Schuetz to remain at helm of Stratosphere

Gary Thompson

Thursday, Oct. 31, 1996 | 11:59 a.m.

Richard Schuetz, the marketing whiz who engineered the remarkable turnaround of Stratosphere Corp.'s operations, is no longer its temporary boss.

The company announced today that Schuetz has been named president, CEO and a director, indicating he'll be around a lot longer than the three to four months he expected to serve when named interim president July 29.

The announcement signaled Stratosphere and its majority owner, Grand Casinos Inc., are determined to fight with creditors for control of the financially strapped resort.

It also pleased Stratosphere employees who have rallied around Shuetz and the other executives Grand installed since acknowledging mistakes it had made in marketing the brand-new resort.

It was just over three months ago that Stratosphere released dismal financial reports indicating that, while plenty of people were visiting the property's 1,149-foot tower, few of them were gambling in its casino.

With remarkable candor, Stratosphere Chairman Lyle Berman readily admitted the initial marketing campaign was a flop and vowed to change it quickly.

"We will offer as good or better odds on table games as any place in Las Vegas," Berman said at the time. "You can look at us to go to 10 or 20 times odds on craps ... and we may set up slot carousels featuring 98 percent payback machines."

A few days later, Berman convinced his long-time friend and former business partner Schuetz to run the new campaign -- supposedly on a temporary basis. In his first meeting with Las Vegas journalists, Schuetz stressed he was an "interim" president and that the search for a long-term replacement would start quickly.

Schuetz left the executive search up to Berman and turned his attention to turning around the foundering resort.

"Within 90 days, you'll see an absolutely different approach ... Stratosphere will become more of a gambling joint, with value propositions throughout the property," he said. "We want to provide value that exceeds gamblers expectations."

The "new" Stratosphere debuted Sept. 30 and since then has been one of the busiest casinos in Las Vegas.

Schuetz went far beyond Berman's first promises. Customers found tables offering 100 times odds on craps and 101 percent payback slots and the word spread quickly among knowledgeable gamblers.

Berman said recently customers surveys during the first three weeks of the new campaign indicated 22-24 percent of the gamblers were locals. Since then, it appears that figure has climbed to around 45 percent.

It's that reaction to the new gaming product that has prompted competing casino operators to begin enhancing their games in an effort to maintain their base of local customers.

Meanwhile, Berman and Stratosphere's investment bankers are negotiating with holders of $203 million of high-yield debt as a Nov. 15 interest payment approaches. Stratosphere has indicated it won't make that payment, though it left the door open should circumstances change during the 30-day grace period after that date.

While there's been widespread speculation that bondholders may attempt to gain control of the property through foreclosure, Berman's appointment of Schuetz to the permanent position indicates Stratosphere's majority owners may fight any such action.

"That sends a signal on Grand's part that this is a vote of confidence on the direction that Schuetz has taken," said David Ehlers of Las Vegas Investment Advisors Inc.

"They made the right move in putting a marketing guy rather than a bankruptcy attorney in there. If they were going to abandon the tower, they wouldn't appoint him and he wouldn't accept."