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Tuesday, Nov. 17, 2009 | 2:10 a.m.
Beyond the Sun
It’s no secret that the recession has hurt the gaming industry. It’s forced companies to adapt business strategies to the changing market, curb development projects and make some hard financial decisions.
Few notice the day-to-day effects more than those steering companies through the downturn: Gaming's financial executives.
“In today’s economy, the actions or inactions of chief financial officers can determine a company’s survival,” American Gaming Association President Frank Fahrenkopf said Monday.
On the eve of the annual Global Gaming Expo, four gaming financial executives spoke about how the recession has affected their strategies, their company’s workforce and what aspects of the industry are beginning to rebound.
Not all regions of the gaming sector have been hit as hard as Las Vegas, the panelists said. Las Vegas-based Ameristar Casinos, which operates regional casinos mainly in the Midwest, has seen the benefits of travelers opting to stay close to home.
“In our mind, we’ve benefited from the recession because big trips to destinations like Las Vegas were postponed or eliminated completely. We were able to get some play off of that,” Ameristar Chief Financial Officer Thomas Steinbauer said.
Steinbauer said Ameristar’s properties have seen lower visitor numbers but not the double-digit declines Las Vegas has seen in the past year.
“From our perspective, medium and larger metropolitan areas -- whose economies weren’t on fire in the last decade -- were growing at 1 or 2 percent. When the recession hit, they were not as negatively impacted like big tourist destinations like Las Vegas and Atlantic City,” Steinbauer said.
For gaming manufacturers, the recession has had a second-hand effect. As leisure travel declines and casinos bring in less cash, they are less likely to purchase new games. But WMS Gaming Executive Vice President, Chief Financial Officer and Treasure Scott Schweinfurth said he believes that will loosen.
“With the meetings that have been going on in the last three or four months, there is a much more positive tone than there was last year at this time,” Schweinfurth said of WMS sales talks with casinos.
In an effort to manage their companies’ balance sheets, gaming financial executives have made some tough choices. In many cases, that’s translated into layoffs.
MGM Mirage Executive Director of Investor Relations Daniel Foley said as MGM Mirage has made acquisitions, it’s been able to eliminate duplicate positions, helping the company to cut costs long before the recession.
But as it entered the downturn, MGM Mirage had to continue to make cuts in its workforce like many other casino operators in Las Vegas.
“We really had to take a look at some of our back-house, non-customer front-facing positions and eliminate some positions, and it’s never a fun thing,” Foley said.
MGM Mirage has cut 9,000 full-time positions in the past 18 months, Foley said, but will be adding a chunk back with the hiring of 12,000 employees at CityCenter.
Ameristar, too, has had to cut full-time positions because of the economic downturn. Steinbauer said the company has increased its share of part-time positions from 10 percent to 35 percent to eliminate costs. Because of cuts like these, Steinbauer said Ameristar has cut $55 million in overhead costs during the past 12 months.
“It has been at a cost and it’s a labor cost, unfortunately, but some have to be affected for the majority to stay employed. It’s just difficult but we’ve had to do it in all of our markets,” Steinbauer said.
While companies like MGM Mirage and Ameristar have cut staff, that hasn’t been the case for WMS.
Schweinfurth said during the 2009 fiscal year, WMS planned on hiring 300 new employees to accommodate the company’s growth. It later lowered that number to 200.
“We responded to what we were seeing [in the economy] by slowing the hiring process but we did not have to go through a round of cost reductions in our work force,” Schweinfurth said.
Casinos have made cuts to more than just their staffing levels. Resorts have slashed room rates and offered deep discounts at restaurants and entertainment venues to attract customers.
“Certainly, customers in the market place are much more price-sensitive and value- oriented in the near term,” Foley said. “Whether or not we get back to the heydays of $400 bottle service and $1,000 bills at restaurants remains to be seen. I think that is many, many years off.”
However, Foley said, MGM Mirage has seen an uptick in convention business to some of its resorts as companies begin to compare the meeting costs of Las Vegas to those of other cities around the country.
“We believe that ultimate lift will bring some of those other revenues back to some historical norms,” Foley said. “All will be depressed but hopefully we’ll see some pick up in food and beverage, entertainment and specifically the convention business.”
The Global Gaming Expo, the industry’s largest trade show, is expected to bring an estimated 25,000 attendees this year, down 5.7 percent from last year. The three-day show runs today through Thursday at the Las Vegas Convention Center.
these yo-yo's still waiting for that $400 bottle coming back to repair everything=clueless.
Ameristar, too, has had to cut full-time positions because of the economic downturn. Steinbauer said the company has increased its share of part-time positions from 10 percent to 35 percent to eliminate costs.
And we wonder why so many Americans are without health insurance?
MGM/MIRAGE is the worst at it too. You used to be able to walk into a full time position but now you have to work 3 years in the same position part time first, with no benefits before you MIGHT get offered a full time spot. Thats why I left that company.
It amazes me how these executives just run to cutting workers instead of trying to come up with a plan to solve the problems like taking a hard look at why people don't want to visit their properties. I'll tell you why, because they are ripping us off at the machines, rooms and food! No be secret here!
As a person that has been coming to Vegas since the early 70's, I lay the blame for the condition of Las Vegas at the feet of Steve Wynn. He built casino based on his ego. Big! Expensive! What the normal person who comes to Vegas is a clean room, moderate room rates, food that doesn't cost 100. for 2 people to have a sit down dinner.
mizdel -- You can't blame Wynn. The building of the Mirage helped keep Vegas relevant and drew many new visitors. Vegas could have stayed cheap and dumpy forever, but if people wanted that they could just go to AC.
That being said, what we have seen it the past several years is upscale excess taken to an unrealistic extreme. There is a place for $400 a night rooms in this town, but that does not mean that every new hotel being built needs to go after that market. Failed projects like Fountainbleu, Cosmopolitan, and Echelon stand as sad reminders that Vegas was never meant to be New York or Miami.
VegasObserver : You are absolutely right, but the problem now is all of this upscale development is there, and needs big bucks just to keep the lights on, what are they going to do ? just close them down and board them up? they better change their strategy and welcome the middle class back in or it's all over!!
I know that these guys are in bed with the slot makers to take more and give less...the lines on a penny machine are stupid 100 liness 5 dollars max bet or more.....so let me see i do a five dollar pull and one line pays me 20 cents if i get really lucky i might hit big enough to get my money back.....what is the pay back percentage now like 72%....Last time I was in vegas i spent two days at the M winning some loosing some then winning so i was up 300 buck wnet to the strip for UFC 100 and lost it all.....went back to the m truned my 20 into 500......the strip is dead and they only people that play there are the ones that dont know...tthose properties do not care if you have a good time.......they just dont care period....
I go to Vegas 2 times a years,flying into Vegas more and more homes were being built.Vegas has as many visitor as worker,thats why they cut jobs.
If you stay in Vegas you will starve you must go where the jobs are,I do.
More bull rhetoric from executives. These guys are so full of it. They aren't hurting in the pocket. I wonder how much these guys made last year while the companies that they work for layoff the average joe that makes enough just to get by. I wonder if they ever thought about ever taking a %50 pay cut. Probably not even though they have no idea on how to run these companies.