Friday, January 23, 2004
Copyright © Las Vegas Review-Journal

BINION'S HORSESHOE: Deal with Harrah's finalized

Downtown proponents, union leaders applaud sale

Gary Loveman, Harrah's Entertainment president, shakes hands Thursday with Binion's Horseshoe accounting employee Karen Bauer before a news conference at the Horseshoe. Photo by Jeff Scheid.

Downtown gaming and union executives welcomed Thursday's announcement that Harrah's Entertainment reached a final agreement to buy Binion's Horseshoe, although some workers expressed concerns about their job prospects.

"We're really pleased it's Harrah's. They're one of the great names in our business, and no matter what ultimately comes of the Horseshoe property, we can be sure they will do what's best for downtown," Boyd Gaming Corp. spokesman Rob Stillwell said. "The fact they were able to resolve this situation and to move forward adds to all the new energy being created downtown."

Harrah's and Culinary union executives announced Thursday Harrah's had signed a definitive agreement to purchase the closed Horseshoe for an undisclosed sum from owner Becky Binion Behnen.

At a Thursday news conference in the Poker Room at the landmark downtown property, Harrah's President Gary Loveman said the agreement was signed late Wednesday night and that the transaction should be completed by the end of the first quarter, subject to regulatory approvals.

Nevada Gaming Control Board Chairman Dennis Neilander said his agency has not received an application from Harrah's to reopen the property. He said regulators would move quickly once it does.

Behnen declined to comment on the final agreement or the sale Thursday. Her husband, Nick Behnen, said she had hired a Los Angeles-based public relations firm that now is arranging her interviews.

Harrah's has started the process of evaluating appropriate staffing levels, which should take four to five weeks, Loveman said. Workers will be notified about plans for reopening the property, which he said was a priority, and their employment prospects. He said his company will give priority in hiring to former Horseshoe workers and honor the property's union contracts.

D. Taylor, secretary-treasurer of Culinary Local 226, the largest union in Nevada, noted Harrah's is in the business of making companies grow, suggesting the property's recent 440-person union workforce and 450-nonunion workforce could be expanded under the Las Vegas-based company's management.

With regard to rumors that Harrah's already might be in discussions with prospective investors to resell the Horseshoe, Loveman said his company "always retains its rights to sell down the road, but plans to open and operate" the property.

Speculation about possible suitors to buy or operate the Horseshoe have focused on Boyd Gaming, but Stillwell said no conversations are under way.

"We already have three operations downtown. There haven't been any of these conversations, and although we believe in downtown, we already have three solid performers," he said.

The final agreement came nearly two weeks after the landmark downtown hotel was forced to close when federal marshals seized about $1 million from the property's cashier's cage to cover unpaid union pension and health care obligations.

Taylor said the closing of the Horseshoe was "a tragedy" but added that Las Vegas is fortunate "a truly community-oriented corporation stepped forward and obviously took a huge leap of faith.

"Christmas came in January this year. Now, we hope the regulatory apparatus will move as fast as Harrah's did," he said.

Joe Schillaci, president of the Fremont Street Experience, also was pleased with the transaction.

"Harrah's is one of the world premier names in gaming, and having them come into downtown bodes well for the whole Fremont Street Experience," he said, adding that the company's "stellar reputation" will be constructive for the downtown area and other operators.

However, Schillaci reiterated many people's concerns that the Horseshoe be reopened quickly, that Harrah's start moving on the marketing front and that the property's employees be put back to work as soon as possible.

Loveman said all former workers have been paid in full.

He also said chips held by players will be redeemable at the Horseshoe once it reopens but, for now at least, will not be redeemable at other Harrah's properties. Any other plan for redeeming chips will have to be approved by regulators, he said.

Loveman also said he does "not anticipate at this time" Behnen having any role in the management of the Horseshoe, which she had run for the past 5 1/2 years.

However, he said Harrah's has "a flexible agreement" with Behnen's brother, Jack Binion, because of the pending $1.45 billion acquisition of Horseshoe Gaming Holdings, which operates three Midwestern riverboats. Although Loveman indicated that Harrah's might offer Binion a role in managing a reopened Horseshoe, he also said his company is "not obliged to do so."

Loveman explained it took almost two weeks to reach a final agreement on buying out Behnen because the negotiations had been between a large corporation and an individual owner whose family has had a long history with the property.

"The fact the casino was in distress didn't make (the negotiations) easier," Loveman said.

Benny Binion, Behnen's father and a former Dallas bootlegger and illegal casino operator, opened Binion's Horseshoe on Aug. 15, 1951, and it subsequently was operated by Behnen's brothers, Ted and Jack.

"Like all things, nothing lasts forever. The business has been good to us. There is no sadness, but that phase is over with," Jack Binion said Thursday afternoon.

Industry insiders say bad choices and mismanagement by Behnen brought about the demise of the downtown property.

When she took over control of the property from Jack Binion in 1998, she made a number of changes that experts said transformed the property from one of the city's most action-packed casinos into a run-of-the mill grind joint.

While employees and former employees said they were grateful that many uncertainties about the Horseshoe had been resolved, many expressed concerns about how long they will be out of work and whether they will be rehired.

Karen Bauer, who is still working in the accounting department closing out the books for December and January, expressed relief.

"I like Harrah's. I understand it's a good gaming company to work for," she said. However, she expressed concern that she could be laid off once her current work is completed, and she has been given no indication when she might be brought back to work.

John Bridges, who has been a security guard at the Horseshoe for 16 1/2 years, took a wait-and-see attitude. "Harrah's is supposed to be terrific people to work for, but I guess we'll find out," he said.

Loveman said Harrah's hopes to hold the World Series of Poker in the Poker Room at Binion's Horseshoe as originally scheduled for mid-April.

Loveman said he expects 3,000 poker players to participate in the tournament and looks for the total prize pool to exceed $25 million.

Harrah's plans to preserve the "rich tradition" of the the World Series of Poker, recognizing the role it's played in increasing the popularity of poker, and will turn the company's marketing expertise to promoting its growth.

However, Loveman said, no decisions had been reached on where the poker tournament would be based after this year.

When the tentative agreement was first announced on Jan. 12, sources said Harrah's would take over the property for about $50 million, mostly in the form of assumed Horseshoe liabilities.

Binion's is believed to owe as much as $20 million to Jack Binion's Horseshoe Gaming Holdings, $7.5 million to the Internal Revenue Service, $3 million to the Fremont Street Experience, $1 million to the Culinary union's pension and health plans and unknown amounts to the casino's landlords and smaller creditors.