(Update: J.P. Morgan analyst Joseph Greff vented frustration to investors over yet another “self-inflicted negative headline,” while remaining upbeat on LVS stock. He did not relate Kay’s departure to “any negative event … We note that Mr. Kay worked for LVS for 5 years, the first 3 years on a contract, the last 2 years not (source proxy). So we deduce that not being offered an employment contract may have been an issue. We understand that Mr. Kay is not leaving for a position at another company.” Greff speculates that Sands will try to poach a CFO from another company “with China exposure,” so Asia-savvy executives at MGM Resorts International and Wynn Resorts suddenly have valuable new bargaining chips with their employers.)
Las Vegas Sands doesn’t just air its dirty laundry in public; it rubs our noses in it. So today’s resignation by CFO Kenneth Kay bears a bit of parsing. Many will be tempted to include that Kay is the latest executive to clash with Sheldon Adelson and feel the mogul’s wrath. But no, Kay is staying on for six months as a consultant, while Sands finds a replacement. When Jonathan Halkyard quit Caesars Entertainment to go to NV Energy, his departure was abrupt and total, leaving Gary Loveman to temporarily fill in as CFO. Kay’s also getting a year’s salary, a 2013 bonus and an indefinite extension of his health-care benefits. If that’s a hostile break-up, I wish someone would get as angry with me.
Tempus fugit Dept. Time sure flies, especially when you’re Penn National Gaming‘s Hollywood Aurora. It opened as a riverboat casino 20 years ago, but that feels like much more recent history. Of course, much has changed. The cruising riverboat has given way to a static, semi-land-based casino. The workforce has changed almost completely, save for 57 loyal employees who have gone the distance. Penn was a latecomer to the party, buying the riverboat back in ’03, when it already had a decade of service under its propellers.
Casinos were an economic panacea back then (and, in some places, still are). Those least likely to be disappointed were those who thought like Aurora Mayor Tom Weisner (left), no fool when it comes to the economic dynamics of casino gambling: “When it came in, there was an expectation that it was going to generate business throughout the downtown. Those who were more realistic realized there would not be much spinoff. That a casino is self-contained.”
However, savagely anti-business policies in Illinois have taken their toll. The present workforce is a shadow of Hollywood Aurora‘s peak employment of 1,500. Revenues have been halved. Himbert Sinopoli, vice president of Hollywood Aurora says Illinois is nearing the point of just shifting a finite player base around from casino to racino to slot route.
Based on overall revenue figures, I’d say that point has been passed and older facilities like Penn’s are fighting for their lives. It’s moving tentatively on renovations and the economic ravages of the last several years put paid to a planned hotel. So congratulations on 20 years of success, with the hope for at least 20 more.
Wow. A politician who actually gets it! He should give some of that valuable advice to the ones in NY!