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Steve Friess: Union Leaders Let Members, MGM Down In Detroit Strike Fiasco

The Detroit casinos and unions sought one deal for everyone. Workers at MGM Grand Detroit had other ideas and will stay on the picket line.

Steve Friess State of Play MGM Detroit Strike Continues
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State of Play with Steve Friess

State of Play is a column that focuses on the trending stories in the casino and gambling space with sharp and clever insight from senior staff writer Steve Friess. Over his 25-year career, Friess has contributed to publications such as Newsweek, Time, New York Times and more.

It takes an awful lot for me to feel the slightest empathy for a multibillion-dollar corporation. And it’s not that I feel actual pity, per se, for MGM Resorts International as it faces an impossible situation after its employee unions at the MGM Grand Detroit rejected a new contract on the eve of Thanksgiving.

If anything, I feel sad that the union did such a lousy job educating its members about why it was time to get back to work. Days before Thanksgiving, they broke ranks with employees of the other two corporate-owned downtown gambling joints, Hollywood Casino at Greektown and MotorCity. The others stopped striking after 32 days; MGM workers are still out there.

Because of that, nobody really has any idea what happens next. It is entirely likely that an obstinate workforce will remain out throughout the holidays and must keep up its picket lines even as the Michigan mercury plummets. There were bargaining sessions on Wednesday and Thursday this week, but it’ll be shocking if anything useful emerges from them.

MGM Grand Detroit spokesman Jason Barczy sounded a vague but hardly optimistic tone in a brief statement to PlayUSA: “We are prepared to listen when we meet this week and remain committed to reaching an agreement on a new contract and ending the strike.”

Someone failed. I’ve talked to several MGM Grand strikers and their ignorance of what they did here is nothing short of tragic. I don’t blame hard-working, misinformed laborers. I blame whoever is dining out on their dues.

Why is MGM Grand Detroit different?

Because what they told me was so counterfactual and I don’t wish to shame them, I’m not going to name any of the employees. A couple said I could, but I just felt bad that their own leaders did such a crap job here.

My fundamental question was: Why is MGM Grand Detroit different than the other two hotel-resorts?

“Well, they’re making big bucks off their app,” one dealer tells me. “My tips are down because people play online.”

A waitress explained, “Everyone knows MGM owns all of Vegas and literally prints money over in China, so they can afford more than anyone else.”

Another dealer told me, “MGM makes a sh*tload more than the other two, so we deserve something better.”

Let’s unpack all of that.

It is true that MGM Resorts is a significantly larger and more profitable company. The market cap is about $13.5 billion, second only in the casino-resort space to Las Vegas Sands’ roughly $35 billion. Penn Entertainment, which owns Greektown, has a $3.8 billion market cap. MotorCity is privately held by the Ilitch family, so there’s no way to know its overall value.

It is also true that MGM Grand Detroit is bigger and more profitable than its two local competitors. State reports show that in 2022, MGM’s gambling revenue was about $600 million, up 8.3% from the Covid-marred year of 2021. MotorCity and Greektown were actually down last year and their combined revenues barely exceeded MGM’s alone.

While it is true that MGM Resorts dominates the Vegas Strip from top (Aria and Bellagio) to bottom (Circus Circus and Excalibur), it is not true that MGM has some monster presence in Asia. The MGM Grand Macau is a modest interest over there compared to what LVS and Wynn Resorts have in the Chinese region — and all of them have suffered significantly from draconian travel policies from the mainland that carried on much longer than anything anywhere else in the world.

This matters because there’s a xenophobic, knee-jerk reaction to the notion of any American company doing business in China. It is a powerful political pressure point that unions have exploited as skillfully from the left as the Make America Great Again gang have from the right. Anything Chinese is suspect. I noticed the employees I talked to didn’t have anything to say about MGM’s other American properties or its failure to realize the worldwide ambitions that former CEO Jim Murren laid out when they added “international” to its corporate name.

MGM is not an online juggernaut

Perhaps more importantly, though, the view that MGM Resorts is an online juggernaut that should — or could — redistribute its iGaming revenues to land-based casino employees is incredibly misleading. MGM has raked in the most revenue in Michigan since online casino and sportsbook apps launched in early 2020, to be sure.

But MGM Resorts only owns half of BetMGM, the subsidiary it launched with Entain. Figured that way, its share of those revenues is about the same in Michigan as what FanDuel earns with MotorCity.

The argument about the casinos making bank online was a major talking point in this round of negotiations in Detroit. It might have sounded good in a press release, but it’s not helpful at the bargaining table.

As MGM employees are about to discover.

MGM workers want more pay, shorter contract

But the biggest problem here is this: If MGM employees wanted to be treated differently, they shouldn’t have agreed to be represented alongside the employees from the other two resorts through the Detroit Casino Council. If they believed they had different issues and perhaps a different expectation for the outcome, they should have made that clear from the start.

Instead, the casinos and unions sought one deal for everyone. That was the playing field the casinos expected. The unions embraced it because that meant they had 3,700 people on strike and put the pain on all of the land-based casinos at once.

The rejection of the contract that emerged leaves everyone — the unions, employees and casino management — at bay. You know this because nobody from the unions knows what to say, so they’ve said absolutely nothing to reporters. On the DCC’s site, the union is still trumpeting the settlement as “a historic investment in Detroit’s future.” It represents “the largest wage increases ever negotiated in the Detroit casino industry’s 23-year history” among other victories.

Sources at MGM tell me they’re gobsmacked by the rejection and unclear what to do. They don’t believe they can offer anything more or different to their employees than what workers at the other properties received.

MGM workers want more pay and a shorter contract, both of which are unlikely to occur. It would also be a Pyrrhic victory; the Detroit Casino Council would basically cease to exist and each property would be on its own.

MGM Grand Detroit workers out on their own

With MotorCity and Greektown employees heading back to work now, MGM workers are about to discover why they tied their fortunes together. The Detroit-area public, which is unusually sensitive and sympathetic to union actions, can now go back to casinos without feeling like they’re crossing picket lines.

Everyone else is going to move on. MGM Grand Detroit will suffer, to be sure, and it might even lose some customers permanently to competitors. But the company has no choice but to hold firm and wait this out. If it doesn’t, it invites havoc and instability in the relationship between labor and management for years to come.

That MGM workers haven’t gamed all of this out is a real bummer. The smartest move now is to get that education out there and take another vote.

Otherwise, they’re going to spend what is shaping up as a very chilly winter out in the cold.

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Steve Friess writes the State of Play column for PlayUSA twice a week. He's a veteran gambling-industry reporter who began covering Las Vegas in 1996 and covered the openings of resorts in Asia, Europe, and across the U.S. His bylines have appeared in The New York Times, Playboy, New Republic, Time, BusinessWeek, Newsweek, New York magazine, and many others. He, his husband, their children and three Poms live in Ann Arbor.

View all posts by Steve Friess

Steve Friess writes the State of Play column for PlayUSA twice a week. He's a veteran gambling-industry reporter who began covering Las Vegas in 1996 and covered the openings of resorts in Asia, Europe, and across the U.S. His bylines have appeared in The New York Times, Playboy, New Republic, Time, BusinessWeek, Newsweek, New York magazine, and many others. He, his husband, their children and three Poms live in Ann Arbor.

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