Stockton's Showboat costs likely to exceed $26M
By the time Stockton University sells the former Showboat casino to developer Bart Blatstein in November, it will have spent more than $26 million on the property, according to a tally provided by the school.
By the time Stockton University sells the former Showboat casino to developer Bart Blatstein in November, it will have spent more than $26 million on the property, according to a tally provided by the school.
Since buying the property last December, the university has sunk $3.3 million in one-time expenses into the project, with an additional $4.3 million in recurring costs as of Sept. 18, the latest numbers available.
So over the nine months since paying the purchase price of the property, Stockton has spent the equivalent of $848,600 a month on it. And it expects to spend another $800,000 by the time it parts with the property.
As of last month, Stockton had spent $25.7 million on the Showboat site, including the $18 million it paid to buy it.
Blatstein has agreed to buy the property for $22 million, and university officials are divided on whether the school would eventually recoup its entire investment in the ill-fated venture to turn Showboat into an "island campus."
"I think it's conceivable, absolutely. . . . I think we'll recoup a good share of it, if not all of it," said Harvey Kesselman, Stockton's interim president.
Charles Ingram, the university's vice president for administration and finance, had a different reaction when asked whether he expected Stockton to be made whole: "No. I don't."
The difference, Kesselman said, was one of perspective, describing himself as an optimist with a broad view. Ingram, he said, had to be conservative in his handling of the university's finances.
Those finances include overseeing the continued - and sometimes unplanned for - costs of holding the Showboat site.
Last week, as weather forecasts warned of a potential one-two punch of a nor'easter followed by Hurricane Joaquin, Stockton had the expense of putting sandbags around the property.
Recurring costs have averaged $477,500 a month. The largest repeat cost: salary and benefits for Showboat-related employees, at $173,600 a month.
Utility bills add hundreds of thousands a month - including $141,600 for electricity, $48,800 for natural gas, plus more for heating oil, sewage, water, phones, and cable. Insurance has averaged $44,800 monthly.
By the time Blatstein closes on the property in November, Ingram said, Stockton will have spent another $800,000 or so.
But the school's financial situation isn't as simple as taking the difference between the total expenses and the $22 million Blatstein has agreed to pay.
For one, various legal issues continue to surround the property, including fallout from the bankruptcy of its former owner, Caesars Entertainment, and a suit filed by Florida developer Glenn Straub, who had previously agreed to buy the Showboat property. (Straub sued and lost when the deal with him fell through, but is now suing over a related matter.)
Both Kesselman and Ingram said the university hoped to recover some of its legal expenses.
"We have options that we're going to pursue, other than just trying to absorb it in our operating budget. We're going to go aggressively after every avenue we can, to get some relief," Ingram said.
Kesselman said he currently sees two ways for Stockton to make back its spending on Showboat, though, "for legal reasons," he declined to name them.
He did cite an "affiliation agreement" between Stockton and Blatstein, being worked on as part of the agreement to sell the Showboat property. Details are being worked out, but the broad outlines include Blatstein providing internships for Stockton students, allowing free use of the House of Blues venue space for some Stockton events, and cross-marketing with the university's Seaview hotel and golf course.
Still, Kesselman said he recognized that making Stockton financially whole would take time, perhaps one or two years - "It's not going to happen quickly" - and in multiple forms.
"Charles looks at the glass half-empty, I look at the glass half-full, and that's actually a very good combination," Kesselman said of Ingram, adding, "You know what, ultimately, we don't know, and that's the thing."
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