Henry Gluck: Gaming Exec Heads Rebound at Caesars World
LAS VEGAS, Nev. (AP) _ Saddled with $63 million in shaky receivables, a 3-to-1 debt-to-equity ratio and an anemic balance sheet, the Caesars World gaming empire was on rocky financial ground when Henry Gluck took the reins 21/2 years ago.
But Gluck, who had retired at 45 ″to smell the roses″ then returned to take on the Caesars challenge, talks today of new directions for a company that has been synonymous with gaming’s glitter for 20 years.
″The Palace has just completed the most profitable year it has ever had,″ Gluck said in a interview at his flagship Caesars Palace on the Las Vegas Strip. ″This is the first year in Caesars’ history that all the properties have been profitable at one time.″
Caesars World Inc. reported net income of $31.8 million for the 1985 fiscal year, which ended July 31, compared with $18.8 million for fiscal 1984. The company sustained a loss of $21 million in fiscal 1983 due mainly to $63 million in doubtful debt - primarily casino credit that could not be collected.
Revenues for fiscal 1985 totaled $660.8 million - up $40 million from the previous year - for the Los Angeles-based company’s seven Caesars resorts in Las Vegas and Lake Tahoe, Nev.; Atlantic City, N.J.; and the Pocono Mountains of Pennsylvania.
Gluck, 57, was coaxed onto the Caesars board by business associates three years ago during a very troubling time in the company’s history.
″The company had a very poor balance sheet, it had approximately a three- to-one debt-to-equity ratio, it had a lot of receivables that we knew were going to be a problem and it had very substantive problems with New Jersey regulatory authorities,″ Gluck recalled. ″When I got in I found out it was worse than I expected.″
Gluck had retired in 1973 to spend more time with his family after traveling 2 million miles putting together Monogram Industries, a $300 million conglomerate. He remains on the board of half a dozen companies.
He said he faced some difficult choices in early 1983 after spending several months on the Caesars board.
″I wasn’t taken by the idea″ of becoming chairman of Caesars, he said. ″I was enjoying the life I was leading, and, quite honestly, I was worried about the downside of the problems potentially affecting a reputation it had taken me a lifetime to build. I just didn’t see that as an appropriate risk or worry at that stage of my life.
″But I was faced with one of three choices. I could sit by and hope that as a board member I could be in a position to watch things correct themselves. I could leave the company. Or I could put myself in a position where I could do something about it. I chose the third.″
His first goal as Caesars chairman and chief executive officer was strengthening the corporate balance sheet and handling the problem of receivables.
The company attacked the receivables problem by keeping a closer eye on casino credit.
Caesars has long been known for courting casino customers around the globe.
″We felt we were using credit too much as a marketing tool,″ Gluck said. ″We felt that was a mistake. As you go around the world, there is no way that a property can accurately predict whether you’re going to have a real estate depression in Hong Kong, a peso devaluation in Latin America, a stock market crash in Kuwait, a depression in the price of oil in the Middle East.″
One of Gluck’s first moves was to set up a subsidiary, Caesars World International, with experts on Latin America, the Far East and the Middle East sitting on a credit committee with the presidents of each gaming property. The experts provide an insight into the economic climate of their respective areas.
″These people are primarily responsible to the president of Caesars World, who acts as an overseer and a balance to make sure we don’t have a recurrence of the problems we had a few years ago,″ Gluck said. ″Their decisions weigh heavily on marketing, granting of credit or collection of receivables.″
Under Gluck, Caesars has begun to negotiate package deals with name entertainers rather than each property booking stars independently. The company is also consolidating many other management functions, is beginning to market products to capitalize on the strong Caesars name and is looking at other properties for possible expansion in the resort field.
The company’s debt ratio is now 1-to-1, which Gluck calls ″probably the strongest of any pure gaming companies in the business.″
The turnaround has given Caesars a sense of direction and much higher credibility, Gluck said.
″Our credibility was very poor when I took control. Only 3 percent of the Caesars World stock was in institutional hands. It is now 37 percent. You don’t get institutional support without a very high credibility factor,″ he said.
He said he is disappointed by the continuing public perception of the gaming industry as a less than respectable business.
″Today, most of the gaming companies are run by well-educated, solid professional people,″ he said. ″They’re public companies with shareholders. And they have reporting responsibilities not only to gaming authorities, but to the Securities and Exchange Commission, the New York Stock Exchange and many other reporting authorities.
″However, I guess old images die hard.″