Station Casinos Bankruptcy Tumbling Out of Control: UFC Could Suffer From Long Term Financial Effects on Fertitta Family

Posted on | November 20, 2009 | No Comments

By: Rich Bergeron

Fittingly, it was a powerful union (The Teamsters) that is credited with making Vegas what it is today, and now another union (Culinary Workers Union Local 226) is trying to set the record straight about the new Vegas Landscape and what the Station Casinos bankruptcy situation is doing to it. A new report from Local 226 (see below), an unlikely source but nonetheless an appropriate voice, reveals how the Fertitta family and other insiders at Station allegedly turned a personal profit of over $1 billion on the back of the business.

The Teamsters’ legendary loans (frequently arranged with mob muscle as Vegas blossomed) built the City of Sin from the desert ground on up. Today, it is more of a corporate mob that makes up the core Vegas playing field. Like many in big business balking at the possibility of facing a declining economy, Station Casinos and other Vegas interests gambled it all on black and lost. The expansion boom they initiated has gone bust, and nobody’s flocking to Vegas looking to spend their life savings in casinos that are losing money and in bankruptcy. Station just announced in the latest quarterly report that losses have ballooned to more than $350 million, and it only gets worse from here.

The culinary union has a stake in the way Vegas weathers this storm, and they have made inroads at other places where they couldn’t at a resistant to unions Station Casinos brass. Maybe part of the motivation for their report is the fact that they have always been at odds with the company, but at the heart of their work is a genuine people’s plea to think about what these business barons have done to potentially ruin the lives of all their employees when this whole thing has to up and fold and close its doors. Even new management will mean layoffs, cutbacks, and possibly shuttering properties. The Station properties are mortgaged and reverse mortgaged and upside down mortgaged to the hilt. $6.4 billion in debt doesn’t accumulate overnight and should not have been such a surprise to Station Casinos insiders. The cooking union has a point about the cooked books at Station.

Think about it. It is the sandwich makers at Palace Station that knew Frank Fertitta, Jr. as a regular patron of the lunch counter there. In his better days he ate lunch there every afternoon. He believed in his own staff and was the kind of businessman that built his style of business off the model of taking good care of employees and customers. Vegas was a playground he knew how to operate in and succeed in despite his skeletons. His sons only knew how to draw from the piggy bank and screw the next generation it seems. Frank Junior died before he could see it all collapse as the Fertitta Family and Colony Capital continually delayed these bankruptcy proceedings until it exploded in their face.

THE FULL CULINARY UNION REPORT:

Las Vegas Culinary Union Report on Station Casinos –

The Fertittas are looking like targets in the bankruptcy proceedings outside of the culinary union’s concerns. Hundreds of millions of dollars are being lost because of this debacle, and the Fertittas are still high, dry, and not in any soup lines as Dana White pointed out when he insisted there would be no impact on the UFC when the bankruptcy began. Yet, now the picture is vastly different. Finally, it seems that the flood gates are opening and the Fertittas are being seen for what they really are: gluttons, cheats, and greedy scam artists who killed Station Casinos to line their own pockets. This will be borne out over a long and painful litigation process that may implicate some insiders in impropriety, but there likely will be no criminal charges to speak of. This episode won’t send anyone to jail the way I see it unfolding, but it will put the Fertittas in a financial freeze if it drags on for years and lawyers of all kinds have to be kept on retainers. If the business is wrenched away from the Fertittas and Colony Capital by Boyd Gaming, and if creditors pick it apart leaving the Fertittas nothing but the UFC, there will be collateral damage to that organization.

What so many people who watch the UFC don’t realize is that the organization is in debt to the tune of hundreds of millions of dollars. The Fertittas and Dana White enriched themselves personally by assuming that debt for the organization, and much of the first major loan for the company went to buying and destroying PRIDE. The operation from payroll to promotional expenses is not suffering by any measure, and the debt load is not uncharacteristic considering Forbes Magazine put a billion dollar potential price tag on the UFC. Still, if the Fertittas continue to struggle and get bogged down and distracted because of the Station Casinos bankruptcy, they will not have as much of their own personal money to put toward getting the UFC out of debt. There is talk of selling an interest in the company, and it’s not as unlikely now to think about the whole thing going up for sale in time.

The Fertittas may not be front and center and always in the spotlight for their UFC endeavors, but they are the main financial masterminds behind the organization. As much as folks give Dana White credit for revolutionizing the sport, his people skills have been tremendously lacking of late. He also has only a limited financial interest in the company as far as ownership goes. He doesn’t make the big decisions people might think he does, because he’s simply the mouthpiece and not the money man. Dana White’s business savvy is a facade built by years of brainwashing the UFC’s fan base through constant media manipulation. White’s pulled off a masterful hoodwinking by inspiring such polarizing responses from fans who are split between those who love to hate the guy and those quick to credit him with revolutionizing the sport. My inside sources tell me the guy is not all there in real life. I’ve been told Dana once tried to sell a painting he paid millions of dollars for only to find out on appraisal that the masterpiece was just a simple print.

If you’re looking to Mr. White as the guy who is going to save MMA, don’t hold your breath. This guy will only make it worse if he continues to shit on his own talent. His negativity and irresponsibility will only further the issues currently facing the UFC. The organization is simultaneously dealing with sweeping injuries, a couple bad main event decisions, the Station Casinos distraction, and a Strikeforce resurgence that promises to give the UFC a real run for its money. A follow up to this piece will come out over the weekend. Stay tuned. My next installment will delve into more of the reasons why Dana White’s in your face bravado is turning the UFC as a whole into a bad reality show. Even though it continues to claim the top spot in the industry, the UFC’s treatment of fighters and White’s seemingly constant badmouthing and public disputes with his own most valuable employees (the fighters) would be unhealthy in any organization. It’s downright toxic for the UFC for a guy in Dana’s position to have so much power to muck things up. The push for ratings and controversy is getting stale and turning fighters like Quinton “Rampage” Jackson away from the sport entirely. As the Fertittas run out of money to pay for White’s mistakes, they won’t be able to hide the problems he’s created.

Right now everything on the surface looks like the whole operation could be on autopilot for the next 10 years and be fine. Dig a little deeper, though, and you will notice this is an organization that is heading for turmoil. The main problem is not that it can’t handle such turmoil, though. The real disaster lies in the fact that the UFC as a whole doesn’t even seem to realize how hopeless the situation might be if these trends continue. Like the culinary union coming out of the woodwork to levy serious allegations on behalf of their non-unionized brethren about to lose their livelihoods, at some point the insiders at the UFC will be so adversely affected that someone will have to come out and speak for them, too. The fighter angst increasingly showing itself in isolated incidents might spread like a virus and explode like a powder keg. It’s only a matter of time before people really get sick of White and the Fertittas taking all the credit and the spoils for the work of the many staff members behind their success. That of course includes all the fighters who often sacrifice the most for the success of the company and get the least return on their overall investment. It’s time for the other shoe to drop, and it just might drop in a big pile of dog shit, so don’t say I didn’t warn you when it finally does happen.