Caesars CEO Gary Loveman Gets Softballed
Of all of the aspects of the Great Massachusetts Casino Race, the involvement of Caesars Entertainment, which has partnered with Suffolk Downs to try to bring a casino to East Boston, has always been among the most compelling. The company boasts one of the largest gambling empires in the world, and is led by its CEO, Gary Loveman, a former Harvard Business School professor and MIT PhD student who lives in Wellesley and commutes to Las Vegas for work (insert here requisite joke along the lines of, “Boy, you thought your commute was bad!”).
But in addition to being one of the largest gaming companies in the world, Caesars is also one of the most troubled. It’s the not-so-proud owner of $20 billion in debt and, as I wrote about a few months ago, since the third quarter of 2008, has been forced to slash nearly $900 million from its budget. Despite having to lay off employees, company executives, including Loveman, patted themselves on the back for doing such a good job making cuts by taking $7.75 million in bonuses last year.
How Caesars’ balance sheet would affect their bid to help Suffolk Downs open a casino here in Boston is hard to say. Caesars only owns 4.2 percent of the East Boston track, so one would think that their financial problems wouldn’t be too big a drain. Then again, the gaming company has entered into a contract with Suffolk Downs to operate the casino, the terms of which have not been disclosed. We’ll have to know more about that deal to have a better idea of the situation.
In any case, the Globe‘s Mark Arsenault has an interview with Loveman this morning, and the Caesars CEO gets pretty darn favorable treatment. Loveman says he’s confident Caesars can deal with its debt and that it shouldn’t affect the proposed Suffolk Downs project. Overall, Arsenault paints the picture of a highly competent, very smart operator. “Loveman is known for his striking deep voice, expansive vocabulary, and elegant diction,” Arsenault writes. How romantic. I imagine they sat by a fireplace and drank sherry during the interview.
What Loveman is really known for, though, is being a spreadsheet whiz who lacks imagination or vision. The Globe story doesn’t mention it, but Loveman is responsible for what is likely the casino industry’s biggest boner of the last decade: He passed on a chance to do business in China. In 2006, balking at the price, he declined to bid on a $900 million gambling concession in Macao (a tiny island off the coast of China that serves as that country’s lone outpost of legal gambling), and ever since has been locked out of the market. So while companies like Wynn and Sands are pulling in money hand over fist from the booming Chinese market, Harrah’s has been left to scrape.
Now, I didn’t get a PhD at MIT or teach at Harvard Business School, but if I ran a casino company and in 2006 you told me that I could have one of six exclusive gambling licenses for China (you know, that place with the explosively growing economy and 1.3 billion people), I would not have quibbled over the price.
“You had to have a kind of intuitive courage and I am not well suited to those kinds of decisions,” Loveman told Bloomberg Businessweek in 2010. “Big mistake. I was wrong, I was really wrong.”
Yeah, he was. He tried to correct that mistake a year later by spending $600 million to buy a golf course on a big plot of land in Macao as a way in, but has been unable to secure a gaming license there. So now Caesars just owns a lot of grass and 18 holes it can’t make much money off of.
There are pros and cons to Loveman’s academic approach to the gambling industry. He can drill down and find efficiencies like no other, but creative thinking is a major weak point. Since, as the Globe reminds us this morning, he’s very likely the guy who’ll be driving the bus if and when casino gaming comes to Boston, it’s worth taking into account both sides.