An interview with Wynn Resorts Chairman Phil Satre
Retirement is just a word
When the gaming industry celebrated Phil Satre, the impactful CEO and chairman of Harrah’s Entertainment, at his retirement some thought that was the end of his stellar career.
Since his “retirement,” Satre has held high-ranking positions on the boards of numerous companies, including International Game Technology (IGT), Nordstrom, NV Energy, Sierra Pacific, Rite Aid Corporation and Tabcorp Holdings. He has also been busy on the philanthropic and civic involvement front, serving as the president of the National Center for Responsible Gaming and the vice chairman of the World War II Museum in New Orleans.
Then last November Satre took on what is arguably is most challenging post-retirement gig: the post of chairman of the board for Wynn Resorts.
I had the honor of recently interviewing Phil Satre over lunch in Reno. What follows are some edited excerpts from our conversation.
Why did you take the Wynn job?
SATRE: Admiration for the company and its products, and a feeling it was an important standard bearer for luxury, high-quality experiences in the industry. Wynn has great assets in Las Vegas and Macau and were building what would turn out to be another great asset in Boston [Encore Boston Harbor].
I was also interested in learning more about the business model since it was dramatically different than the one we used at Harrah’s Entertainment, which became Caesars Entertainment and is now Eldorado [chuckles]. We were a distribution model at Harrah’s—creating relationships with customers, meeting the customers on their terms whether it was a riverboat, Indian gaming facility or a luxury resort. We covered the landscape, unlike Wynn Resorts, which focused on solely catering to the high end of the market. And that was interesting to me—I thought it would be a lot of fun to learn more about that business model.
I had a long visit with Elaine Wynn, the person who approached me about joining the board, and I admired her courage in trying to stay the course as a shareholder with that company while overseeing some changes that she felt were important. I felt I could help out in the governance and regulatory areas.
So, do you feel Wynn Resorts is over the hump and moving in the right direction?
SATRE: Yes, I feel the drama is largely behind us and we’re about continuing to grow and fine tuning what we recently opened up in Boston. I feel pretty good about it.
What are your overall thoughts after 40-plus years in the gaming industry—where it’s been, where it’s headed and what its challenges and opportunities are?
SATRE: Although it’s been a rocky road, the gaming industry continues to be more and more acceptable as a form of entertainment, capital investment and job creation in communities.
When I started out, gaming was sort of a pariah industry, established only in Nevada and Atlantic City, where it was “OK, there can be only 10 [casinos] and it has to be in this little town that’s desperate.” The growth after that was spurred by the Cabazon decision in 1988 in California, which opened the door to Indian gaming, and then by Iowa in 1990… who knew Iowa was going to come up with limited riverboat gambling? Even with limited wagers, they were making money hand over fist, so by 1991, I’m moving the company headquarters to Memphis and we’re trying to get as many riverboats as we can.
Now riverboats are slowly being converted to land-based gaming operations—a sign that people accept this industry is well run, is a good job creator, and can be an important part of the local community whether it’s supporting education or tourism. In addition, more and more states are saying “We would like to have gaming.” Big cities without a gaming industry are also saying “We can do this”—Encore Boston Harbor and MGM National Harbor [outside Washington D.C.] show that gaming can be a provider of capital investment, jobs and tax contributions. We could see other big cities that are looking for new ways to increase financial contributions from business [adopt] the gaming industry as a new source.
Who are the people that really impressed you in the gaming industry?
SATRE: Bill Harrah is a person I admired for a couple of reasons. First, for the high standard of guest service he fostered at his properties. The two properties he created were not identical, [Harrah’s Lake Tahoe] was a significantly higher-end operation, but the service at both was essentially the same. People were proud to work at Harrah’s and they liked to be associated with the high standard that Bill held.
The other thing I really liked about Bill was his development of “premium points” to reward the slot player. Nobody figured out what he was doing until it was too late, and he had shifted market share to his slot machines. Bill really pioneered quality, recognition and reward for good customers, and paying upfront for really high-quality entertainment.
