Impatient Culinary puts screws to MGM Mirage

Michael J. Mishak

Wednesday, April 4, 2007 | 7:17 a.m.

Negotiations between MGM Mirage and the Culinary Union have not exactly burst out of the gates , as the two sides had hoped when they agreed last month to start bargaining early.

In fact, after four negotiating sessions, the two sides have yet to tackle big-ticket items such as the union's organizing rights at MGM Mirage's Project CityCenter, the company's $9 billion development in the heart of the Strip, according to sources close to the talks.

Although the pace is typical of early negotiations, casino industry insiders say the Culinary is growing impatient. As a result, it is making a strategic move intended to pressure MGM Mirage. The union is entering separate negotiations today with another industry giant, Harrah's Entertainment.

Making inroads with Harrah's, they say, could give the union leverage with MGM Mirage, which, with 10 Strip properties, is the largest player in town.

In 2002 MGM Mirage and Mandalay Resort Group took the hardest line in talks, particularly on the union's health care plan. But hopes of a united front disappeared when, one week after the union threatened its first strike in 18 years, Park Place Entertainment and Harrah's caved and signed deals. MGM and Mandalay saw the terms as too generous, but agreed to similar terms within a week .

"They got the most expensive contract in history at a time when the industry could least afford it," Mike Sloan, a Mandalay senior vice president, said then. "They played hardball and they won."

On Tuesday D. Taylor, secretary-treasurer of the Culinary, said the union hopes to reach an agreement with MGM Mirage in the next two to three weeks. In 2005, MGM Mirage bought Mandalay Resort Group for $7.9 billion. "We started early to get done quickly," he said. "We're not going to sit for another month of negotiations to get another month of negotiations."

Current five-year contracts, affecting about 50,000 hotel and restaurant service employees, expire June 1. About 16,500 of those workers are employed by Harrah's; 21,000 more work for MGM Mirage.

The union wants to keep existing health care and pension benefits, increase opportunities for promotion, protect tipped workers through an IRS defense fund, boost wages for nontipped workers and create a housing trust to help members buy homes.

Industry insiders expect the union's right to organize properties through a process known as "card check" to emerge as the sticking point in the MGM Mirage talks.

The existing contract lets workers organize simply by signing cards specifying their support of a union. Once organizers gather a majority of workers' signatures, the company agrees to accept the union.

MGM is expected to try to limit the card check provision so the rules of organizing will be determined by federal law. Under that law, employers have the right to call for an election rather than accept such cards as final word.

Unions say the added step gives employers a chance to intimidate workers and cite the elections option as one reason union membership has dwindled nationwide.

Industry insiders say MGM Mirage does not want card check to extend to the non gaming parts of its many new enterprises, most notably Project CityCenter.

The Culinary won't have to clear that hurdle with Harrah's because the company has not embarked on a Las Vegas expansion plan.

Marilyn Wynn, who is president of Bally's, the Rio and Paris Las Vegas and is lead negotiator for the Harrah's talks, said the company wants resolution "well in advance of May 31."

"The union and Harrah's have very similar goals," Wynn said. "We want our employees to earn a good wage, have opportunities for career advancement and enjoy good health care and pension benefits."

This year, however, a wild card is in play.

The union's negotiations with Harrah's begin on a day when Harrah's stockholders, through a proxy vote, are expected to approve a $27.8 billion deal to sell the company to two large private equity firms, Apollo Management and Texas Pacific Group.

Although both sides say the new contract must be honored by the new owners, it's unclear how the purchase will color the negotiations.

Private equity firms have been the subject of street protests by labor unions across Europe, and organized labor in America is starting to turn up the heat. The Service Employees International Union has started an Internet campaign to focus attention on the Blackstone Group, the first of the big American private equity firms to undergo a public offering.

Labor leaders warn that private equity deals, which typically rely on lots of debt, make companies less stable, putting jobs and benefits at risk. The firms say their practices improve business operations, yield big returns for investors and boost job growth.

For its part, the Culinary identified the potential threat posed by private equity deals in a survey it distributed to its members this year, saying such firms "may be preparing to further squeeze profits from the casinos."

U.S. Rep. Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, told The New York Times last week that he had met with a number of union heads, including Andy Stern of the SEIU, and that private equity companies could face closer scrutiny in Washington.

"There is a concern that the takeover of companies by private equity firms could have a negative impact on the people who work for those companies," Frank said. "One problem is when there is a high level of debt involved in the purchase, is whether that drives decisions to deal with the immediate implications of the debt rather than the long-term implications for the workers of the company."