New Wynn board chair makes his case
Satre says revoking casino license wouldn’t be fair
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The new, 69-year-old chairman of the board at Wynn Resorts is expected to take a lead role in efforts to convince Massachusetts regulators that the company should be allowed to hang on to its casino license in the wake of Steve Wynn’s messy departure amid allegations of sexual misconduct.
It’s easy to see why Elaine Wynn, the ex-wife of Steve Wynn, recruited Satre for the task. He is a veteran of the casino industry, having served as chairman and CEO of Harrah’s, chairman of International Game Technology (the world’s largest manufacturer of slot machines), and president of the National Center for Responsible Gaming. He also has blue chip business credentials from stints serving as chairman of the board of Nordstrom and NV Energy.
Satre says he knows both Steve and Elaine Wynn – Steve from previous gambling industry connections and Elaine from a mutual interest in educational issues in Nevada. He says Elaine called him in May and wanted him to take over as chairman immediately. Company officials and board members were wary, in part because the company had been battling Elaine Wynn for seven years in court. Satre says he didn’t want to be rammed down the company’s throat, so he stepped back and waited. The company subsequently reached a settlement of its legal dispute with Elaine Wynn and Satre joined the board in August. (Elaine Wynn is now the company’s largest shareholder and the firm’s press releases describe her as co-founder.)
Now Satre’s goal is to convince gambling regulators in Massachusetts and elsewhere that the company has shed its ties to Steve Wynn and moved on. In our interview at CommonWealth’s office last week, Satre makes his case in an amiable, matter-of-fact way. In a legal sense, he says, the company should retain its license because it has parted ways with anyone regulators would deem unsuitable. But I ask him whether that’s enough in Massachusetts, where Steve Wynn personally closed the casino deal. Without Steve Wynn, is the company that won the casino license still the same company?
Satre acknowledges the company may not be the same, particularly when it comes to designing casinos, an area in which Steve Wynn excelled. But he says Massachusetts will get a Steve Wynn-designed casino at the Encore Boston Harbor in Everett – without Steve Wynn. “What I’m saying is that we can separate Steve from the company and still accomplish everything we promised here,” he says.
COMMONWEALTH: What brings you to Boston?
PHIL SATRE: I have my interview with the Massachusetts Gaming Commission about my own personal suitability. They’ll go through my personal background, financial background, questions that they may have that relate to my past history in the gaming industry. I think six board members are being interviewed by them this week because we have so many new board members on the Wynn board. Before they make the final recommendation on this [investigation], they actually have to interview and finish the investigations of the board members.
CW: Do you know Steve Wynn?
SATRE: Oh, yeah.
CW: How do you know him?
CW: What was your impression of him?
SATRE: I was always an admirer of his creative skills and his incredible dedication to the design process. No one – no one – in the hospitality industry rivals Steve in that. He just had a gift for that. I admired him for that and I tried to learn from him to some extent. But I have not had any interaction with Steve for about seven or eight years.
CW: Elaine Wynn, Steve Wynn’s ex-wife and the company’s largest shareholder, was the one who urged you to become chairman of the board. It sounds like she didn’t have to twist your arm too hard.
SATRE: It was actually a difficult decision. I asked for some time to think about it. So I spent about four or five days thinking about it and I made my own analysis of what I thought the situation was at Wynn. I felt very strongly that the major constituencies of the company – our employees, our communities, our shareholders, our regulators, and our customers – all needed to be considered in this decision. From the research I did, I felt that, despite the allegations made in the Wall Street Journal article, the workforce had not lost its strong feelings about working for the company – the pride that they felt, the strong belief that they were working at the best firm in the business, and being compensated better than their counterparts at other casinos. Even though we went through that rough area where all of this was in the news, we didn’t lose people. Second, I wanted to make sure our customers stayed with us. Wynn has one of the highest levels of loyalty of casino customers in the business. That’s partly because it’s a special place. You feel like you’re in a special place when you’re a customer there. So I felt like the company was in good shape.
CW: What impact does Steve Wynn’s departure have on the company?
SATRE: From my own experience of being a competitor of his, I knew quite well that Steve was capable of creating an environment that customers wanted to be in. But none of the customers really knew him. It wasn’t his style. Because of his eyes situation [Wynn’s vision is seriously impaired], he just couldn’t walk around and reach out and shake the hand of a customer. That was impossible.
CW: So give me your pitch. Why should Massachusetts regulators allow Wynn Resorts to retain its casino license to operate here?
SATRE: There were three cases sort of like this that occurred in the time that I was in New Jersey in the early ‘80s. What New Jersey said was, we’re willing to grant you a license but we’ll only grant it if individual a, b, or c or all of them are gone.
CW: And you feel you’ve met that standard at Wynn Resorts, getting rid of any objectionable employee or board member?