I also admired other Harrah’s executives such as Mead Dixon and Claudine Williams, as well as Kirk Kerkorian of MGM. I admire Steve Wynn for his incredible devotion to product planning and design and his patience in working to get to what he really wanted. That’s a really hard characteristic to nurture, because you just want to start building something and finish the design process. He would really work on that until he got it to right where he envisioned it.
With what you know about Bill Harrah and his management style, if he were alive today what would he be thinking about the current state of the gaming industry?
SATRE: I think he would be impressed, and I’ll offer an unusual perspective as to why. Bill was a renowned collector of antique cars, acquiring first models from automobile pioneers and entrepreneurs before they became big companies. He witnessed car manufacturer consolidation so he had a window into the technological processes that changed industries and the economic impact that created for participants—forcing mergers and consolidation, changing the charm of certain cars and, ultimately, the trend toward mass production.
I think because of his car collecting experience, Bill would look at the gaming industry now and say, “Hmm, that’s what you would expect…. technology is leading to totally different experiences, companies are consolidating, some don’t make it and they either go away or are diminished. Totally understandable.” A lot of people used to say when Harrah’s went into Indian gaming or built small casinos in regional markets, that Bill would never had done that. I don’t know if he would have or not, but he would have understood why that was a logical step. He certainly would have understood that Total Rewards [Harrah’s/Caesars loyalty program] was an evolution of his “premium points” concept.
What have you been doing from a non-casino perspective during your “retirement?”
SATRE: Getting involved in industries that interested me. One was the regulated utility industry; I was on the board of NV Energy and chaired it for a period of time, until the company was sold to Warren Buffet. I didn’t expect this industry to be fascinating but it was—the capital investment was so significant and the business so highly regulated. In other words, they were told what their profits would be. In the gaming industry, they regulate us a lot, but they don’t dictate our profit.
The other industry that really interested me was retail, so I went on the board of Nordstrom’s, chairing it the last three years I was there.
What did you learn at Nordstrom’s?
SATRE: It was one of the most remarkable cultures that I had ever seen. They worked so hard at it because the executives were fourth-generation family members. You might think the fourth generation might be a bunch of spoiled brats, waiting for the checks in the mail, but these guys rolled up their sleeves; they were in the office at 6:00 a.m. and they walked the talk. The Nordstrom employees idolized the four Nordstrom family members who worked in that company at that time.
What I learned was that even in an incredibly difficult environment, where industry disruption happens, if you have an incredibly strong culture, you can continue to compete. Maybe not at the same level, but you can continue to make a difference in the customer’s experience in the brick-and-mortar setting at the same time you have to adapt to the very rapid changes happening in that industry. They had to scale up on small stores [Nordstrom Rack] and make a huge investment in the supply chain, particularly online sales. When I joined Nordstrom’s, online sales were about 5 percent of the sales total; by the time I left, online sales accounted for 50 percent of total sales.
But the biggest value in my time at Nordstrom’s was seeing the “standard bearers” of culture in action.
Then there was IGT and your board chairman role there. Tell me about that and what you learned…
SATRE: I think IGT was also involved in a fairly significant transition in the industry, where you saw a customer base coming out of the recession that just didn’t come back and play slot machines like they did before the recession. That aging, middle-class customer base simply felt a more significant loss of wealth and discretionary income, and that had a huge impact. At the same time, jurisdictional expansion slowed down. That was a tough business; the toughest of all the businesses I was involved in.
I learned at IGT that being more nimble in terms of adapting was very important. I think that IGT didn’t anticipate the changes I described—a slowdown in jurisdictional expansion, an aging customer base with less discretionary income, and a change in the slot replacement cycle. The going assumption was that slot replacement would occur every five years; just change the machine bells and whistles and you’d be able to have a steady level of sales, even without jurisdictional expansion. We didn’t watch that carefully enough, in my opinion.
