If you ever needed evidence of why Caesars has failed so spectacularly time and time again in Asia, you need only look so far as the transcript of their Q4 earnings call, held at 5pm ET on Thursday (6am Friday Macau time).
When asked on the call where exactly Caesars sits in relation to their upcoming integrated resort investment in Korea, CEO Tom Reeg replied, “Korea has gone, we sold it for some barbecue pork …“
Reeg, previously CEO of Eldorado Resorts, was a driving influence behind the behemoth US$17 billion acquisition of Caesars in 2020, and has come out the other side of that deal as CEO of the resulting Caesars entity. While Caesars might be a household name in the US (well, at least in the 1960s, 70s and 80s it was), it is essentially unheard of in Asia, compared to the likes of Sands, Wynn and MGM. These three US brands secured incredibly lucrative Macau gaming concessions which changed their fortunes forever, as the Macau market eventually towered over the Las Vegas strip, becoming more than six times the size. Caesars missed out on a Macau license in 2006 when then-CEO Gary Loveman astonishingly turned down such a license, calling it “too expensive.“ In 2010 Loveman described that decision as “the biggest mistake the company ever made,“ which is really saying something about a brand that is more than 50 years old.
Reeg’s “BBQ pork“ comment will be hard to live down and will stick in the minds of Asian gaming industry figures for years to come. It is at best incredibly naive, and at worst blatantly racist.
Caesars’ decision to sell its stake in a Korean IR may indeed be a prudent one given the company’s need to focus on its financial situation domestically – a situation plagued by enormous debt from the recent acquisition and the impact of COVID-19. Despite this, Caesars’ Korean misadventure now represents yet another failure in Asia.
It should also be noted that Caesars was one of the first companies to pull out of the Japan IR process, and little wonder given the company’s apparent inability to muster even a basic understanding of how to become an industry participant in Asia.
It seems Caesars under Reeg is set to become a very US-centric company, with the CEO stating, “You should expect that over time [our Windsor management contract in Ontario, Canada] will be the extent of our non-US business.“
Pouring salt into the wound, Reeg added a throwaway, “I think that was in May [2020]” to his comment about Caesars departure from Korea. The comment contradicts information directly from the Incheon Free Economic Zone Authority stating the sale actually took place in late January of this year. If Reeg is correct and the sale was indeed in May, it would have been nice to give the market some official confirmation a little earlier than nine months after the fact. But if he’s wrong and the sale was in January, Reeg’s comment suggests a CEO out of touch with important happenings inside his own company – or at least anything outside of the good ol’ US of A.
Reeg’s final two words on the Korea matter in today’s earnings call were, “we’re out.“
Until Caesars can find a CEO who knows how to handle himself on this side of the world without offending people, our comment is, “Good riddance.“
