Sep. 9, 2003 - ATLANTIC CITY, N.J.--To quell reported employee unease at his three Atlantic City casinos, Donald J. Trump said the move to let go of more than 300 employees last week was nothing out of the ordinary.

"This is just seasonal," said Trump, reached in his New York office by phone yesterday. "We do this all the time. You hire in the spring, and let go in the fall."

More than 300 Trump employees, mostly full-timers, were handed pink slips late last week at the Trump Plaza Hotel & Casino, Trump Marina Hotel Casino, and Trump Taj Mahal Casino Resort. They represented all levels and all departments. But the most heavily hit were supervisors and middle management.

The job cuts represent 2.5 percent of the Trump workforce of just over 12,000, and come at a time when the Trump casinos are facing increased competition and higher taxes.

"We've been rated a five-star and five-diamond operation," Trump said, insisting that employee and media reaction to the cuts was overblown. "We're in great shape."

Trump said the job cuts were a way to rein in payroll expenses and increase cash flow. "You always want to be more efficient," Trump said.

Several operators, including Aztar Corp., which owns Tropicana Casino Resort, and Harrah's Entertainment, which owns Harrah's Atlantic City and the Showboat Casino-Hotel, have added towers with new hotel rooms and amenities, including high-end retail, in anticipation of the new Borgata Hotel Casino & Spa.

While he scoffed at the idea that the Borgata -- which he described as "nothing special" -- affected his decision to trim payroll, Trump said one factor that definitely played into it was increased casino taxes signed by Gov. McGreevey in July.

"Yes, that had something to do with it," Trump said. "Taxes are very bad for Atlantic City. Very bad."

Wall Street analysts and gaming observers predicted that the arrival of the Borgata, which opened July 2, would expand the market, as well as affect the bottom line of competing casinos by increasing their marketing budgets.

Michael J. Pollock, editor and publisher of Gaming Industry Observer, said other factors, such as a lagging economy and new taxes, were forcing operators such as Trump to make tough decisions.

"The Borgata is a factor, but not in taking market share, but in that it has made this market much more intensely competitive than it previously was," Pollock said. "And those that don't seek out new efficiencies are going to fall further behind."

Pollock said Trump, who operates three casinos in one market, was doing the prudent thing. Two of the three Trump properties -- Trump Plaza and Trump Marina -- have been in the red for some time. For the first half of this year, gross operating profit declined 15 percent to $125.7 million from the same period in 2002.

The opening of the Borgata coincided with a 9 percent decline in combined July gambling revenue at the three Trump casinos, including a 19 percent decline at Trump Plaza.

"I see this, from the standpoint of improving Trump's competitive posture within the increasingly competitive gaming industry, as a positive," Pollock said. "I view this as a signal that the company is finding new ways to operate more efficiently.

"They've been doing it for years," he said. "This is clearly a sign that the process is not over yet."

Lawrence A. Klatzkin, managing director at Jefferies & Co. Inc., an investment bank, said Trump was not too far off base with the layoffs, since casinos do the bulk of their revenue in July and August.

"Everybody's tightening," Klatzkin said. "I don't see any major cutbacks. Taj was up last month in revenue. Marina is suffering from that [connector] road not opening up; and the Plaza had some high rollers that lost a lot of money there last year and are not back this year, so they had a tough comparison.

"Everybody bulks up for the summer because you have flat-out, full demand," he said. "It's definitely seasonal. Three winter months equal two summer months in revenue."

Pollock said the trend of doing more with less had been growing for the last decade as a result of increased consolidation, the move toward less labor-intensive slots, new technologies, and better management.

"As properties get larger, they are able to accommodate more people with fewer staff," he said. "It's just a factor of being smarter, and streamlining your operations more, and taking advantage of new technologies."

New Jersey's Casino Control Commission will release August revenue figures next week, and that should shed further light on how much the Borgata has increased the market, as opposed to having cannibalized it.

Analysts and industry officials had hoped that the Borgata would cause as much as 10 percent overall market growth. Instead it went up about 4 percent in its debut month.

The Borgata's revenue for July, $46.9 million, was fourth overall, below Bally's Atlantic City ($63.4 million), the Trump Taj Mahal Casino Resort ($48.8 million) and Caesars Atlantic City ($48.2 million).

"This market has been a pretty healthy market," said Larry Mullin, executive vice president of marketing for the Borgata and former president of Trump Marina. "Whatever is affecting businesses as it relates to costs, it's kind of an individual company's decision, and companies have to do what they have to do to run a business."

Pollock said Trump needed to redirect cash where it was needed most: toward capital investment. And Trump acknowledged as much yesterday.

"There is always that need," he said. "There's been a lot of capital coming online."

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