The new CEO of Caesars Entertainment, Tony Rodio, will be based in Las Vegas when he takes over next month, according to Caesars officials.
But wherever he resides, Rodio will take with him a wealth of experience from Atlantic City — which should put the shore town’s Caesars properties more in the forefront for a company that, some in the city have grumbled, has not always paid enough mind to its eastern flank.
That’s because Rodio is a “Jersey Boy” from Hammonton, a town about 30 miles west of Atlantic City but also in Atlantic County.
And his decades of experience as a casino executive there show a vast portfolio of jobs, having worked at Harrah’s, Trump Entertainment and Taj Mahal, Tropicana, Resorts, and the Atlantic City Hilton.
The hiring of Rodio comes at a time of tremendous uncertainty at Caesars, which rebuffed a merger proposal late last year from Golden Nugget owner Nelson Fertitta, who also owns the Houston Rockets (which is why you can’t bet on NBA games at that property).
While that one didn’t pan out, there are reports of another effort — this time with expanding Caesars investor Carl Icahn — to make it happen.
Or perhaps rumors about Eldorado — which owns Tropicana in Atlantic City — merging with Caesars will come to fruition.
It’s a small world after all
As it happens, Icahn just sold Tropicana Atlantic City to Eldorado last fall, leading to Rodio stepping down as the national CEO of Tropicana.
Now Icahn is exerting such a growing influence on Caesars — he recently was granted control of three company board seats — that Rodio’s new role there was considered a fait accompli.
Icahn and Rodio drew widespread praise for their revival of Tropicana AC, which just a decade ago had its license stripped after layoffs of nearly 1,000 employees led to widespread consumer complaints about the condition of the property.
Icahn invested hundreds of millions in upgrades after his 2010 purchase of the bankrupt property, and Rodio led a change of culture that produced dramatic results over time.
Once a struggling seventh in annual revenue in the market, by 2017 Tropicana — aided by a strong online casino platform — had climbed to No. 2 with 50% net revenue growth during Icahn’s ownership.
The healthy revenues created a better working atmosphere and more jobs at Tropicana, which has led outspoken Atlantic City union leader Bob McDevitt to praise Icahn for his efforts.
On the other hand — and it’s a giant hand — McDevitt spent some years feeling bitter over Icahn’s takeover of the bankrupt Trump Taj Mahal property in the spring of 2014 (assuming you see McDevitt calling Icahn “a malignancy that needs to be cut out” as bitter).
By the time Icahn went from controlling investor to owner in early 2016, the feud only escalated. Icahn won a court battle that allowed him to eliminate health insurance and benefits for workers during the bankruptcy phase, leading to spirited protests on the Boardwalk.
Rodio role in Taj Mahal dispute
Rodio at times was right in the middle of the controversy. He issued a statement on Icahn’s website in August 2016 in which he noted, “Against my advice, Carl Icahn agreed that [a]proposal would include a new union healthcare plan, as well as restore a number of work rules that had been removed by prior ownership during the bankruptcy.”
But, Rodio said, “McDevitt blindsided us and the Taj employees by unilaterally rejecting the proposal at the Taj, even though it included an excellent healthcare plan,which he himself had outlined and told us would be acceptable. He did an about-face because it didn’t include the UniteHere healthcare plan which generates exorbitant profits for the Union — profits that McDevitt has become accustomed to.”
No matter who one blames, the stalemate led to the closure of the casino that December.
It was the fifth Atlantic City casino to close in three years — and so far, the last.
Meanwhile, the purple-themed Taj Mahal, with its minarets, was gutted and revived last year as a Hard Rock casino, while the former Revel a bit farther up the Boardwalk reopened as Ocean Resort Casino (now known as Ocean Casino Resort).
Bigger pie, smaller slices
Those openings have led to cannibalization. While the industry as a whole grew by 7.5% in 2018, only Golden Nugget managed even a modest increase in revenue compared to 2017. The rest saw, well, “shrinkage.”
A merger of Caesars with either Tropicana or Golden Nugget would again leave Caesars with four casinos in Atlantic City. That was the case until 2016, when Caesars Entertainment closed Showboat even as it still eked out a net annual profit.
Now there is talk about Showboat, too, rising again as a possible 10th casino in the city.
Will all this lead to more casino contraction?
Thousands of jobs are on the line at each casino, and Rodio’s arrival at Caesars, under Icahn’s guidance, is bound to make many of them even more nervous, given the Trump Taj Mahal fate.
But Icahn drew praise from McDevitt for his hiring of many former Trump Taj Mahal employees to Tropicana, where Rodio proved he knows how to reinvent a dying casino.
In the end, for both Icahn and Rodio, this is business.
But at least now, whatever happens with Caesars properties in Atlantic City will be approached from the point of view of two men who certainly know the market.
Photo by Shutterstock.com
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