A Woman with a Plan
When Virginia McDowell was a child, at election time she’d go canvassing for votes with her father, a Philadelphia newspaperman and Democratic Party organizer in the suburbs north of the city. The Reagan Revolution was looming on the horizon. - “So you can only imagine what being a Democrat was like,” she says. “Talk about swimming upstream politically. After that the gaming industry was cake.”
How does it stack up to the challenges of leading a billion-dollar casino corporation through the worst economic downturn since the Great Depression - and being the only woman in the country to hold such a job?
Let’s start with the downturn.
“We’ve been very open and honest about this,” says the president and COO of Isle of Capri Casinos. She adds, “Which in some cases actually surprised members of the investment community, that as tough as things were we were willing to go out there and talk to them.”
The thing is, Isle has a plan. In essence it goes like this:
“We believe,” McDowell says, “that if we pay attention to the basic blocking and tackling, and we continue to be the same company, the same management team that has always been known and recognized for financial discipline, that we will emerge a stronger company on the other side of this. … The strong and the smart will survive. And as long as you are making prudent financial decisions, and as long as you are paying attention to details, and as long as you are always staying focused on the customers, those are the companies that are going to survive.”
Isle will be one of them if Virginia McDowell has anything to say about it.
“She is indefatigable, just tireless in what she’s capable of doing,” says Isle CEO James Perry.
And he would know. They’ve worked together at four different gaming companies over the course of more than 20 years, their careers intertwined in ways that few in this business, or in any business, are.
“She is always the first to be relied on, whatever the task, to think creatively and to do what’s in the best interests of the company. She can be counted on to do whatever she can, with total dedication, to her family, the business, her community.”
There is no denying that something clicked when McDowell joined Isle in the summer of 2007 and the management team she began assembling rolled up its sleeves and got to work. Call it a new vitality, a renewed sense of purpose, a belief that this is a company that can find the light at the end of this long, dark economic tunnel and is confident it will get to it.
During the worst of the financial crisis last fall when casinos across the country were slashing from the bottom to reduce costs, laying off line employees, supervisors and middle managers, McDowell, Perry, Chairman Bernard Goldstein and his son, Vice Chairman Robert Goldstein, volunteered to forego 25 percent of their salaries for a year.
“It wasn’t something that we did because we wanted it publicized or we wanted people to pay attention to it,” McDowell says, “we did it because we felt it was the right thing to do at the time under the financial circumstances.”
People did pay attention, needless to say. Mostly the people who work for Isle of Capri. “I got a lot of nice feedback,” she recalls. “You know, ‘Thank you. We see that you’re doing your part, your piece, as well.’”
It wasn’t lost on Wall Street either. In March, Isle reported its first profit in eight quarters, a solid $46.1 million. It was a hefty insurance recovery from Hurricane Katrina that made the difference. Still, it was significant, the first quarterly profit since McDowell took charge. The stock (Nasdaq: ISLE), which closed at $4.02 the day the executive pay cuts were announced, down 12 percent (it had fallen below $3 at one point last year), this April cracked $7 a share.
But it’s like she says, “We believe in the plan.”
Compared to which, the fact that she’s the only female chief operating officer of a major U.S. casino operator is pretty much a non-issue.
The way she looks at it, “I’ve been married for 30 years, and I have two children, and I certainly think, when you look at the responsibilities of running a company and dealing with a family, it doesn’t really make a difference to me whether you’re a male or a female because you still have the same responsibilities.”
She directs the conversation instead to the obvious point that all relationships, be they professional, personal, public or private, are by definition “collaborative”.
“Obviously,” she says, “there was an awful lot we had to do on the fly in the past year in terms of being able to deal with the economy and make changes both at the corporate level and the site level so that we could continue to remain profitable. So there’s always that piece of it. … But, you know, we try to get as much information about what is going on out there as possible. And this is one of the reasons why we believe that we have been successful in the last year, where some other properties may have struggled: We really did pay attention to the basic blocking-and-tackling piece. We stayed focused. And my job was to keep the properties focused.”
McDowell took over a company that was coming off five straight years of declining profits, the last one, in 2007, ending in a net loss, Isle’s first since 1999. She also inherited a company in the throes of a massive growth spurt. Between April and July 2007, Isle opened a $190 million racino at Pompano Park harness track in Florida and a $175 million riverboat casino and hotel in Waterloo, Iowa. Aztar’s riverboat casino in Carutherville, Mo., was acquired for $45 million. Isle also opened its wholly owned casino in England in Coventry.
