Union alerts investors to labor troubles

Wednesday, May 8, 2002 | 11:03 a.m.

As part of an effort to drum up national support for their bargaining position, Culinary Union leaders are spreading word of their heated contract negotiations with the casino industry to Wall Street investors and vendors who deal with casinos.

Fliers pointing out the June 1 contract deadline were sent last week to about 500 Wall Street investors and analysts and dozens more businesses across the country that supply goods and services to Las Vegas casinos, union officials said.

The same flier also was mailed to the nation's 50,000 travel agents and convention planners.

"This town is dominated by Wall Street investment companies, and we want people to know what's going on here," said D. Taylor, the union's newly elected secretary treasurer.

Courtney Alexander, the union's research director, said Wall Street has invested $19 billion worth of stock in the city's five largest, union gaming companies -- Park Place Entertainment, Mandalay Resort Group, MGM MIRAGE, Harrah's Entertainment and Boyd Gaming Group.

Those companies also carry an $18 billion debt load from Wall Street investors, she said.

The flier, Alexander said, was "understated" and did not attempt to alarm investors and those who do business with the casinos about a possible strike on June 1, when the current five-year contract with 35 casinos expires.

"They need to understand the positive relationship we've worked so hard to develop over the years has been beneficial to them, and it's in their interests that these negotiations don't break down," she said.

But Mike Sloan, general counsel for Mandalay Resort Group, called the union strategy "shortsighted" and said it is discouraging people from visiting Las Vegas.

And that, he said, ultimately could cause concern among gaming industry investors.

"What we wish (the union) would do instead of fighting with people is sit down and honestly and realistically negotiate," he said. "We have a history of having worked with them, and we are disappointed by these bullying tactics."

Sloan said his company allowed the Culinary Union to organize workers at four of its Strip properties -- Mandalay Bay, Luxor, Excalibur and Monte Carlo -- on a simple card check.

Wall Street analysts, meanwhile, reacted calmly Tuesday to growing tensions in the contract negotiations, which have begun to attract national media attention. The Wall Street Journal published a story Tuesday on the escalating rhetoric in the talks.

Jason Ader, a gaming analyst for Bear Stearns in New York, said it was premature to worry about the effects on casino stocks of a possible strike at the end of the month.

"It's a little early to be concerned about it from a profit perspective," Ader said. "It does create some short-term uncertainty for gaming stocks."

But Ader said such uncertainties tend to create "great buying opportunities" for investors in the long run.

"I think Las Vegas is a good investment for a very long time," he said. "I'm very excited about the city and its resilience given the recession and Sept. 11."

Ader predicted that if a walkout occurs on the Strip, it would be a short one.

"If it's drawn out, nobody's a beneficiary of that," he said. "Hopefully cooler heads will prevail."

In a research note to his clients, Ader said many gaming employees, especially those who rely on tips, still are recovering from tough times brought on by Sept. 11 and will be less likely to give up their jobs.

And employers won't be as concerned about their ability to replace workers because of high unemployment rates in Southern Nevada, he said.

Harry Curtis, a gaming analyst for JPMorgan in New York, said he expected labor and management to reach a new collective bargaining agreement without a strike.

"I think that at the end of the day, the strong relationship that the union has had with the casino operators for nearly 20 years will resurface," Curtis said. "Traditionally, labor issues are short-term issues that should not impact the value of great companies. When it's resolved the stocks should resume their positive trends."

But Curtis said the Culinary Union is hurting the casino industry's post-Sept. 11 economic recovery by trying to focus national attention on the contract negotiations.

"For union leaders to threaten that success is counterproductive," he said. "What interest does the rank-and-file worker have in making a national issue out of this?"

The union has contract talks planned today with Mandalay Bay, then Park Place on Thursday and Harrah's on Saturday. It meets with MGM MIRAGE on Monday, three days before it holds a massive membership meeting at the Thomas & Mack Center to take a vote to authorize a walkout if negotiations break down at the end of the month.

Culinary leaders have been working hard behind the scenes to turn out as many as 20,000 of its 53,000 members for that vote.

"May 16 will be one of the most important dates in your life," union officials said in a recent letter urging members to vote for a strike authorization.