What’s Trop worth?

When the Trop AC first went on sale (it seems like a decade ago), a newspaper reporter asked me how much I thought it would get. I considered the Sands’ recent selling price and made a quick mental tally of the Trop’s relative size. “$650 million, ” I replied. “Maybe $700 million.

The next day, I was taken aback to learn that the consensus among the “analysts” was that the casino should sell for $1 billion or so.

“Wow,” I thought. “I really don’t know this casino stuff at all.”

Yesterday’s AC Press, though, made me feel a little smarter:

A Baltimore developer known for transforming a blighted section of Atlantic City into a bustling downtown shopping district is in negotiations to buy Tropicana Casino and Resort.

Cordish Co. emerged Tuesday as a leading bidder in talks with the state-appointed conservator who has been overseeing Tropicana’s sale ever since the troubled casino was stripped of its New Jersey gaming license last December.

Under the terms, Cordish would acquire the Tropicana and virtually all other assets of its former operator, Adamar of New Jersey Inc., for $700 million in cash and stock, according to the state Casino Control Commission.

Cordish Co. offers $700M. for Tropicana in Atlantic City

I guess I knew what I was talking about. Either that, or the “analysts” put as much effort into their valuation as I did mine, or just picked the biggest round number they could spit out. I’m not surprised that the financial sector is in such disarray, since a relatively stable business can lose about 1/3 of its perceived value after it’s had a minor turnaround. Either that initial billion was badly inflated, or this is the bargain of the century. I stand by my original prediction and say that, if anything, the $700 million offer is generous.

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