Supplier News
US – Energy contract ran Revel into the ground
By Phil - 27 April 2015
The former owners of the Revel casino have citied an energy contract as one of the fundamental reasons for the failure of the US$2.4bn Atlantic City resort.
In a court filing; a proposed disclosure statement for its bankruptcy case, the operator places much of the blame on Revel’s original management team, headed by former CEO Kevin DeSanctis. Among the problems, it lists construction cost overruns, taking on too much debt, a failure to attract day-tripping gamblers, expensive food and beverage, marketing problems and technology issues.
But the contract with its utility provider tops any other problem as according to the filing it cost over US$2m a month. Revel’s owners struck a deal with ACR Energy Partners who built and operated the required power plant for the operation.
The contract saw Revel paying for utility services but also paying down debt from its construction, guaranteeing ACR a 15 per cent to 18 per cent return on its investment.
Its owners admitted that an outside contractor also ‘made a series of significant budgeting errors that were not disclosed until right before the April 2012 opening.’ This saw Revel being at least $100 million over budget when it opened.
Other problems included a lack of a players’ club at its launch and a focus on overnight customers.
