LAS VEGAS (KLAS) — Coming out of a record third quarter, Caesars Entertainment CEO Tom Reeg stoked employee expectations to share in the wealth.
Workers can expect “the largest increase our employees have seen in the four decades” since working with the Culinary Union, Reeg said during the Q3 investors call on Tuesday. He said he remains optimistic for a contract agreement, but he wouldn’t say when it might happen.
Investors couldn’t get an answer from Reeg when they asked if the agreement would be in place before the Nov. 18 Las Vegas Grand Prix, which has been touted as an economic windfall for Las Vegas. A strike would complicate things. Reeg said he expects the F1 event to exceed New Years Eve.
“We are in active dialog with the union. I’m involved personally in the discussions,” Reeg said.
“We have done quite well as a company post-merger and post-pandemic,” and employees will see the benefits of that success, Reeg said.
Anthony Carano, president and COO of Caesars, echoed Reeg’s statements, saying, “Our success is a direct result of our team members.”
The comments regarding the negotiations with the union were the company’s first in three months. Reeg said at the time he didn’t expect “a whole lot of drama.” In the time since, Culinary workers have authorized a strike if no agreement is reached, and rallies on the Strip have brought more public attention to the stalemate.
And if Culinary workers might be saving money in case there’s a strike, Reeg said Caesars has been stocking away money to pay for the costs of a new agreement.
The company reported Tuesday it set an all-time “consolidated Adjusted EBITDA record” — the company’s description of earnings (earnings before interest, taxes, depreciation and amortization). It amounted to $1.04 billion on $3.0 billion in net revenues.
Profits at Las Vegas resorts have soared coming out of the pandemic. One reason: fewer jobs. The casino companies have focused on parts of the business that make the most money, and slashed expenses along the way. While much of the economy has returned to prepandemic levels, Nevada now has the highest unemployment rate in the nation.
Caesars expects to complete renovations to the Paris Las Vegas Versailles Tower, opening some rooms by the end of the year. The company is also reporting a profit from its digital segment after unveiling a new app in September. Revenue from both of those projects will help offset higher labor costs, the company said.
Q3 wasn’t all roses for Las Vegas resorts. A cyberattack at MGM Resorts and a ransomware problem at Caesars Entertainment produced negative headlines. Investors asked if Caesars picked up any business as MGM worked to restore operations that disrupted business.
“No, I wouldn’t call out a benefit,” Reeg answered. “One thing I know for certain after this quarter is nobody benefits from a cybersecurity incident.”
Going forward, the company’s balance sheet will be healthier after the Rio Hotel & Casino is off the books, now under the ownership of Dreamscape Companies LLC. Reeg said the property was only generating $40 million in revenue — and no profits.