So Harrah’s has big plans.
Here we go again, news reporters and analysts stopping short of asking all the right questions. Maybe their thought processes were numbed by the happy talk and "development speak" gushing from executive offices.
Another point: Don’t some executives appear a little tone deaf as they talk about how they expect to spend big money on developments of one kind or another while they are at the same time presenting cases for salary concessions by thousands of union members?
Case in point: A Las Vegas Sun story that spoke of the plans hatched by Harrah’s Entertainment strategists to build an east-west avenue of assorted entertainment facilities – bars, restaurants and what have you, linking its several hotels and casinos (Flamingo and O’Shea’s) on the east side of the Strip and north of Flamingo.
The story did not say when all this creating might start or finish – or how the company expects to pay for it – but I suppose this might seem like a small detail in the grand scheme of things.
Here’s what the story sounded like, considering the lack of important details: An effort to make the point that the company continues to think big, and envision a brighter tomorrow at a time when it is up to its corporate neck in debt; a time when it is asking union members to delay 50¢ an hour pay raises, as it continues cutting out so many of the small things that reduce its ability to service existing customers.
Caesars Palace may have escaped unscathed by the reductions, but this is not true at other company properties.
But in fairness, Harrah’s is not the only company guilty of delivering mixed messages that fall short of producing smooth harmony as it also whacks away at all kinds of costs. We had an example of the same thing at MGM Mirage when CEO Jim Murren’s big raise was announced at a time when property managers were being urged to think small, as in cut costs wherever possible.
Murren has a bigger job than he did a year ago, so it is easy to see him being worthy of more money, but it might have been a good idea to defer some announcement of it to a future date. Don’t think issues such as the big pay packages being earned (or already paid) to executives at Harrah’s and MGM don’t get batted around every time company officials get with union leadership to discuss more concessions.
Nevada gaming regulators might want to consider redesigning their approach to keeping an eye on the industry as leaders of the biggest companies deal with the impact of changes that once seemed unimaginable.
Maybe they can bring in the folks from Extreme Home Makeover to develop priorities with an up-to-the moment look.
For instance, what’s more important, making certain nightclub patrons keep their clothes on, don’t have sex in dark corners and avoid getting sloppy drunk?
Or, taking a closer look at multi-billion-dollar resort ventures that have often been proposed and launched with no real idea about where the money to complete them is coming from?
When the thinking behind these projects runs off the rails, or some aspect of strategy proves faulty, the impact is felt in every corner of the state as jobs are lost and taxable revenue evaporates.
On the other hand, coming down on the nightclub at Planet Hollywood as the Gaming Control Board did last week, gives regulators a chance to flex their muscles and scowl at questionable behavior that does not mean much in the big scheme of things. But they can put their hands around it.
That’s difficult, probably frustrating with some of the other issues facing them.
Remember the Wall Street Journal story of several months ago that made reference to the worst case scenarios imagined by the private equity groups preparing to load Harrah’s up with debt so they could take it private? As credit markets froze and consumer confidence tanked, they quickly saw that reality was worse than anything they had been able to imagine.
And so I wondered, can we imagine any executive at any gaming company being called before gaming regulators and threatened with a fine for aiding and abetting strategy that cost the state tax revenue and thousands of lost jobs?
Can penalties for stupid thinking be written into gaming statutes?
Gee, I’m glad I don’t have to come up with answers to some of these questions, but it is kind of like what happened in New Jersey some 19 months ago when Tropicana owner Bill Yung lost his license because he failed to maintain a "first class resort" in accordance with state regulations.
Question? Comment? E-mail me at: Phil Hevener