That was a tough lesson about being more conscious of the macroeconomic changes rather than the three or four other competing companies. It opened the door to a tremendous number of new entrants in the slot manufacturing industry.
Did the trend to higher holding slot machines play a factor here?
SATRE: I am very concerned about increased hold percentage on slot machines. I’ve tracked it a lot at IGT and in my role at Harrah’s. Look at the Nevada Gaming Control Board reports—they show shrinking slot machine representation on the casino floor; part of that is taxes, but hold percentage also has an impact. It’s been tough walking through Las Vegas casinos—most of them don’t have the same kind of play on the slot machines anymore. Something is going on there and I worry about that, and I think hold percentage is a part of that.
What advice would you offer to up-and-coming gaming executives looking to become better leaders?
SATRE: I think you’ve got to go out and listen to, as well as interact with, employees and customers. I don’t know how you can get better in an industry without understanding what it’s like to work in the company or what it’s like to be a customer of the company. There’s a phrase that Steve Wynn likes to use, and I agree with it, “Only people make other people happy.” If you don’t understand this and don’t interact with your staff or your customers, ultimately I don’t think you can compete with companies that do, even if you have great financial resources, even if you’re brilliant at looking at a P&L or balance sheet. It’s not going to pay back for you.
What are the career accomplishments of which you are the proudest?
SATRE: Well, I was very proud of being part of the team that was able to build Harrah’s into the largest gaming company in terms of revenues and number of properties. I thought the Harrah’s brand was a great brand. I thought we had great relationships with not only customers and employees, but also with regulators. In a highly regulated industry, I felt strongly that regulators had to trust us and could depend on us to keep our promises. I was very proud that we would get in head-to-head competitions for licenses—like in New Orleans, Shreveport and Cherokee, North Carolina—and often, be selected. I think it’s because the company had a good reputation, a track record of keeping our promises, and that we innovated in some areas like responsible gaming. It was very important to me that we took both underage gambling and responsible gambling seriously. I’m very proud of that.
Any regrets or things you would have done differently?
SATRE: Not getting into Macau, that’s the one thing. I was preoccupied in getting our operations up in New Orleans, and we had just done a lot of other acquisitions as well. I even went over to Macau and looked at it and still didn’t do anything. So that’s the one thing. I handed that one off to my successor [chuckles]. I don’t have many regrets other than that.
How would you like to be remembered?
SATRE: More than anything else that I tried to carry on what I thought were some important traditions at Harrah’s while creating a stronger company that provided more jobs. I love creating jobs and opening up in new markets. It is thrilling… it was what I enjoy. Like now there are 5,000 new employees in Boston and that was just amazing to see how much they treasured those jobs.
I would also like to be remembered as someone who really thought gaming is a great industry and that the industry played a role in many dimensions—it’s a form of entertainment that people really like, it’s a job creator, it supports communities and states. I’ve always been very proud to be associated with all of that.
So what’s next for Phil Satre?
SATRE: Well, I’d like to build a few more Wynn properties, maybe one in Japan. I’ll be very interested to see whether Boston does influence the trajectory of major metropolitan cities traditionally associated with industries and activities other than gaming. Boston has been associated with higher education with MIT and Harvard, with sports teams, and with high tech. And all of a sudden, it’s got a great big, spankin’ new casino and it’s going to have a dramatic economic impact there. I think you are going to see more cities interested in [casinos] and I’m interested to watch that and stay involved.
I also want to stay associated with the National World War II Museum in New Orleans. That has been a labor of love for me and my wife, Jennifer. Both of our parents were involved in World War II and it tells a story, and I love the story telling part of it. I’ve often said that the best thing about building a casino in New Orleans is that I learned about the World War II Museum and became involved. I like watching people walking into that museum and going “Wow!” That’s been my single biggest, non-gaming, non-employment activity. Even more than fishing.