Thursday, August 28, 2008

Local 54 are THUGS (in our humble opinion)

Bob McDevitt and the Local 54 casino worker's union are well on their way to destroying the prospect of any future casino development in Atlantic City. Through a poorly disguised ruse, McDevitt and company are apparently threatening the ongoing Revel casino project unless Revel agrees to terms ensuring the employment of Local 54 members once the casino opens two years from now.

McDevitt flexed his muscle last year when he objected to 2,5000 job cuts at the Tropicana Resort and Casino. In response to the job cuts, McDevitt spearheaded an effort to revoke the gaming license of the casino's new owner, Columbia Sussex Corporation. Complaints were raised on grounds that the job cuts were so severe that the property was no longer being run as a "first class" resort as required under New Jersey law. The union presented claims that room service trays were not removed for hours, reports of vermin, and allegations of general uncleanliness due to under-staffing. The property's owner alleged many of the complaints were acts of sabotoge conducted for political purposes.

In a normal market, a property that was being run in a sub-standard fashion, as alleged here, would suffer lost revenue as customers turned away in search of better service. As a result, the property's owner would either lose money on its investment, or resolve to improve service in order to protect its investment. Atlantic City, however, is not a normal market. Rather than allow the public to choose its preferred casinos, the New Jersey Casino Control Commisison summarily revoked Columbia Sussex' gaming license, resulting in the loss of hundreds of millions of dollars to the casino's investors and threatening the owner's nationwide gaming enterprise.

In rendering the decision, Linda Kassekert, the head of the Casino Control Commission, stated that Columbia Sussex failed to prove it had the business experience, financial ability and good character to hold a casino license. Ms. Kassekert's conclusion was surprising given the fact that the Columbia Sussex company was built from the ground up by its owner, Bill Yung, and that at the time of the decision, the company operated some 60 hotels and casinos in 30 states across the country. Seemingly, Ms. Kassekert (who has never managed a hotel or casino in her life and whose professional experience consists of being a career bureaucrat and lobbyist) felt that she was better qualified to determine the appropriate staff levels at the Tropicana than Mr. Yung, who has spent his entire as a career hospitality professional.

Hidden in the subtext of Ms. Kassekert's public statements, however, is the more likely truth that Ms. Kessler and the rest of the Casino Control Commission buckled under political pressure exerted by Local 54 and other unions on state and local political leaders. Ms. Kassekert's most telling statement ocurred when she declared that her decision was not "difficult at all, given the applicants' demonstrated failure to appreciate the workings of the Atlantic City casino marketplace." Kassekert continued, "The applicants could have taken the time to educate themselves in what it takes to operate successfully here, or they could have hired and retained sufficient staff knowledgeable in those processes," Kassekert said. "They have done neither and must bear the consequence."
So, what is it that is so unique about the Atlantic City marketplace? What is it about "the workings of the Atlantic City casino marketplace" that makes it so different from the 30 other markets where Columbia Sussex successfully operated? And exactly what "does it take" to operate successfully here? Apparently, coming from out of state, Columbia Sussex failed to understand that in Atlantic City, the interests of Bob McDevitt, Local 54, and the politicians take precedence over the interests of hard working businesses, residents and taxpayers.
The Tropicana matter is not the only example of the unions' stranglehold on the public interest. The latest act in the union's thuggish repertoire is to circulate a petition for referendum on an already-approved bond ordinance to assist Revel in making road improvements for its new casino. The city's interests on the $54 million bond are fully secured by a first lien on Revel's 20 acre oceanfront parcel, which is worth an estimated $200 million. Consequently, there is very little risk of loss to the city and the risk that does exist is greatly outweighed by the millions of dollars in tax revenue and improvements as well as the thousands of jobs the Revel project will bring to the city. Nonetheless, the bond issue leaves Revel dependent upon city cooperation and McDevitt sees this as an opportunity to leverage the union's influence over the government officials (and his own membership) to force Revel to pay tribute.
At worst, McDevitt's tactics could risk the Revel project altogether. At the very least, McDevitt's tactics will discourage other casino developers from locating to Atlantic City as they know their costs will be higher and their risks greater if they choose to invest in Atlantic City regardless of whether or not they agree to patronize Local 54. If casino operators work closely with Local 54, they will pay higher wages and have fewer development options. If casino operators try to ignore Local 54, McDevitt has shown that he will do everything in his power to disrupt the casino's operations.
When weak and incompetent government prevails, as it does in Atlantic City and New Jersey, local power brokers such as Bob McDevitt have the opportunity to pursue their narrow self interests at the expense of common good, and that is exactly what Mr. McDevitt and Local 54 are doing. The residents of Atlantic City must understand that their interests are not parallel to the interests of Local 54 on this topic, or many others.
All of the above statements are solely the opinion of The Hanky Panky Report.

1 comment:

vtpat said...

Tropicana forfeited the right to operate in the "free market" when they climbed into bed with gromley and the crda. If you do your research before you run your mouth you will understand why that is true.
Economics 101 = if you live in big daddy's house you will obey big daddy! They also have to show financial stability. Losing half their customer base and ransacking the place is not showing financial stability. When they agreed to the license they agreed to the terms. They were given preferential treatment by gromley and the crda. They took the money and sold the joint to some slimey operator ftom KY. Too bad for them huh!!