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Taj Mahal ruling puts other A.C. workers' benefits in danger

A U.S. bankruptcy judge's decision last week to allow the Trump Taj Mahal Casino in Atlantic City to jettison a traditional defined-benefit pension and company-sponsored health insurance could spell the end of historically solid benefits for low-paid casino workers.

Atlantic City Casino union members of Local 54 UNITE-HERE and others stage a rally at the intersection of Arctic Ave. and Christopher Columbus Blvd. in Atlantic City, N.J. on Wednesday, Oct. 8, 2014 to protest casinos threatening to take away workers' benefits. (AP Photo/The Press of Atlantic City, Edward Lea)
Atlantic City Casino union members of Local 54 UNITE-HERE and others stage a rally at the intersection of Arctic Ave. and Christopher Columbus Blvd. in Atlantic City, N.J. on Wednesday, Oct. 8, 2014 to protest casinos threatening to take away workers' benefits. (AP Photo/The Press of Atlantic City, Edward Lea)Read more

A U.S. bankruptcy judge's decision last week to allow the Trump Taj Mahal Casino in Atlantic City to jettison a traditional defined-benefit pension and company-sponsored health insurance could spell the end of historically solid benefits for low-paid casino workers.

Unite Here Local 54, the union targeted by Trump Entertainment Inc., Taj Mahal's parent company, said every worker in Atlantic City is under siege by billionaire investor Carl Icahn, who controls Trump Entertainment through the roughly $290 million of debt he holds.

The consequences for the casino workforce in Atlantic City could be huge.

"No other property owner is going to want to pay several dollars more an hour than Icahn is paying at the Taj," said Ben Begleiter, spokesman for Local 54, estimating the hourly cost of benefits.

Unite Here represents about 1,100 Taj Mahal workers.

Icahn's Tropicana Casino & Resort, which he bought out of bankruptcy in 2009 for $200 million, withdrew from the Unite Here pension in 2012, a preview of what was coming for the Taj Mahal.

Most Atlantic City casino employees represented by Local 54 are working under contracts that expired last month but received six-month extensions.

Taj Mahal and Tropicana - the two casinos controlled by Icahn - were the only two that refused the extensions, according to union officials.

Trump Entertainment told U.S. Bankruptcy Judge Kevin Gross that the company needed $14.6 million in annual savings from its contract with Local 54 to have any chance of emerging from bankruptcy.

Gross ruled Friday, but on Monday released his detailed opinion, which showed he was convinced that the union was more focused on protesting the bankruptcy maneuver than on negotiating a new agreement.

The bankruptcy plan also hinges on local property tax savings and significant benefits from the state - both of which face stiff political opposition.

Kevin Ortzman, a Caesars Entertainment Corp. executive in Atlantic City who is also president of the Casinos Association of New Jersey, could not be reached for comment Monday about the impact of the bankruptcy-court decision on the cost structure of other Atlantic City casinos. Ortzman runs Caesars and Bally's.

Health benefits and pensions are a major cost to casinos in Atlantic City, where there has historically been a level playing field in terms of labor costs because of a large union presence, Begleiter said. Many of the casinos have workers represented by three or more unions.

Excluding the four Atlantic City casinos that closed this year - the Atlantic Club, Showboat, Revel, and Trump Plaza - the industry spent at least $72 million on health benefits and pension contributions in 2013, according to financial filings with the New Jersey Division of Gaming Enforcement.

The cost for five casinos with comparable data ranged from 2.4 percent of net revenue at Harrah's to 8.1 percent of net revenue at Resorts.

The $72 million does not include an undisclosed amount spent by Borgata on health insurance. Borgata is by far the resort's biggest casino in terms of employment and revenue, with 6,018 employees in August and $696 million in revenue last year. Borgata said it spent $7.3 million on union pension plans.

The financial filing by Taj Mahal covering 2013 does not say what the casino spent on health insurance for unionized employees, but it says the casino contributed $4.18 million to union pension plans. In a bankruptcy document, the company said it contributed more than that - $4.61 million - to the Unite Here pension alone in 2013.

Begleiter pointed out that his union does not account for all health-care and pension costs. However, in the case of pension costs, Unite Here's badly underfunded pension accounted for at least three-quarters of the pension costs reported by the casinos.

Bob Bruno, a union expert at the School of Labor and Employment Relations at the University of Illinois at Urbana-Champaign, offered a positive note.

He said Friday's bankruptcy ruling on the Taj Mahal union contract does not mean that pension and benefits will automatically disappear for Atlantic City's casino workers.

"It doesn't absolve the employer in each different setting to establish what their economic ability to pay really is," Bruno said.

INSIDE

Icahn will face a tough fight from N.J. lawmakers. A2.EndText

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