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Best of Howard Stutz

Gaming Guru

Howard Stutz

Labor talks: Casinos, Culinary still lack deal

30 May 2007

LAS VEGAS, Nevada -- Contracts covering some 50,000 Strip and downtown hotel-casino workers expire at midnight Thursday and, despite early negotiations and optimistic attitudes, both union representatives and management leaders admit new agreements won't be in place by then.

But don't expect picket lines or mass walkouts Friday morning.

Culinary Workers Local 226 officials said Tuesday additional meetings with representatives of the largest gaming companies, MGM Mirage and Harrah's Entertainment, are planned this week. Also, D. Taylor, the Culinary's secretary-treasurer, said the union plans to begin holding contract talks shortly with smaller casino operators, such as the owners of the Stratosphere, Sahara, Las Vegas Hilton and the downtown casinos.

Since it's highly unlikely new contracts will be reached by Friday, workers covered by the Culinary contracts will continue to be employed indefinitely under the old agreements.

In February, Taylor called for early negotiations in an effort to reach new agreements in a corporate landscape that had changed since the two sides last bargained in 2002. Several gaming companies were absorbed by competitors while several casinos went through ownership and management changes. Harrah's, for example, is being bought out in $17 billion private equity deal.

"We wanted to start early to try and go against the historic norm," Taylor said. "But the talks have proven again why norms occur. I'm an optimistic person, but there have been too many hurdles to overcome."

The five-year agreements between the state's largest labor organization and some of the gaming industry's biggest casinos cover wages, benefits, health care plans and worker training.

With MGM Mirage, however, the biggest hindrance to a new deal has been language that would allow the Culinary to freely organize workers on development projects where the company has a joint venture agreement.

MGM Mirage has said the Culinary can organize eligible workers at the 4,000-room hotel-casino that is being developed as the centerpiece of CityCenter, the company's $7.4 billion multiuse project that is opening in 2009.

However, MGM Mirage doesn't believe its potential partners that might not be hotel-casino operators should have to negotiate a union contract if they don't want one.

"They may be different businesses altogether. In some cases we may not own or even manage these projects," Cindy Kiser Murphey, MGM Mirage senior vice president of human resources, said in an e-mail last week to several corporate officials within the company as part of an update on contract talks.

"Attempting to bind these yet-to-be-identified partners is clearly unacceptable," Murphey said. "Further, nothing prevents the union from attempting to organize these employees in the future, as they would at any other new business anywhere in our city."

Taylor said issues surrounding the third-party agreements is taking longer than anticipated. Many of the language issues were being negotiated in smaller committees. He hopes an agreement with the bigger players could spur the smaller companies. MGM Mirage has 10 Strip casinos with Culinary contracts while Harrah's is next in size with six.

Taylor said he expected to present the union's economic package -- proposed wage increases -- to MGM Mirage this week. Harrah's has already received the package.

"It's a different world. The companies we are negotiating with deal in billions and we deal in dimes," Taylor said. "This city is full of enormous prosperity and we believe the workers should be able to share in that."

Murphey, in her e-mail to MGM Mirage executives, said the issues have taken longer to resolve than the company had expected.

"It is becoming apparent we may not have a signed contract by May 31st," Murphey said. "Many of you know it is not unusual for negotiations to continue beyond initial deadlines. As we move ahead, it is important we keep in mind the magnitude of our task. These are the largest union negotiations ever undertaken in Las Vegas."

Wall Street is starting to watch the contract talks as the deadline approaches, Deutsche Bank gaming analyst Bill Lerner said in a note to investors on Tuesday.

He said the union's public campaign that focuses on Culinary members being able to afford a home as median prices have increased, mirrors a concern the financial firm has expressed about attracting workers as the hotel supply grows.

"Union officials recognize that there could be a shortage of workers, which will not be helped by higher home prices," Lerner said. "Historically, Las Vegas has been tremendously attractive to new workers, offering a relatively lower cost of living and the ability to buy a new house. However, the cost of purchasing a home may have escalated beyond the reach of some casino and hotel workers."