President & COO, Isle of Capri Casinos
Virginia McDowell was appointed president and COO of Isle of Capri Casinos a little more than a year ago. She joined the company after serving as chief technology officer for Trump Entertainment for two years. McDowell is a longtime casino executive, whose most notable experience was helping to build Argosy Gaming into a Midwest power. At Isle of Capri, McDowell, along with CEO Jim Perry, another Argosy veteran, has outlined the important operational aspects they have stressed and how the strategy to include the “Lady Luck” brand in some of the 16 Isle casinos will be carried out. She spoke with Global Gaming Business Publisher Roger Gros about the changes she has helped to institute. To hear the full version of this interview, go to www.ggbmagazine.com and click on the GGB Podcast button.
GGB: You’ve been in charge of Isle for over a year now. How would you characterize what has happened during that year and what you’ve done?
McDowell: This is a transition process. We are changing the company. It has been a collaborative effort on the part of the management team at the corporate level, along with contributions from our general managers.
When I joined the company last summer, it was perfect timing, literally two days before the credit markets shut down. We had just completed our refinancing, which is now a tremendous asset to the company at this point.
Jim Perry, who joined the company the same time that I did, chaired a strategic board committee. We looked at the company overall. We looked at who we were and where we were going. It was a kind of “what do you want to be when you grow up” moment.
That resulted in a strategic plan that said we have a great portfolio-concentrate on organic growth opportunities in the short term, stop chasing transformational projects and concentrate on our existing properties, both from an operational and capital-reinvestment perspective to make us more competitive in our markets. It’s been a busy year!
What are you doing to operate more efficiently in this economy?
There were some obvious things we could do in the short term. We focused on improving our margins by reducing our expenses both at the site level and at the corporate level. That required that we do a forensic analysis of legacy programs.
One of the things I tried to push was the concept of making decisions close to the customers. Isle had moved toward centralization over the last few years. A lot of the decisions had been made at the corporate office. But you can’t do the same kinds of things at Pompano and Waterloo than you can at Natchez and Marquette. The customer bases are very different.
At the corporate level, we have a team that, at Argosy, built one of the strongest balance sheets in gaming, so we’re in good hands.
Let’s talk about Florida. You’ve got a great location at Pompano Park but are at a severe disadvantage to the Seminole casinos in terms of taxes and table games. Do you expect any relief at any time soon?
Pompano is a difficult situation. We spent almost $200 million there building a beautiful facility, but it has become increasingly difficult to for us to compete in Florida. We have done a good job as far as margin improvement is concerned and in stabilizing operations. Our management team is focused on the type of things they have to do to create great experiences for our customers.
As for our competition with the Seminoles, the Indian Gaming Regulatory Act stipulates that before a tribe can offer a particular form of Class III gaming, it has to be legal in the state. Table games, other than poker, are not legal in the state of Florida. Now if we offered table games, we would be subject to huge fines or our license would be in jeopardy. The playing field is not level and it’s an untenable situation.
We tried to get legislative relief last year, but were not successful. We told the legislature what the impact would be and we’re starting to see that impact.
In the U.K., you’ve got one of the larger casinos in the Ricoh Arena in Coventry. With the difficult government oversight there, can you survive in that environment?
The economy in the U.K. is very similar to the U.S., but worse. You have the net effect of a tax increase, regulatory change and a smoking ban that has literally rocked the entire gaming industry there. As a result of this, it has become increasingly difficult to operate. Large companies like Gala and Stanley down to the smaller bingo operators and betting parlors, we’re all struggling. It’s not just us. We clearly over-invested, but we’re trying to make the best of a bad situation.
Are you considering exit strategies there?
We’re looking at all our options. We hired UBS to work with us on this and everything is on the table.
Explain the differences between the Isle and the Lady Luck brands.
By creating a local brand and repositioning these properties, we gain several advantages. First, we can maximize the profitability of the Lady Luck brand by pulling costs out of the property. We can centralize many of the management functions-marketing, information technology-and the decision-making process. Then we can focus on nailing the attributes that are crucial to a customer who truly views this kind of property as a local establishment. As our balance sheet becomes stronger, it allows us to be a logical acquirer of other smaller facilities across the U.S.
The Isle brand is aimed at a more regional market, with a fine dining experience, convention and meeting space, a name-entertainment venue, a spa, a business center; something that a meeting planner would consider.