SATRE: Yes. I believe your law is almost exactly like the New Jersey law in terms of what the requirements are for a company to be qualified to have a license. In fact, that’s what we have said to the regulators here. We’ve pointed out those cases in New Jersey and they’re familiar with them. So when we have a hearing, they’re going to look at who’s on the board, who’s in the management, and if there was an area of the company or an individual within the company that they found unsuitable, is that person no longer involved with the company. I understand the issues historically. I mean, you can’t avoid that. His presence was huge – Steve’s, that is – in the original licensing process, the fact that people identify the company with him personally. I’m not going to say that it’s an easy case, but if you look at what has been done everywhere else, I think it’s pretty straightforward. The individuals that are running that company today, whether it’s the management team or the board, are the people that they have to place their trust and confidence in. We are the company.
CW: Recently, Steve Wynn’s attorneys filed suit claiming that Wynn Resorts had shared information protected by attorney-client confidentiality with investigators from the Gaming Commission. It seemed like something the Gaming Commission could have let go unless the information that was obtained was blockbuster material.
SATRE: I know what the documents are. I don’t particularly think that there’s anything that’s significant in terms of the primary area of investigation. Let me back up and just make sure you understand the process. We did a very significant special committee investigation, interviewed 135 people, went through thousands and thousands of documents, prepared a report that was presented to the board. But the report didn’t include several documents that came to light later. And those documents we’re a very small percentage of the documents that had been reviewed by the special committee. And when those particular documents were discovered, we provided them to the Massachusetts Gaming Commission, we being Wynn. When Steve Wynn’s lawyer found out, his claim was that those documents are privileged documents and that Steve Wynn has not waived his attorney-client privilege. What you’re dealing with here to a certain extent is a very strong feeling by his counsel that you should not ever waive that privilege. In my view, they’re doing that for that purpose rather than to block some actual content.
CW: So why is the Gaming Commission fighting Wynn’s challenge if the documents aren’t important.
SATRE: I don’t know the answer to that, but I can give you my best guess. About five or six weeks ago, Ed Bedrosian [the executive director of the Gaming Commission] was responding to questions in one of the commission meetings on why the process has been delayed. And Ed said we’re going to be as thorough and as complete as we possibly can be, and only once we get through this process and have all of the documents will we then present that to the commission. They’re now being told you can’t have these 10 or 12 documents. The natural reaction is these must be explosive documents. They must be a smoking gun on x, y, or z or some other person. And the fact of the matter is from the standpoint of a lawyer advising his client, it’s not that at all. It’s just never waive your privilege because if you waive it then you waive it forever.
CW: What is going to be your role as chairman of the board.
SATRE: I’ll have a more active role with the regulatory structure. Later in this process the Gaming Commission is going to want to hear how this company is going to be governed? I’ll talk about how we’ve changed the board, what we’ve implemented from a governance standpoint.
CW: If you were a betting man and laying the odds, what do you think your chances are of retaining the license? It seems like you think it’s going to go your way.
SATRE: I wouldn’t say that. I understand that this has not just legal and regulatory implications. I understand that this has got a political ramification here. Typically, that’s the case in startup jurisdictions. When you’re in the early stages, it’s very difficult to not see yourself as being at the epicenter of a political firestorm because a lot of people believe that they never should have legalized it in the state in the first place.
CW: Do you think the fact that Steve Wynn’s name is part of the name of the company is a factor? His name is no longer on the casino-hotel under construction here, but it’s still part of the company name.
SATRE: I don’t think you’ll feel that way in five years. I don’t think there’ll be nearly the association with an individual as it is with the company. Here, of course, it’s Encore Boston Harbor, but even in Las Vegas or in Macau I don’t think it’ll be as strongly associated with Steve. And I think that’s simply because he is going to be more and more distanced from the company. He’s not going to be in TV ads. He’s not going to be in posters throughout the property. He’s not going to be the voice that people hear on their phone when they go in. I understand why right now it seems very difficult to separate that, but I believe it’s not fair to this company and to the 4,000 people that will be working there. It’s not fair to all the management that we brought in to operate this casino. Frankly, I don’t think it’s fair to the taxpayers of the state or the cities that benefit from this company. It’s like you’re saying you’re all going to pay the price because it’s your bad luck you had a person that can’t get approved by us even though he’s gone, even though he doesn’t own shares of the company, or anything like that. That’s why the statutes have been drafted to allow for the company to be the entity that’s licensed.
CW: But Steve Wynn was the guy who personally closed this deal in Massachusetts.
