Bankruptcy’s good for Caesars Entertainment Operating Co., which posted a $53 million profit in April (not having to pay interest on 
$18.4 billion in debt can’t hurt). As for outgoing CEO Gary Loveman, his move upstairs to the chairmanship of the Caesars Entertainment empire plays to mixed reviews in the Wall Street Journal. He is praised for acts of kindness toward the families of Caesars executives, as well as for a willingness to take the mickey out of himself (not a trait I witnessed in any of several encounters with Loveman).
He also gets zinged for his decision to live in Boston and essentially run Caesars from aboard the corporate jet. Loveman says it was unfair for Nevada Gaming Commissioner Tony Alamo to fault him for disengagement, but the fact that Loveman chose to skip an important NGC meeting says much about his lese-majeste leadership style. Also, Loveman’s ‘other companies do it’ defense doesn’t wash in the context of such incidents as when significant cost savings in the company were followed by a round of big, juicy bonuses for Loveman and his cronies. When a customer complains that a disenchanted Total Rewards player has deserted Caesars Palace for Bellagio, he cluelessly remarks that this is “a very good thing” because it shows how important Total Rewards is.
That admission won’t come as news to the 19,000 Caesars workers sacked under Loveman’s tenure, and who will soon face higher health-
insurance costs and reduced pay packets. (Loveman is leaving new cost-cutter CEO Mark Frissora to face the heat.) An admittedly desensitized Loveman says he’s endured “floods, hurricanes, building collapses,murders. I’ve had employees murder customers, I’ve had customers murder employees, and dead babies…” not finishing the thought. Those remarks are unlikely to garner him much sympathy. “I absolutely empathize with their frustration,” Loveman said of his workforce, without doing anything to alleviate aforesaid frustration, despite claiming to be “accessible almost to a fault.”
Loveman’s response to the financial crisis was to redouble his spendaholic tendencies, buying into two Ohio casinos (now gone), building one in Baltimore, another in South Korea, and offering to spend the moon to build casinos in Massachusetts and New York. Then there was his pet project, the underperforming Vegas High Roller Ferris wheel, showered with megabucks while existing properties languished under a lack of capex maintenance.
“On the casino floor below the executive offices, which overlook a topless pool at Caesars Palace, staff say morale has sunk as managers saddle them with impossible workloads, ignore their complaints and decline to rein in abusive customers,” reports the WSJ. Loveman claims employees “trust people in management” but I wouldn’t bet the farm on it, especially when it moved to grab a percentage of dealers’ tips.
Rival casino executives rarely criticize each other but Pinnacle Entertainment CEO Anthony Sanfilippo says, “If Gary had led more with his heart than his intellect, people wouldn’t be asking what happened to the heart and soul of Caesars Entertainment.” That heart and soul would appear to have been traded in for a compensation package that quadrupled to $32 million in 2014, even as the company sank into bankruptcy. The sacrifice of $100,000 of his base salary seems piddling by comparison.
Loveman’s lasting achievement, besides the Chapter 11, will of course be Total Rewards. The company may value it at $0 for accounting purposes but creditors put a $1 billion price tag on it and it may come cheap even at that amount. Loveman says “ingenious” cuts are ahead. His employees can hardly wait, I’m sure. He tells the WSJ that “revenue and earnings aren’t the best way to assess Caesars’ performance.” If not, what the heck is?
S&G has long maintained that Loveman is the most overrated CEO in gaming. Depending on how much he acts as puppetmaster as chairman, we’ll either be well rid of him or stuck with his mistakes for years to come.
* Business trends in Macao showing scant sign of improvement, the gaming industry is falling back on the “build it and they will come” mantra that it used in Las Vegas during the Great Recession.
