Vol. 4, No.10, October 2008
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Imperial Ambitions
Gluck helped grow Caesars Palace in the face of increased competition
In fact, he savors a lucky 13. It’s been 13 years since the Gaming Hall of Fame inductee departed Caesars World, where he served 13 years during the pivotal evolution of Las Vegas. In the gaming aftermath, he has owned companies and sat on various boards, most recently that of California Pizza Kitchens, which he just left. Gluck runs an investment company with his daughter Tracey. He’s the vice president of UCLA Medical Center, which is ranked the third highest-quality hospital in the nation. And he plays a spirited session of tennis, just about every day.
Oh, Henry, life is good.
“The body seems to be holding up, I’ve been married to Arline for 56 years, and my kids still talk to me,” he said, laughing. “I can’t complain.”
Born in Germany and educated at the Wharton School in Pennsylvania, Gluck enjoyed one sustained gaming burst. It occurred primarily from 1982 to 1995, spanning the growth and maturity of the Strip.
“I loved so many different elements of it,” Gluck said. “There’s the thrill of the corporate end, with the big investments, the capital assets, the structures, the buildings, the businesses and the people in one big pot.
“The other end was the high-end gaming business. Think of how thrilling it was to go up against a guy who is betting over $200,000 a hand against you at baccarat, or a guy betting $75,000 a hand at blackjack, and he’s got the whole table. It’s exciting, to say the least, and it could be very upsetting too. Anybody who tells you, when it’s his responsibility to run a property, that it doesn’t give you a twitch, is not telling you the truth.”
Gluck embraced a changing phenomenon in Las Vegas. He began when Caesars dominated and defined the Strip. Caesars Palace, with its omnipotence, outdoor major-fight arena and entertainment niche, appeared to compete only with itself. Before Gluck departed, however, it faced the presence of Steve Wynn and a Strip that exploded with growth.
Nationwide competition further enhanced the need for companies to reinvent themselves.
“We were the first to recognize that we had to bring more to casinos than just gaming,” he said. “We had to provide more options and not just entertainment. We had to give the women and families more to do, make what we offered more compatible with the market.”
What Gluck did in the face of increased competition became his proudest achievement. He started a revolution that has since swept over the entire industry in building the Forum Shops.
Like any visionary, he battled fiercely against the prevailing wisdom of the time. Before the Forum Shops could become the most profitable mall in the country, it was regarded with skepticism.
“They blasted me,” Gluck said of the reaction from casino officials, media and contractors. “They called it Henry Gluck’s tomb. People could not believe we would devote valuable space to retail. It took seven years for this process to be complete. I had seen it as an ability to attract different kinds of people, so we saw it through.”
Gluck structured the deal the way a casino operator might four-wall a fight. He let others take the risk. Caesars opted not to own the stores and it did not realize the revenue from leases. The shops were placed next to the entrance for Caesars, enticing shoppers to later hunt down different types of deals, like progressive jackpots. Located next to the property, the shops became a recruiting ground for the gaming floor.
Caesars did receive a percentage of companies’ exceeded targets and maintained one major, intangible.
“We left some money on the table, but that was OK,” he said. “We controlled all the advertising. We controlled signage. We controlled parking. The deal was unheard of in retail complexes. We basically said, ‘Here, guys, you invest hundreds of millions of dollars on our property and give us a percentage of it. You let people throughout the world know that you are going to build at Caesars.’
“So, for no capital investment whatsoever, we drew 20 million people a year just through the Forum Shops. In the first year, business on the north end in the slot business doubled. Business for all of Caesars went up 35 percent that first year.”
Numbers alone did not provide the satisfaction. Gluck persuaded unions against blocking non-union activity. He convinced them that increased business affected the entire city and widened the overall revenue pie. Gluck also overcame a difficult final negotiation with powerful shops developer Mel Simon.
“He didn’t want to sign the deal because he had never done one like this and he figured it was such a big headache that everybody would want him to do the same in the future and he wouldn’t get leases,” Gluck said.
It was a big-money showdown. Simon, one of the world’s richest men, according to Forbes magazine, was used to getting his way. Gluck convinced him to sign the contract by promising to turn over control of advertising and signage in six months if the original arrangement didn’t work.
“But it can’t be in the contract,” Gluck told him. “All you have is my word.”
It was enough.
The deal went through, and the Forum Shops became so popular that the Pier at Caesars in Atlantic City was patterned after them.
Before leaving Caesars, Gluck helped the company fight off a hostile takeover. He views gaming with mixed feelings now.
“On the one hand, it’s so much better,” he said. “There is so much diversity; you have the entertainment, the suites, the restaurants, and that’s all great. On the other hand, you have so many people coming in that you do not see the same level of service as you did years before.”
That’s the world, he knows, in a nutshell.
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