SATRE: His credibility was based on his ability to build things. It wasn’t him alone that built those things. As I said, he was gifted in the design process, but he had people that still work for us today who are really the authors of what Steve then edited, what Steve imagined. And he gave them license to go out and create those things. It’s possible that 15 years from now when we open a new Wynn casino someplace or a new Encore casino someplace, it may not be quite as creative at that point in time. I think that’s possible. I don’t want to promise it because I think we still have a lot of the talent that develops these facilities. But I will tell you this – Encore Boston Harbor will meet everybody’s expectations of what a special experience it is to be in a Wynn Resorts property. What I’m saying is that we can separate Steve from the company and still accomplish everything we promised here. We will be the finest hotel casino property on the East Coast of the United States. We will outperform anybody else in the state of Massachusetts in terms of casino performance – however you want to measure it. I’m confident of that. We don’t have to have him as the chairman and CEO of the company to do that.
CW: After the Wall Street Journal story in January, the Gaming Commission launched an investigation and said a $7.5 million settlement that Steve Wynn negotiated with a manicurist in 2005 had not been disclosed to the agency’s investigators and steps were taken to keep it out of the public domain. Officials at the commission said the settlement would be a “critical element of this review.” What can you tell me about that?
SATRE: It’s pretty much agreed that by 2016 [after a Bloomberg report on an Elaine Wynn legal filing alleging that Steve Wynn made a multimillion-dollar payment after being threatened with “allegations of serious misconduct”] it was brought to the attention of the general counsel, Kim Sinatra; the board; and Matt Maddox [then the president and now president/CEO] knew about it. He’s said so. That single event was described by Steve, supported by the staff that had worked on this issue, that it had been a consensual relationship and that he had agreed to a payment of a settlement with this particular individual. And everybody at that point in time on the board agreed with that settlement.
CW: What happened after the Wall Street Journal story came out?
SATRE: I think people’s first reaction was this is Elaine Wynn still going after Steve Wynn and creating false allegations about Steve. The company’s response was a defiant one. In my view, you could look at it and say that’s a natural reaction, you know, this guy has been leading this company for a long time and we know he has this bitter litigation with his ex-wife. Their immediate reaction was to say it’s because of her. And that’s because that was Steve’s reaction. But then the story unfolds and, when it was clear there was some substance to these claims and we have a bigger problem and it’s not just because of the litigation between Elaine and Steve, everything changed dramatically. Steve resigns and we get him out of the stock. He’s moved off the property, he’s lost all rights to use the facilities. And then the board is completely transformed. I’m going to speculate a little bit because some of those board members would have probably been second-guessing whether they should have done something in 2016. I don’t know that to be the case because in 2016 it was just one particular settlement and that was all it was.
CW: And your belief now is that when Steve Wynn resigned, even though he proclaimed his innocence, that was the right thing to do?
CW: And you must be convinced that there is substance, as you said, there’s substance to these allegations.
SATRE: Well, I don’t have any way of knowing personally what happened. I wasn’t there and I’ve heard, you know, read the accounts in the Wall Street Journal and all of that. But I would say that if you had that much happening at the epicenter of your company and you didn’t do something about it, you’re risking not just what you’re pursuing as a licensee here, you’re risking the future of the company. Your obligation as a director is to represent all shareholders and he was a 10 percent shareholder and you have the other 90 percent that you’ve got to say what’s the right decision for them using your best business judgment.
CW: Can you believe the company is putting a $2.6 billion casino in Everett, with a power plant across the street, a wind turbine nearby, and a Costco across the railroad tracks?
SATRE: You have to look at it from the standpoint of it’s not just what it looks like today or on June 24, 2019. It’s what it’s going to look like five years from now.
CW: What do you think it’s going to look like?
SATRE: I think some of the things that you’ve made observations about won’t be there anymore.
CW: The power plant may be shut down permanently in three to five years, possibly sooner.
SATRE: That’s why I gave you a longer time frame. I will tell you that when you’re a casino customer in particular, you’re not going to be preoccupied with the vistas because it’s a different kind of experience. Most of what’s happening inside those buildings is focused on the inside of the building rather than the outside of the building. I’ve built some beautiful towers in Australia and New Zealand with great views, but all the guests are downstairs in the casino.
CW: That’s interesting. That’s a big difference between you and Steve Wynn. He was always emphasizing everything else going on at his properties. He’d say the money from the casino made everything else possible, but one casino was pretty much like any other casino. The key to success, as he saw it, was everything else.
SATRE: It is a difference between us, I will absolutely agree with that. Steve had a different focus. My focus has always been let’s make this a great casino experience. He, too, made a great casino experience, don’t get me wrong. But I was more focused on the casino as being the driver.CW: Steve Wynn always said he’ll design the facility so you won’t even notice the power plant. You’ll just see the skyline of Boston.
SATRE: He’s right about that. We were at the construction site this morning. You have some absolutely stunning vistas, notwithstanding the power plant or the big wind turbine. We were up on the 24th floor. Spectacular. It’s amazing. It really is. We won’t disappoint people.