed name for the satellite campus, are halted for now. The project was initially set to be complete by late spring 2015 and acting as a secondary campus by fall 2015, but thanks to a twenty-six-year-old agreement between Caesar’s Entertainment, Resorts Casino Hotel, and Trump Entertainment Resorts, Stockton might need to scrap its plans.
Stockton’s Plan for Expansion
The Stockton-Island Campus is the college’s seventh attempt to expand into Atlantic City under current president Herman Saatkamp. The college, which recently became a university, currently serves just over seven thousand students and is growing rapidly. The institution seeks to further its position as a driving educational and economic force in southern New Jersey by being part of Atlantic City’s revitalization efforts.
Purchasing old hotels and turning them into functional campus properties is nothing new for Stockton University. In 2010, the college purchased the Seaview Resort, a century-old hotel, spa, and golf resort in Galloway Township, New Jersey. Today, part of the hotel is used to house upperclassman students while the rest of the resort is used by the university’s hospitality management program to provide students with a hands-on learning experience in their chosen field.
The Expansion Goals
In December 2014, Stockton purchased the Showboat for $18 million, a fraction of what the resort was appraised for in 2013. The plan is to convert the gambling floors into academic spaces, creating classrooms, lecture halls, and music studios. Tower 2 and Tower 3 would provide 852 dormitory rooms for students while Tower 1 remains available for paying guests. The dining and recreation areas would be taken over by the campus and used to meet students’ needs. This plan would effectively double the number of students Stockton could serve. Proponents of this plan point toward the effect Columbia University had on Morningside Heights in Manhattan and the positive changes Rutgers University has brought to New Brunswick, Newark, and Camden.
Not everybody was on board with this plan. Some students called the purchase a waste of funding that could have been better spent on the main campus to improve its facilities. Parents of students spoke out against the hotel deal as well, citing safety concerns for students rooming in the former hotel.
Another group was unhappy with the purchase as well. That group was Trump Entertainment Resorts, the owner and operator of Trump Taj Mahal. In fact, Trump Entertainment Resorts was more than unhappy about the deal – it was ready to take legal action against Stockton University. In 1988, Trump signed a covenant with Caesar’s Entertainment, the parent company behind the Showboat, and Resorts Casino Hotel that required that the three properties only ever operate as first-class casinos and hotels. To facilitate this partnership, the three resorts were connected by enclosed skywalks.
A college campus is not a first-class casino resort. Not even close. Creating one in the Showboat’s former buildings would be a violation of the covenant. The college was aware of this and in December, Caesar’s Entertainment asked Trump Entertainment Resorts to waive the covenant so Stockton could proceed with the purchase and development of the resort. Trump Entertainment Resorts, then going through its own issues with the Taj Mahal’s bankruptcy and potential reorganization, chose not to waive the covenant. Its representative made the following statement to the press, which is available to read in full on its website:
“We advised that because the Taj is in bankruptcy, as a matter of our fiduciary responsibilities to our creditors, we could not waive our valuable rights under this covenant without obtaining bankruptcy court approval and without receiving appropriate consideration. We were not offered any consideration for this waiver.”
Trump Taj Mahal’s website states concerns about the potential legal issues that could arise with underage students living next door. It also noted the negative effect that the campus could have on its own bottom line, claiming that it would deter potential Taj Mahal visitors.
Stockton and Caesar’s went ahead with the sale anyway. Now, Stockton can not move forward with the resorts’ development until it works out all the legal issues it faces from Trump Entertainment Resorts. To be ready for a Fall 2015 opening, contracts regarding the property and its administration must be signed by April 12th.
A Potential Sale, But Not a Total Loss
If it can not complete the process this month, Stockton University’s president Saatkamp stated that the university will sell the property because it can not afford to hold on to it for another year and attempt to open it for Fall 2016. If this is the case, the university has a buyer lined up.
That buyer is Glenn Straub, owner of Polo North, Inc., a Florida-based development company. Straub purchased Revel earlier this year and plans to develop it into a megaresort with a second hotel tower and indoor water park.
Straub promised to purchase the Showboat property for $26 million if Stockton can not reach a settlement to move forward with the property’s development. This money was placed in escrow for ninety days. If Stockton does end up selling the property to Straub, it stands to approximately break even on the deal. Although the university purchased the property for only $18 million, it has since invested money in developing a plan and building its legal strategy to work out the issues with the covenant.
Save Our Stoboat
Stockton students want to see their university grow and take advantage of all that the satellite campus could offer. Earlier this month, a group of Stockton students and members of the Local 54 of Atlantic City marched from the Showboat to Trump Taj Mahal, protesting Trump Entertainment Resorts’ attempts to block Stockton’s development of the Showboat property. The protest was named “Save Our Stoboat,” a portmanteau of Stockton and Showboat.
Atlantic City mayor Don Guardian stands with the university, stating the benefits that the college would have on the neighborhood and the city’s residents.
And it would have many benefits. Getting more year-round residents into the city to make use of local businesses and diversify the city’s demographics can only bring positive changes. Stockton University is growing rapidly and if it does not expand into Atlantic City, it will take its economic boosts elsewhere. Missing out on the Stockton-Island Campus would be a bad move for Atlantic City and just another hurdle for its recovery.