All the expansion had pushed long-term debt to the edge of $1.5 billion. Annual interest expense had increased by $20 million. And cracks were beginning to show in the U.S. economy. So right at the start, leverage was identified as an issue. The other problem was one of identity. Isle had grown to 14 casinos in six states, plus a Caribbean property, and with the Coventry opening, three in England. There were too many brands, four in all, and what differentiated them, or didn’t, had become nebulous and confusing.
At the instigation of Perry, who was a director at the time, a committee was formed to consider solutions, comprised of senior management, McDowell playing a central role, and members of the board. From the research and deliberations of this group the plan was born, its five base elements:
Leverage geographic diversity - Instead of selling off older, smaller riverboats in the drive-up markets, as some in the investment community had urged, it was decided to reposition the company’s two basic asset classes as two distinct brands: “Lady Luck” for the smaller, locals-oriented riverboats, “Isle” for the larger, more amenities-rich properties serving regional markets. Each would have its own senior vice president to whom the property GMs report.
Balance sheet management - Debt reduction and refinancing are to be combined with a more disciplined, “value-added” approach to capital investment, taking organic growth opportunities rather than greenfield development as its starting point. This has reoriented Isle’s focus toward its core domestic markets and has resulted in the company’s decision to divest itself of its casinos in the UK and the Bahamas.
Strengthen operations - Execute on the fundamentals, trim operating expenses, hold firm to a similar “value-added” approach when it comes to the implementation of new technologies.
Elevate the customer experience - This is the sun around which everything else in Isle’s universe revolves. Its watchwords are “clean, safe, friendly” and “fun”. It involves ongoing and very specific use of attribute-based WAVE research to better understand customer preferences and perceptions in each market and identify trends, improve service levels and keep management and staff focused on the players. WAVE is a tool McDowell and Perry began using in a previous collaboration at Argosy Gaming, where she was in charge of marketing and he was CEO. Another key is making optimal use of the data base to ensure precious marketing resources get to the most valuable players. Everybody does this, of course, though not always well. It’s a particular strength of McDowell’s. She made her bones in Atlantic City, which pioneered the application of data base marketing technologies and practices to the casino industry.
Leverage human capital - This flows from the initiative above and involves a more simplified system of employee training structured around a new “See, Say, Smile Customer Courtesy Program” that embraces all levels of staff, from GMs down to the line employees, and combines objective measurement criteria with recognition and specific rewards.
McDowell’s role in all this, to which Perry has alluded and she herself explains, is to be a “professional communicator,” as she puts it, a “liaison”.
“I’m constantly talking with the corporate staff, constantly staying in communication with the board [of directors], staying in communication with our regulators, our communities, and most important, staying in communication with our employees.”
All in the service of the plan“That’s my primary responsibility, to represent to the corporation and the site teams what we need to do to execute against our strategic initiatives. My job is to look at the plan, look at the components of the plan, help build them and to modify them as necessary.”
She takes great pride in the fact that recent WAVE research has shown seven of the domestic properties with improved scores in more than 80 percent of the attributes measured. Scores in the “Customer Courtesy Program” improved almost 20 basis points. Positive comments from customers increased 45 percent over the course of the survey period.
“A truly amazing performance,” she says, “by a very committed and dedicated team.”
Her years in Atlantic City were characterized by a profound commitment to community service, and this has carried over to the St. Louis area, which she now calls home. She says it was instilled in her by her father, “who had me out knocking on doors probably when I was 4 or 5 years old.”
She is the founding chairwoman and president of the St. Louis chapter of Gilda’s Club, which is raising funds to build a facility in the city to provide free social and emotional support to those in need. She is a member of the St. Louis Regional Business Council and serves on the executive advisory board of the John Cook School of Business at Saint Louis University. She formerly served as president of the AMC Cancer Research Center and was a founding member of Winning Women, a partnership with the St. Louis County Economic Council. She also is a member of the board of directors of the American Gaming Association and serves on the board of trustees of the National Center for Responsible Gaming.
Nancy Pechloff, a founding board member of the Gilda’s Club chapter in St. Louis and the group’s treasurer, speaks of McDowell’s “unique style”.
“She’s both commanding and very down to earth,” she told St. Louis Business Journal. “It’s easy for anyone at any level to relate to her. She thinks big. Some people are just dreamers, but she’s also practical. She’s a very hands-on president.”
“It is personally rewarding for me,” McDowell says of her many commitments. “It’s something that I spend a tremendous amount of time doing, just because it makes me feel good. But I also think there is a tremendous benefit in terms of building strong relationships with our community - and from a corporate social responsibility standpoint, again, it’s the right thing to do.”
Of course, somewhere in all this she finds time for her family, for her gardening, which is a particular passion, and, believe it or not, for the occasional triathlon.
“Well,” she says, “I truly believe that to whom much is given, much is expected.”
There is in Virginia McDowell’s life a larger plan at work too.