 |
|
About InBusiness
|
CARSON CITY — December's state Gaming Control Board agenda had all the ingredients for a major confrontation for one of the state's most important companies.
The confrontation never really happened, but it appears there still could be some fireworks ahead.
Harrah's Entertainment, the company that owns Caesars Palace, Paris Las Vegas, the Rio, Harrah's and Bally's and has promised to build a 20,000-seat arena that could become the home of the city's first major-league sports franchise, was on the agenda for the company's sale to two private equity companies, Apollo Management and Texas Pacific Group's TPG Capital.
At $17.7 billion ($31.3 billion including debt), the deal has been described as the gaming industry's biggest private equity deal, more than three times the Station Casinos private equity sale earlier this year.
Clearly, the events at the Control Board's meeting on Dec. 5 were extremely important to the executives of Harrah's, TPG and Apollo.
Meanwhile, representatives Las Vegas' black community attended November's Nevada Gaming Commission meeting in Las Vegas and asked commissioners and members of the Control Board to take a close look at Harrah's diversity record.
Stan Washington and Gene Collins spoke on behalf of the group of about 10 people, many of them affiliated with the Veterans of Foreign Wars.
Washington and Collins submitted to the commission record a news story that appeared in a Pittsburgh business publication outlining Harrah's promise to establish a $25 million endowment to revitalize Pittsburgh's inner-city neighborhoods.
The message delivered was clear: If Harrah's said it would establish an endowment for Pittsburgh's minority community, why can't it do that here in Las Vegas?
The group promised to be in Carson City in December to confront the deal-making executives.
Washington and Collins took the same flight I took to get to Northern Nevada for the meeting, and they gave me a copy of the testimony they planned to deliver to both the Control Board and the commission, which meets Dec. 20 to make the final decision on the buyout.
For those unfamiliar with Control Board protocol, the three-member board normally considers items involving nonrestricted licenses — the big casinos — on the first day of the two-day meeting. On the second day, the board reviews matters involving locations with restricted licenses — the bars, grocery and convenience stores that have 15 or fewer slot machines — gaming employee registration appeals and casino-player disputes. The board also takes public comments on the second day.
So my immediate thought was: How will these activists make their points before the board considers action?
The answer turned out to be: They couldn't. But that didn't mean the topics wouldn't come up.
The testimony presented by the community activists was written by Louis Overstreet, executive director of the Urban Chamber of Commerce. The key points were that in 2000 the gaming industry made a commitment to diversity, and companies were asked to make a public accounting of their diversity initiatives and provide regular updates to the community. Overstreet said so far, only MGM Mirage is following through on that commitment.
Here's what the activists want:
"In the foregoing regard, I stand ready to be corrected as to my observation that Harrah's, as the largest gaming enterprise in America, has given only lip service in terms of committing only hundreds of thousands (of dollars) to diversity while it grosses billions annually," Overstreet's testimony said.
He said to his knowledge, Harrah's diversity initiatives are limited to taking out corporate memberships in three minority chambers of commerce, hosting an annual luncheon for the minority chambers and contributing "only a miserly $100,000 or so a year" to minority scholarship programs.
Washington and Collins saw to it that Control Board Chairman Dennis Neilander had a copy of the document before the Harrah's matter was brought up.
When the regulators questioned the Harrah's executives, they asked them to discuss the company's diversity initiatives and whether any changes would occur under the new ownership.
Chief Executive Gary Loveman said the company is a strong supporter of the NAACP in Las Vegas, the Latin, Asian and Urban chambers of commerce, the Las Vegas-Clark County Urban League and the Organization of Chinese Americans in Las Vegas. He said Harrah's was awarded a perfect "100" score on the Human Rights Campaign's 2008 Corporate Equality Index and Best Places to Work survey.
The company says 48 percent of its 37,454 Nevada employees are women and 47 percent are minorities. At the management level, 39 percent are women and 17 percent are minorities.
As far as corporate giving is concerned, Loveman said Business Week magazine ranked Harrah's as the single most generous cash giver among Standard & Poor's 500 companies in November with 9.2 percent of its pretax profit directed to nonprofit organizations. He said the company averaged giving $1.5 million a week to community organizations in 2006 and in Nevada, the company has pledged $30 million to UNLV's William F. Harrah School of Hotel Administration to establish the INNovation Village for hospitality education, research and training.
The company also has given $1.5 million to FIT for an Independent Tomorrow to provide individualized training for unemployed and underemployed Nevada residents, and $1 million each to Opportunity Village and the Nevada Cancer Institute.
That, like most other aspects of Harrah's operation, won't change under the new ownership, Loveman said.
In an interview after the board vote, I asked Loveman if he was concerned about some of the matters raised by Washington and Collins, and he said he was skeptical that they were representative of the views of entire Las Vegas black community.
Loveman, who speaks with a booming Chris Berman-like voice, apparently was overheard by Washington and Collins because the next time I saw them, as I was going to my car after the meeting, they were furious with Loveman.
They offered personal insults of the executive and talked about boycotts.
The next day, when the Overstreet testimony was formally presented during the public comment session, Washington and Collins still hadn't cooled off.
They questioned why the regulators hadn't asked Harrah's tougher questions about diversity and giving back to the community when the deal was under consideration. I had, in fact, asked the same question of Neilander the day before.
Simply put, diversity and philanthropic matters are not a part of the approval process. Nothing says a company has to hire a certain percentage of blacks, Hispanics, Asians or American Indians or have programs in place to recruit employees of color or hire minority contractors.
"There are no standards in the regulations," Neilander said.
In other words, it's up to the companies to do what they think is right when it comes to hiring decisions and working with contractors. If Harrah's wants to give $30 million to UNLV and not create an endowment for the Las Vegas inner city, that's up to the company.
If it doesn't want to disclose how many people of color it has in executive positions, it doesn't have to.
Would it be smart for Harrah's to do some of those things? Probably.
Overstreet's testimony contained a veiled threat at the end of it.
"Here in Las Vegas, that atmosphere for gaming having unfettered power to control economic-political outcomes is about to be changed as never before," he said.
He then referenced the initiative proposed by the teachers union to raise the gaming tax 3 points to 9.75 percent to pay teachers more and finance educational programs. That's a 44.4 percent tax increase.
Would minority groups band with the teachers in support of that initiative to punish the gaming industry for its alleged inattention to people of color? If so, what does that do to the positive relationship the minorities seem to have with MGM Mirage, which also opposes the teachers' initiative?
If Harrah's wants to patch things up with the minority community, it need only gather the information that was asked for. Invite the leaders to the meeting they want. Invite the media. Explain what they've done and where they hope to go.
That's what an important leader in the business community would do.
In other tourism news:
Star power: If you thought the biggest stars were in Las Vegas, you're wrong.
While in Carson City, I paid a visit to the Nevada Commission on Tourism, which is assisting Tonopah with its "Tonopah Star Trails" tourism promotion.
Through a matching grant program, the tourism commission is distributing brochures and star guides highlighting Tonopah's distinction of having one of the darkest night skies in the country.
Light pollution limits the number of stars we can see from Las Vegas. But in Tonopah, on a clear, moonless night, you can see thousands of stars and the Milky Way appears to have a whole river of them.
Tonopah is about halfway to Reno on U.S. 95, a 3 1/2-hour drive from Las Vegas, and at about 6,000 feet, a cool respite from the desert in the summer months.
Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4061 or by e-mail at velotta@lasvegassun.com.
