Like individuals, corporations have personalities. At Isle of Capri, the company’s personality comes from founder Bernie Goldstein. As the first gaming operator outside of Las Vegas or Atlantic City, Goldstein’s company was as different as the jurisdiction in which it was born, Iowa. With roots set firmly in the Midwest, Isle of Capri grew by leaps and bounds in the early days of riverboat gaming. From Iowa, Isle moved to Mississippi, Illinois, Missouri and Louisiana.
The company found Middle America to be its comfort zone. Every time it reached out to expand that territory, there were problems. After the ill-advised purchase of Lady Luck in Downtown Las Vegas and ill-fated foreign ventures in the Bahamas and the United Kingdom, Isle retreated to its safety zone. But then, the economy went south.
Luckily, Goldstein had a succession plan, and had brought in an experienced team of gaming executives just before the downturn, led by Jim Perry and Virginia McDowell. Both executives had led major casinos and gaming companies, from the Tropicana in Atlantic City to Argosy Casinos and Trump Hotels.
Goldstein later stepped down as chairman, ceding the title to Perry, who recently resigned as CEO, a title inherited by McDowell. Perry remains executive chairman of the company, and McDowell now has the responsibility for implementing Goldstein’s vision.
Planning to Succeed
McDowell says that building a strategic plan upon joining the company in 2007 required them to identify the company’s strengths and weaknesses. What they discovered, she says, is that the company was good at the basics.
“We specialize in blocking and tackling, and we’ve cornered the market on having fun,” she says.
McDowell says the plan crafted at the start of their tenure remains the roadmap they are following today.
“That plan is the foundation of what we want to do as a company going forward,” she says. “Of course, we implemented that plan about six months before the economy tanked, so we had to go to plan B. In 2010, we started to see the economy and consumer confidence recover a bit, so we went back to the original plan. We’ve updated it, of course, for the ‘new normal,’ but we still believe it’s valid. We’re going to continue reinvesting in our existing portfolio, looking for organic growth opportunities, and to continue to increase free cash flow for the entire company.”
When the economy intervened, aggressive cap ex plans had to be shelved and the company began looking for ways to reduce expenditures. But Isle did it differently than other casino companies, particularly its competitors, and it started with a financial restructuring led by CFO Dale Black.
“We have worked very hard to improve our capital structure,” McDowell says. “Most recently, we pushed our various maturities out to as late as 2019. Earlier this year, we did our equity offering that went very well. During the teeth of the recession, as a result of the property enhancement programs we put in place, we were able to pull $30 million to $40 million out of the costs at the property and the corporate levels. At the same time, we were able to pay down our debt by over $300 million. We were really focused on decreasing our leverage during that time period.”
But Isle continues to focus on its customers, and how to parlay their experiences to success.
“You don’t want to cut so deep and so far that it negatively impacts your customers’ experience,” McDowell explains. “Some of our competitors did that and we benefited from their cuts. Our customers hold us to a higher standard. They tell us, ‘My leisure dollars are more precious than they’ve ever been, and I can only make one choice where I used to be able to go out three or four times a month.’ We believe that the relationships we created with our customers and the value we held for them during the great recession is going to help us on the other side.”
How that translates to a higher share price is problematic.
