Posted on: March 2, 2022, 03:55h.
Last update: March 2, 2022, 4:07 a.m.
Workers at partner casinos The Venetian and Palazzo on the Las Vegas Strip are being offered what is believed to be the property’s first revenue-sharing deal with the new operator.
New York-based Apollo Global Management, a private equity giant with a long history in the US gaming industry, recently completed its $2.25 billion acquisition of The Venetian and Palazzo operations. Apollo attempts to win over the thousands of former Las Vegas Sands employees who now work for the investment firm with potential riches in the event of a further sale.
Apollo management informed the casinos’ combined workforce of about 7,000 employees that they could each benefit from the success of the Venetian and the Palazzo. But not in terms of annual profit sharing.
Instead, Apollo says that if it decides to offload assets from the Las Vegas Strip in the future, employees who remain at the casinos will have a cut of the profits. For example, if Apollo one day sells resort operations for $4 billion, the profit of approximately $1.75 billion will be partially split among staff.
The potential payouts, which Apollo says could exceed $10,000 per employee, are in addition to their salary, benefits and annual bonuses.
Apollo will manage the operations of The Venetian and Palazzo, while VICI Properties, Caesars Entertainment’s real estate investment trust, now owns the physical assets of the stations. VICI paid Sands $4 billion for the real estate. Apollo will lease the two stations from VICI for $250 million per year.
When a hedge fund or private equity giant takes over a company, workers often worry about job security and operational changes. These companies are notorious for only holding onto their assets until they find a buyer willing to shell out a hefty premium on top of what the hedge fund or private equity group has paid.
Apollo spokeswoman Erin Clark told the Las Vegas Sun that the “value creation” program is not based on seniority or job title.
If we come in and tell people that we’re so excited about this business and think there’s a lot of room for growth, everyone should be able to think like owners,” said Clark. “[Employees] should be able to benefit from what we plan to do together.
Clark likened the concept of value creation to workers having equity positions in the company with which they are employed.
“It’s like fairness,” Clark added. “We believe this is an example of good corporate governance.”
David Schwartz, a professor at UNLV and a historian of the Nevada gambling industry, told the Las Vegas Sun that he believes the value creation arrangement is a first in the state’s long gambling history.
Las Vegas Sands has managed to keep its two Strip casinos union-free. The late Sheldon Adelson gambling empire forged lasting relationships with its thousands of employees, many of whom were devastated by Sands’ decision to sell the properties.
Apollo’s value creation program is likely an effort to retain these workers.
Sands employees are truly loyal to these properties,” Explain Casino.org Las Vegas insider Scott Roeben. “They were already shaken by Adelson’s death, and the uncertainty is worse now.”