It’s always a red flag when senior executives seem to live in fear of their bosses. That’s the way it was with Columbia Sussex, the soon-to-be-former owners of the Tropicana in Atlantic City. I attended a few functions during which the top guy, Bill Yung, was present and everyone was walking on eggshells. And since we’re always interested at Global Gaming Business in welcoming new companies and executives to the industry, my first efforts to interview the boss were, well, less than well-received. The red flags were flying.
And when Columbia Sussex took over the properties formerly owned by Aztar last January, the first thing they did was fire hundreds of people at all properties. Everyone I knew thought it was excessive, but I was ready to give Yung the benefit of the doubt. He claimed to have a new business model that had never been used in the gaming industry before, and I was hopeful that maybe it
But alas, it proved to be a phantom. The antics of Columbia Sussex were a source of much derision in the gaming industry. Dan Lee, the chairman of Pinnacle Entertainment, at a conference in New Orleans last April said “the business model of Columbia Sussex appears to be letting their joints get dirty.” Harsh, maybe, but not too much off the mark.
You see, when you buy a casino, you not only buy a business, you buy part of a community. And I understand that sometimes you have to lay off employees. That’s part of business. But when you set an arbitrary number and force your department heads to meet that number, no matter how deeply the cuts go or how much it affects the integrity of the business, then you have a problem.
When you run a casino, you’re involved in hundreds if not thousands of lives. Layoffs are a part of any business, certainly. But wholesale slashing, just for the sake of reaching a number that your investors or shareholders are comfortable with, is irresponsible. And firing people with no logical explanation is reprehensible.
But the strangest part for me is that it didn’t make business sense. Yes, you’re trying to reduce costs, but to instill a fear in your organization so it permeates down from the property GMs to the maids cleaning the rooms just doesn’t compute. You’re a new owner of a property. You bought it because it was throwing off some good revenue. While you always need to tweak operations, why would you make such far-reaching changes that it impacts your entire company?
Columbia Sussex is going to have to struggle to simply survive now. It is going to have to change its business plan to adapt to the jurisdictions in which it operates. Will the Nevada Gaming Control Board notice that some of the pledges Columbia Sussex made about the Las Vegas Tropicana have not been met? You can be sure the Culinary Local 226 of UNITE HERE will use some of the same tactics used by Atlantic City’s Local 54 when opposing relicensure for the only Strip property that hasn’t signed a new contract with Culinary.
And a tip of the hat to the New Jersey Casino Control Commission. It took great courage to come to this decision. After all, the Tropicana is one of the largest properties in Atlantic City, still, even after the layoffs, employing thousands of people. The swift decision and even quicker regulatory moves to ensure the property remains open were nothing short of stunning.
Chairwoman Linda Kassekert demonstrated that the Casino Control Act means something. Since a slap on the wrist would have encouraged other companies like Columbia Sussex to try to manipulate the system, the CCC upheld the letter of the law in New Jersey, and they were there to defend the state against piranha that only want to come pick the carcass of a casino in that jurisdiction.
So let this be a lesson to any company that wants to join the gaming industry. We’re a proud and responsible community of companies. Expect to be welcomed if you want to respect the principles and expect to be exorcised if you run a business the way Columbia Sussex has.