Author Home Author Archives Search Articles Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!
Related Links
Related News
Recent Articles
Rod Smith

Union Opposes Aladdin Sale

4 March 2004

LAS VEGAS – State regulators are investigating objections raised by the Culinary union to the designated buyer for the Aladdin, Nevada Gaming Control Board Chairman Dennis Neilander confirmed this week.

Culinary Local 226 raised its objections over the sale to a group that owns Planet Hollywood in a letter to the control board last week.

U.S. Bankruptcy Court Judge Clive Jones approved an Aladdin sales procedure in May and chose a $635 million offer from the Planet Hollywood group, which includes Robert Earl, Douglas Teitelbaum and OpBiz LLC.

Earl, Teitelbaum and OpBiz all have license applications pending before the control board.

Neilander said his agency is actively investigating the licensing applications and added that agents assigned to the case will consider the Culinary allegations in their investigation.

Planet Hollywood's bid included $90 million in cash contributed by Starwood Hotels and Resorts Worldwide, Bay Harbour Management and Earl. The group would use the money to rename, retheme and fix the megaresort.

It also included $510 million in refinanced Aladdin secured debt and $35 million from the Aladdin's power supplier, Northwind Aladdin.

In his 11-page protest letter, Culinary research director Chris Bohner detailed Planet Hollywood's history of alleged "conflict-ridden insider transactions and questionable corporate governance, findings of possible management misconduct by an independent fraud examiner, continuing operational problems at Planet Hollywood, the inquiry into Earl's conduct by Hong Kong securities regulators and the presence of key OpBiz principals with conflicted loyalties."

Earl was removed from the board of directors for Star East Holdings in February and Hong Kong authorities are considering disciplinary actions for failing to perform his fiduciary duties, the Culinary said.

Also, claims against Star East Holdings directors, including Earl and Teitelbaum, raised by a bankruptcy court appointed fraud examiner were settled out of court for $2.4 million in return for a blanket release from liabilities, the Culinary said.

The Culinary also alleged that related party transactions by six of nine Planet Hollywood directors, including Earl, involve conflicts of interest and are under investigation.

The letter claimed the history of Planet Hollywood is a sharp contrast with "the robust corporate governance and transparent corporate structure of Nevada gaming companies."

Bohner said the union developed deep concerns about the prospective owners because of issues in Earl's background and felt it was important that they are reviewed by the control board.

Earl declined to comment, but one industry expert questioned the union's involvement since the Aladdin is not organized.

University of Nevada, Las Vegas professor and casino industry expert Bill Thompson said although dissatisfied Aladdin workers should be looking at the proposal and the designated buyers, the union should stick to union issues.

"They have enough on their plate not to be worried about every possible misdeed that a nonunion property may or may not have," he said.

Bohner, however, justified the Culinary's action to stop the sale on the grounds a large majority of workers at the Aladdin have signed cards indicating their desire to be represented by Culinary Workers Local 226.

"The workers at the Aladdin -- many of whom have been at the casino since the opening in 2001 -- have a core interest in ensuring that any new buyer of the Aladdin has the requisite business competence to successfully operate the Aladdin," he wrote in the control board letter.

Bohner said the workers at the Aladdin should not have to go through another bankruptcy, which he said would be likely if the Planet Hollywood partnership takes control of the property.

UNLV professor Hal Rothman also justified the union's involvement on the grounds the Culinary, which represents 50,000 hotel-casino workers in Nevada, is the major local defender of workers rights.

"The wisdom of Planet Hollywood should be questioned," he said. "It's not seven years ago when the brand was really hot. Somebody should ask why Planet Hollywood is a good choice for this."

Specifically, Rothman questioned the buyer group's ability to turn the troubled Aladdin around.

"Clearly, the future in Las Vegas is in multiproperty entities, not free-standing entities. If you have a free-standing (property) and you have debt, you don't have a good chance (of surviving)," he said.