Executive View Q & A
Executive View Q & A
Q&A with Tim Hinkley, president and chief operating officer, Isle of Capri Casinos
Tim Hinkley is president and chief operating officer of Isle of Capri Casinos Inc. His background in hospitality and food and beverage operations-he ran a cruise dining company in the late 1980s-got him involved in riverboat gambling. He joined Isle of Capri in 1990 in Iowa where the company was developing a couple riverboat casinos. In 1992, Hinkley was chosen to head up Isle's Mississippi license opportunity, ultimately helping open the Isle of Capri Biloxi. From that property was borne the Isle brand, under which the company operates its 15 properties today. In 2003, Hinkley was named president and chief operating officer, helping grow the company into new markets. He recently discussed his company's growth with Casino Journal contributing writer Regina Lafay, as well as its temporary casino and rebuilding plans along the Gulf Coast in the wake of Hurricane Katrina.
Isle of Capri has been a major player in the Southern gaming markets in recent years. In Mississippi, your Isle of Capri Biloxi was the second Gulf Coast casino to reopen after Katrina. How much work and effort went into reopening just months after such a catastrophe?
It was the second to open, and the first that was over land following the new amended legislation to take casinos off of floating barges and allow them to conduct gaming. I call it "over land" because a lot of people confuse it with "land-based." They are, technically, but they're sitting above the ground. The elevation is what differentiates them from land-based.
Down here along the coast, especially in the hurricane region, FEMA had established standard levels of habitable space in the late '60s after Hurricane Camille came through. The standard was about 24 to 25 feet above mean tide. When Katrina came through, it set all kinds of records and went way above what most felt would never have been surpassed. Now we're waiting on what the new levels are going to be. Fortunately for us our hotel has parking underneath it, and the hotel lobby actually sat about 39 feet above mean tide. So the main surge actually floated underneath us. That's how we were able to take our lobby and convention space and turn them into casino and food and beverage space.
It's like anything you put your mind to. The day after the storm we started cleaning up. We wanted to be aggressive, and we knew that the market was still going to be there, even though there was only one bridge out of three left to get you on to the peninsula. We decided to put all effort into it. The storm hit August 29 and we opened up the facility the day after Christmas.
Reports have been that business has been good for the few casinos that are open on the Gulf Coast. Is that the case?
Business is good. We knew that the core market was coming from areas that were not as affected by Hurricane Katrina. As long as they had a way to get here, they would be able to make it. And they have. Plus we've had a lot of assistance from people out of the region.
There isn't a heck of a lot of things to do here. There was enough demand from our primary market that has really caused the three casinos that are open to do very well.
Has the lack of full infrastructure on the Gulf Coast affected or dissuaded your more regional patrons?
We've been down here since 1992, so we know the market very well. People, when they took a look around and saw the devastation, were skeptical that we would get any business at all. But we draw people from Mobile, Pensacola, the southern half of Alabama, Georgia, the Florida Panhandle. So there's quite a region that we draw from. That's why I had full confidence that the market was going to come back a lot stronger than most people thought it would.
Your company's Pompano Park was also affected by Hurricane Wilma. Now that it too has reopened, how is business there?
We didn't have nearly the devastating effects in southern Florida versus the Mississippi Coast and Louisiana, but it was still a pretty strong hurricane. It shut us down for a few of days, but we were able to get simulcast and racing back up shortly after. We had damage to the grandstand and to some of the horse barns, but we've been able to rectify that. Business has come back.
The big thing we're waiting on in Florida is a clearer picture from the state on the racinos that we've been working on.
Isle's casino is a temporary one right now. What kind of full-scale property are you hoping to bring back to the Gulf Coast?
I hate calling it temporary, but for all intents and purposes, at least for the next year and a half, it will be housed where our convention space was. We are working on a plan to expand it and create an entirely new gaming area, switch what we're doing in the hotel and revert our meeting and convention space back to what it was, because there is going to be a real need for that.
What are your thoughts on the passage of new rules allowing for shore-based gaming on the Gulf Coast?
They're perfectly logical. People would look at our situation who were not familiar with it and just scratch their heads wondering why in the world we were made to put casinos on barges. Once you explain to them that it was all politics and that this was the only way to get a law passed for gambling, then they understand. There was some absurdity to it. Now it's safer, and you can put a lot more facilities in and make it much more attractive for customers.
Why the decision to move Isle's headquarters to the St. Louis, Mo. area?
I think about the second week in not having a corporate office, we were having daily conference calls with the properties outside of Biloxi letting them know that we were fine and going to get our communications back up soon.
Katrina was the third hurricane that we had shut down for in less than a year. We're running a big company that has most of its properties away from the Gulf Coast and Biloxi that rely on the corporate office. Not being able to provide those services over an extended period of time, and knowing that situation is going to recur every year, you have to really think it through. What really made the decision firmer was the fact that attracting talent to the Biloxi area was going to be really tough.
Your company's plans for a casino in Pittsburgh, Pa., with the Penguins NHL franchise, are its most ambitious to date. Can you explain how this deal came about and what you hope to bring to the Pennsylvania market?
We had been following Pennsylvania for some time. One of our banks had been working on a deal with the Penguins and approached us and asked if we were interested. We got together with the Penguins and sized up the lay of the land, ran the numbers and decided that it was such a big marketplace that did not have any kind of oversupply down the road. So we thought we could do extremely well there and that it was worth the risk.
The casino would start out with 3,000 slot machines, several restaurants, the parking, retail, etc. It would be sitting adjacent to the new arena that will be home to the Penguins arena hockey club. There's also, adjacent to those facilities, 28 developable acres of which we've agreed to jointly develop. We're working with Nationwide Development out of Columbus, Ohio to work on the development. It will be a lot of mixed use; retail, food and beverage, different things from a residential standpoint. We hope to create a lively area in the city.
It's a great idea, a great marketplace and a great location. It sits just off of the downtown business district, right off of an interstate so it's easy to get to, and it's a safe and recognizable area. The Penguins are an incredible hockey franchise that have been trying for a long time to create some venue to get a new arena built for them. Their arena is the oldest in the league. They couldn't drum up any support. The Pittsburgh Steelers and the Pittsburgh Pirates had used a lot of public money. I don't think there was an appetite for more public funds. Part of our bid is to put up $290 million that, if we are awarded the casino license, would go to the construction of the new arena. We wouldn't have anything to do with the arena, we would just operate a casino, but we would be the conduit that would get this development that has been lagging for so long moving forward.
Isle recently sold its properties in Vicksburg, Miss. and Bossier City, La., noting it was looking for opportunities that better matched your portfolio and strategic vision. Would it be safe to say Isle is looking to expand its reach beyond what have been your core Southern and Midwestern markets?
We've always been opportunistic and taken a look at promising marketplaces like Pittsburgh. We were awarded a license in Waterloo, Iowa. We're trying to look at marketplaces that have long-term sustainable growth. Unfortunately we did not see that in Vicksburg or Bossier City. To manage a portfolio that looks at growth we look at the whole and what our opportunities are. The racino situation in southern Florida is a good example of that. It's a great market.
Right now, we're really going through a reinvestment in our core assets. Being an opportunistic company, we're always looking at ways to grow, and that's what we're doing.