Fortune: Goldberg to step down by end of 2001

Steve Green and David Strow

Monday, Sept. 11, 2000 | 11:07 a.m.

Arthur Goldberg, chief executive of casino giant Park Place Entertainment Corp. of Las Vegas, plans to step down as CEO by the end of 2001, Fortune Magazine reports in its Sept. 18 issue.

Park Place executives, however, denied the report today, saying Goldberg had no near-term plans to retire.

"It's a misquote," said Matt Rose, a spokesman for Park Place. "He's looking for a successor to his position as president, but he'll remain CEO. His reference to stepping down was solely as president, not CEO."

Fortune noted nagging concerns about the health of Goldberg, who was hospitalized for five weeks in 1999 with pneumonia.

The magazine said Goldberg responded tersely when asked about his health. "It's okay. Things wear out as you get older."

"Whatever Goldberg's medical situation, he's finally addressing the problem of succession, a move that's overdue," Fortune said.

The magazine said the 58-year-old Goldberg plans to name a president from inside the company in the next few months, mostly likely one of his executive vice presidents, Wallace Barr in Atlantic City or Mark Dodson in Las Vegas.

"Though Dodson and Barr are strong managers steeped in Goldberg's rigorous style, the master's departure will be a blow to Park Place," Fortune said.

The chairman's title at Park Place is currently held by Hilton Hotels Chief Executive Stephen Bollenbach, though many on Wall Street have speculated it is only a matter of time before Bollenbach is succeeded by Goldberg as chairman.

The Fortune story first appeared on news service databases on Friday. In Friday trading, Park Place fell 44 cents to $14.19. This morning, however, Park Place traded up 19 cents to $14.38.

Fortune, like Barron's, crowned Goldberg the new king of the gambling industry because of his rapid-fire deals that saw:

Other observers believe Kirk Kerkorian is the most important executive in gaming following this year's acquisition of Mirage Resorts Inc. by Kerkorian's MGM Grand for $6.4 billion.

The deal gave the new company, MGM MIRAGE, first-class assets on the Las Vegas Strip including the MGM Grand, New York-New York, Bellagio, the Mirage and Treasure Island.

Goldberg's Park Place, on the other hand, controls the new Paris hotel-casino as well as three older but strong performers in Bally's, the Flamingo Hilton and Caesars Palace. Goldberg is selling the Las Vegas Hilton.

Fortune said Goldberg's intense focus on quality and cost controls produces better profit margins than MGM MIRAGE is achieving.

"If he hits his target, Goldberg will be able to raise Caesars' return to 16 percent by year-end. It could be more. ... By contrast, MGM is earning around 13 percent on its purchase of Mirage."

Fortune said Goldberg raised Grand Casinos' returns to 22 percent from 18 percent.

"By comparison, a nearby rival -- the MGM Beau Rivage, a Steve Wynn monument in Biloxi, Miss. -- reports returns of around 9 percent," Fortune said.

Wynn, the former undisputed king of the casino industry, left Mirage after the MGM Grand takeover and is now redeveloping the Desert Inn site into a casino resort.

Wynn, in the past a target of Goldberg barbs, praised Goldberg in the Fortune story.

"He's an aggressive guy who put together a big company lickety-split," Wynn is quoted as saying.