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Gaming Guru

Chris Jones
 

Caesar's Employees Give Merger Mixed Reviews

16 July 2004

LAS VEGAS -- Like Shakespeare's Roman citizens of old, employees of Caesars Entertainment offered mixed opinions Thursday on whether Harrah's Entertainment's pending $9.4 billion buyout would help bury Caesars or praise it.

Some said their empire's likely conqueror would bring a welcome influx of new customers and marketing amenities to both companies, combining Harrah's massive client database and geographic diversity with Caesars' unique mix of Celine, shopping and a significant Strip footprint.

Others, however, feared Harrah's ruler, Gary Loveman, might soon make like a modern Marcus Antonius, asking some of his new friends, Romans and countrymen to lend him their ears, as well as their current jobs.

"We're screwed," a mid-level accounting executive, who asked not to be identified, said Thursday. "There's no way they need two accounting departments and Harrah's won't keep any of us. That, and nobody's even talking with us. This stinks. We've worked years. The company's turning around. And this is our thanks."

In a Thursday conference call, Loveman, Harrah's president and chief executive officer, said he hopes to realize $80 million in "synergies" during his company's first year of combined operations with Caesars.

Last year, Caesars (then known as Park Place Entertainment) reported $71 million in corporate expenses, leading one current worker to speculate a house cleaning is in store at Caesars' corporate headquarters.

"Everyone at 3930 is done," said the worker, citing the Howard Hughes Parkway street address of Caesars' main office. "They'll shave off the corporate expenses and save the rest on other people's salaries and cutbacks." Others were much more confident, however.

"If you believe in Caesars, you'll believe in this deal," a longtime mid-level employee said. "There's just tremendous strength and power in putting together two companies with lots of hotels and lots of employees.

"I've talked today with people who have been here for 35 years and they are extremely excited about this. Two brands coming together is a great thing."

The same employee said she'd already survived multiple mergers and ownership changes during her time at Caesars and said most employees she's met with aren't concerned with pending layoffs should Harrah's complete the takeover.

"Whoever owns it, they'll want to make sure things go well and I think they'll leave the employees alone."

Culinary Local 226 Secretary-Treasurer D. Taylor said Thursday he's optimistic the planned Harrah's-Caesars deal, as well as the recently announced MGM Mirage takeover of Mandalay Resort Group, will benefit Southern Nevada and its workers.

"Those companies have added a lot to this city and I'd expect the new (combined) companies would do the same," Taylor said.

The local union leader compared the gaming industry's push toward consolidation to what's taken place as other major industries have matured.

"There used to be a lot of beer companies; now there's mainly Miller and Budweiser," Taylor said, citing Anheuser-Busch's signature brand and the brewer's chief rival. "When it's all said and done, I think we're going to be left with four or five major gaming companies in this country."

The Culinary has contracts with all four local gaming companies now involved in prospective mergers, and Taylor said their respective combinations should have little effect on the union's approximately 39,000 members now employed at local Caesars, Harrah's, Mandalay and MGM Mirage properties.

Taylor said his lone concern with the mergers involves the "no rehire" policy, which could prevent an employee fired by Mandalay's Luxor from reapplying for work at the company's sister Excalibur property, for example.

With fewer property owners in the market, such a policy could severely limit a person's ability to find work in the hotel-casino industry. Because of that, Taylor said gaming regulators have kept a close eye on such policies and have largely reduced their implementation in recent years.

"We don't want to see anyone pigeonholed, so that's a concern, but I expect that's something the regulators will again address," Taylor said.

Gaming Wire writer Rod Smith contributed to this story.