This isn’t just about the changing world of gambling, but it’s
just one industry of many that seems to be going through another metamorphosis that
I’ve seen far too often in my lifetime.
I read about the potential bankruptcy of Caesars
Entertainment (they’re $25 billion debt), and how that will change the face
of Las Vegas (and much of the US’s gambling industry, too). Of course, Atlantic City has had its share of
closures (FOUR!) in 2014 (and Trump Taj Mahal still to come), and elsewhere it
seems you read about expansion of gambling here and then the closing (or
layoffs) of gambling there.
There is one bright spot in all of this. We’ll get to that in a moment.
First, full disclosure.
I’ve owned a business for 14 years.
A small business (you’d call it “Mom & Pop” – hardly even a small
business). I have also been involved in
other businesses and industries, and three of those firms have gone through “difficulties”
like I see reported for the casinos and other troubled businesses of
today. I have witnessed all of these
businesses develop that one “bright spot” I mentioned above, though it’s never
happened in my business. But I believe
it will happen in the gaming world.
I know it
will. About a year ago, when I first got
involved on the “Anti-Sheldon-Adelson” train, I read his editorial
in the Las Vegas Review-Journal explaining his valid reasons for opposing
Internet gambling. One of his valid
reasons (the one you never hear him talk much about any more) is the negative
financial impact online gaming will have on land-based casinos (at least, the
ones not also online). He states:
With the lack of strategic
thought some of our colleagues in the industry have put into this, they have
missed the fact that the land-based casinos, particularly regional ones, have a
very high risk of losing at least 20 percent from their top line while at the
same time risk losing a more significant percentage of their bottom line.
Somewhat tactless, yes, but he has a point. Now, the question I pose to you is this –
when a company faces a financial downturn, a loss of income, increased
competition that causes hurt to their bottom line, what do they normally do?
They lay off workers, of course. Layoffs are as common as milk; more so during
the economic downturn.
And does the CEO also take a hit to his already enormous
salary and stock options and other benefits too numerous to mention?
Don’t be silly.
He usually gets an INCREASE in salary and more stock
options, too. The stock price gets a
bump, dividends increase, and stockholders and other officers are happy. Very happy.
Nearly everyone is happy.
‘cept those workers, of course.
That’s the “bright spot.”
That’s the normal course of events – the company has problems, they
layoff hundreds or thousands of workers, and the fat cats get fatter. You NEVER hear a CEO talk about a cut in pay
for himself if the company is in difficulty (Lee Iacocca was the last one I
remember, and that was ages ago).
Lay off the peons and have another glass of champagne!
How can a company justify both layoffs (because the company
is in turmoil) and a big fat raise for the guy who is IN CHARGE? Because he’s doing such a great job? Because you’re afraid he’ll go
elsewhere? I’d be glad to be rid of that
kind of failrure, frankly.
I worked for three different firms that faced a financial
crisis. Each time the choices were clear
– we could all tighten our belts a little and carry on, or the chief could can
some folks, keep his big earnings, and we’d muddle through somehow. In one case the choice was a brand new truck,
or laying off three workers.
It was a really nice truck.
When our ice cream shop suffered a decline, we sucked it up
and took less money. When tourism
declined in 2001 (9-11) and 2003 (the War in Iraq), we sucked it up and took
less. When more competition came to town
in 200, we sucked it up and took less, reinvesting what we did have to start making
our own ice cream so we could offer something different and better. When we had even more competition and the
economic slow-down in 2008 and 2009, we didn’t lay off staff. We didn’t cut corners. We kept doing what we always tried to do –
make the best product we could – and we personally took less. We wouldn’t think of doing it any other way.
I know that we COULD have put fewer nuts or chips or
flavoring in the ice cream, or used a cheaper (lower butterfat) mix, or yes,
laid off some of the summer staff and made everyone work harder for less. But we didn’t. We believe that you make it in business by
having good people and a good product, and you take what you’ve earned and
nothing more.
What CEO is really worth 400 times the average worker in his
company?
Name one.
I have many pet peeves, but raises for folks who don’t need ‘em
while at the same time laying off workers who do is what pisses me off more
than most. If Adelson’s casinos were to
be financially hurt because of the rise of Internet gaming, do you really think he’d no longer be one of
the richest men in the world? And can
you imagine the headline in the Las Vegas papers if it came to be?
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