Question of the Day - 20 October 2023

[Editor's Note: This viewpoint comes from our Stiffs & George business blogger, David McKee.]

Your analysis is on point.

To be crystal clear, the Culinary Union and Bartenders Union are not yet on strike, despite “informational picketing” last week that looked a helluva lot like an actual labor action. Wall Street analysts’ consensus is that a collective-bargaining agreement with MGM Resorts International, Caesars Entertainment, and Wynn Resorts (in descending order of number of employees) will be reached by the time Formula One hits town.

However, Culinary Union Secretary-Treasurer Ted Papageorge has proclaimed labor talks to be “at a standstill.” The employers have kept mum and it cannot have pleased them to see the Culinary invite media members to sit in on labor negotiations. That and the Culinary’s amped-up rhetoric and actions point to a serious impasse and comparable ratcheting up of pressure from the union. It knows full well — as do the casinos — the effect of Formula One fans coming to town and having to cross picket lines. It won’t be disastrous for business, but it won’t help it either.

A gloomier view than even the Culinary’s was taken by executives of Golden Entertainment, owners of the Strat. In a meeting with Deutsche Bank analyst Carlo Santarelli, they told him that they expected negotiations to drag on into the middle of November, the very eve of the Grand Prix. They expect a resolution, but a last-minute one, with Culinary staring down the loss of tipped-income business. 

Golden is under no such pressure, as it will negotiate with the Culinary once the Big Three have inked their respective pacts. In the catbird seat is the Venetian/Palazzo, whose employees have been granted the right to card-check unionization by owners Apollo Global Management, thereby averting hostilities with Culinary.

The union has frequently made it explicit that it will settle for nothing less than the largest wage increase ever handed out on the Strip. Employers there enjoyed exceptional profit and cash-flow margins after the pandemic and weren’t shy about publicizing it to Wall Street. Now their workforces have come to collect.

Truist Securities analyst Barry Jonas visited Las Vegas in September and took the unusual step (for Wall Street) of sitting down with Culinary members. Wynn, Caesars, and MGM executives had all said talks “are about where they thought they’d be at this time,” with an October resolution anticipated. 

But Culinary officials told Jonas that their sticking points extended well beyond wages, with replacement of workers by newfangled technologies (“which many consumers are more and more demanding”) and reduced workloads — which may prompt the removal of bathtubs from hotel rooms — cited as key issues. Those are looking like the real sticking points. Employers may try to palliate the Culinary with wage hikes. Some have been stockpiling cash against salary increases, most notably Caesars.

We hope cooler heads prevail. Or at least that the approach of Formula One gives everyone a come-to-Jesus moment.