MGM Resorts Reshuffles, Consolidates Leadership as Las Vegas Strip Remains in Limbo
Posted on: May 1, 2020, 09:13h.
Last updated on: May 3, 2020, 11:09h.
MGM Resorts International streamlined top management at its properties Friday. The news came on the heels of Gov. Steve Sisolak announcing that Nevada casinos will not be among the first businesses to reopen in the state, as the coronavirus pandemic continues to keep gaming properties closed.
An MGM Resorts spokesman declined to comment on reported top-level layoffs at the company, but provided Casino.org a list of new property executives and their positions. It appears the new management plan has key executives leading at least two properties per leadership group.
Based on the list supplied by MGM, let-go resort casino presidents were not given new positions elsewhere. Four resort-casino presidents were dismissed.
They were identified as: Randy Morton of Bellagio, Cindy Kiser Murphey of New York-New York, Cliff Atkinson of Luxor, and Eric Fitzgerald of Excalibur, according to the Las Vegas Review-Journal.
Consolidation Not Surprising
When asked for comment, the Rev. Richard McGowan, a finance professor at Boston College who studies national gambling trends, told Casino.org the management reshuffling is “not really” a surprise.
“MGM was in a huge amount of debt before COVID-19, and the virus put MGM over the top,” McGowan said. He adds that outside of Las Vegas Sands Corp. and Wynn Resorts, the casino firms are having challenges in withstanding the economic “downturn.”
“I would be very surprised if more layoffs did not happen,” McGowan added. “The casino industry in those areas where there is too much saturation will be experiencing complete closures.”
Also, Anthony Cabot, Distinguished Fellow in Gaming Law at UNLV’s Boyd School of Law, told Casino.org, “Major casino companies with multiple properties in Nevada are likely to have phased openings, where a limited number of their properties reopen at the end of the lockdown.”
On Thursday, Gov. Sisolak was vague when pressed on the time frame for reopening Nevada’s casinos and other gaming businesses. In short, the Nevada Gaming Control Board (GCB) apparently will make the final determination.
As these reopened properties begin to achieve profitability at about 50-60 percent of capacity, then they will look to reopen other casinos,” Cabot added. “Until then, the need for upper management for the shuttered properties is limited and their salaries [are] a drain on company resources.”
“So, the announcement is not a surprise, and is likely indicative of a general, hopefully temporary, downsizing of the number of casino employees across … all levels,” Cabot said.
Stephen Miller, director of UNLV’s Center for Business and Economic Research, recalled that Las Vegas was “ground zero” for the Great Recession. He said that was a “deeper and longer recession here than in other metro areas.
“I think that Las Vegas will also be ground zero for the Coronavirus Recession,” Miller told Casino.org. “We also know that the leisure and hospitality sector has taken the big hit among sectors of the economy over the last six weeks.
“In Nevada, over the first five weeks of huge initial [unemployment] claims’ filings … 40 percent of the claims came from the accommodations-and-food-services sector,” Miller said.
Many claims have yet to get filed because state residents could not get through the process. “Those claims will pile up in the next couple of weeks,” Miller said.
While Miller declined to discuss personnel policy at MGM Resorts, he said that “many of the layoffs have occurred in the ranks of the lower paid workers at the resorts. “One cannot imagine that some excess baggage exists at the management levels after such a long run of good times in the resort-casino world,” Miller added. “Everyone needs to contribute to tightening the belt.”
He explains the “big issue” now is “how long the recession will last. The shorter the recession, the more quickly the economy can recover.
“The length of the recession is determined by the virus and not traditional economics. Opening up too early, which we may be doing, will lead to a likely second wave and another shutdown. That would be the worst news for the tourism industry.”
The MGM reshuffling follows recent news that former CEO and chairman Jim Murren’s tenure at MGM Resorts International ended prematurely. He now heads the Nevada task force focusing on the pandemic.
Last year, the company also initiated MGM 2020, a strategy which led to layoffs of a limited number of employees. Most of those let go were in management.
Losses During First Quarter at MGM Resorts
This week, MGM Resorts reported that the first three months of 2020 saw a loss of 45 cents per share, compared to a gain of 14 cents a year earlier. Revenue dropped 29 percent to $2.3 billion, which the company mainly attributes to a 63 percent drop in its MGM China unit.
Macau closed integrated resorts for 15 days in February, and the number of visitors remains far below 2019 levels. Domestic gaming property shutdowns did not start until about two weeks left in the first quarter.
On a conference call with analysts, MGM interim CEO Bill Hornbuckle said that when Nevada officials approve reopening of casinos, the company will start off by welcoming guests at the Bellagio and New York-New York.
As for its portfolio of regional assets, which includes venues in Massachusetts, Mississippi, New Jersey, and New York, among other locations, MGM is awaiting go-aheads from state authorities to release reopening plans.
In another cost-saving move, MGM said it is slashing its annual dividend by 98 percent to just one cent per share.