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With great power comes great responsibility, as gaming organisations like Harrah’s, Boyd and others are now discovering. These conglomerates are now feeling the pressures of appeasing Wall Street’s millions of investors, which is the cost of massive growth. The price of their stock shares has influenced many decisions, including who owns the company.
In addition to the staggering number of sales and acquisitions of different gaming companies this year, we should look for more in the future. Harrah’s Entertainment and Station Casinos of Las Vegas, Trump of Atlantic City and several others are all sold, under agreement or exploring potential acquisition, some from private firms.
Pinnacle Entertainment closed on the Sands in Atlantic City in November 2006, which left more than 2,000 employees without permanent jobs. Some have found work in other casinos while others have hung up their uniforms to pursue other interests. Following the building’s demolition, Pinnacle will rebuild a $1billion casino by 2011.
Are these turnovers healthy for the industry and its employees? Do employees fare better with a complete change to the corporate culture just because new owners may be more financially solvent? Are there long-time staff members whose hard work has helped create the property’s success, only to lose their jobs or accept a demotion in this new corporate hierarchy?
It is a mixed bag. Aztar’s sale meant layoffs for almost 1,000 Tropicana workers in Atlantic City. Their stable senior management team is mostly gone, either by choice, buyout or termination.
While the companies aim to streamline their operations, does the upper management feel the same economic pinch? CEO pay and public perception is one serious issue confronting corporate America. Top executives in many businesses are under attack for receiving tens of millions in salaries, bonuses and stock options. These payments often contrast their companies’ poor performance. Shareholders are taking notice and voting against these policies.
The gaming industry is no exception; there are numerous examples throughout the US. Trump senior executives earn seven figures despite serious problems. Despite years of struggling, the Sands’ former president received an impressive compensation package.
Newspaper sources report that Harrah’s CEO Gary Loveman may receive approximately $94 million in total compensation pay following Harrah’s recent $27.8 billion sale. Formerly a Harvard professor, Loveman consulted for Harrah’s in the late 1990s. He became CEO in 2003. Loveman may also receive an additional $18.9 million in severance pay if he leaves under certain conditions.
Most casino employees look unfavorably on these ownership changes. After several failed attempts over 25 years, dealers at multiple Atlantic City casinos have voted to unionize.
The United Auto Workers (UAW) union has successfully persuaded Atlantic City dealers to unionize. Caesars Atlantic City, a Harrah’s property, just voted 572-128 to unionize. The UAW has filed a petition with the National Labor Relations Board (NLRB) to represent 1,200 dealers, cashiers, keno and simulcast employees at Bally’s Atlantic City, another Harrah’s casino.
Bally’s is the fourth casino the union has filed to represent in recent months. In addition to Caesars, Trump Plaza’s dealers have voted 2-1 to unionize. The UAW has indicated that it aims to organize the 8,000 dealers working at Atlantic City’s 11 casino properties.
Why this success now, when both national and New Jersey’s statistics reveal declining union membership? The UAW believes it may succeed for multiple reasons.
First, as dealers witness Atlantic City gaming top $5.2 billion for 2006, their $4-per-hour-plus-tips wage seems inadequate. Figures released by the New Jersey Casino Control Commission (NJCCC) reveal table games revenues increased 5.2 per cent last year. They also know that their casino counterparts – such as cooks, restaurant servers – have long been represented.
Also, employee discontent over layoffs and general working conditions have fueled this fire. For example, more than 60 percent of Harrah’s affected employees have complained about “unilateral” changes in their retirement and health-care plans. These occurred since Caesars and Bally’s were acquired to operate alongside their Harrah’s and Showboat casinos. Now, another new owner may mean uncertain job security.
Here’s the question. If jobs are being cut and the employment budget trimmed to squeeze out more profit, should senior executives still enjoy millions in compensation? Does anyone deserve that much money?
The furor over this issue in scores of industries has reached such a contentious level that the US Congress is examining the issue. We’ll see how this affects gaming, as well as other giant businesses.
Time will tell.
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