Caesars Entertainment CEO Gary Loveman has been called "The Experimenter" and the father of the modern comp after creating the most sophisticated customer-loyalty program the casino industry had ever seen.
But his critics contend the former Harvard associate professor often failed to calculate the human aspect of the casino industry.
As Loveman prepares to step down from his post in June, the results of his grand casino experiment are inconclusive. He will remain chairman of Caesars Entertainment after former Hertz chief Mark Frissora assumes the CEO position July 1.
Loveman did not return a telephone call requesting comment.
Frenetic growth at Caesars, which became the world’s biggest casino company when it was bought by Harrah’s in 2005, has come to a screeching halt, as the juggernaut, which owns or operates more than 50 casinos across three continents, suffocates under mountains of debt racked-up during a 2008 private-equity buyout.
The debt, the recession, a saturated casino market, and tectonic shifts in the way Americans spend their entertainment dollar sent Caesars’ main subsidiary into Chapter 11 bankruptcy in January. Caesars hopes to slash that unit’s debt to about $8 billion from about $18 billion and start posting an annual profit — something Caesars hasn’t done since 2009.
It’s a stark state of affairs and hardly a ringing endorsement of Loveman’s tenure heading the company.
Rajiv Lal, a senior professor of retailing at Harvard Business School, says Caesars’ current finances shouldn’t obscure a basic truth about Loveman: “When he came to Harrah’s, he really changed the rules of the game.”
The comp system he spearheaded, now called Total Rewards, uses analytics to precisely track customer behavior and tailor Caesars’ marketing budget accordingly. It’s arguably Loveman’s defining achievement in the private sector, the brainchild of a man who spent years studying technology’s impact on productivity.
“The most important thing he did is say ‘Look, I really want to make sure that the amount of money we spend on marketing is commensurate with the size of the wallet of the customer,’” Lal says. “When he instituted this program, he was able to assess with this statistical analysis what is the size of the wallet, or what is the customer’s lifetime value, and allocate the marketing budget accordingly on an individual basis. ”
“You have to give him credit for doing that,” Lal says.
Chris Ireland, who tended bar for 27 years at Showboat Casino Hotel until Caesars closed the casino in August as part of a downsizing efort, concedes Loveman’s influence.
For Total Rewards, Ireland says, “undeniably the man deserves credit. It was so successful that everybody in the industry now has followed suit.”
But while Loveman may have had a gift for quantifying human behavior with algorithmic precision, among Showboat workers, Ireland says Loveman never shed a reputation as an aloof, numbers-obsessed pedant who didn’t truly grasp the human aspect of the casino industry and the people who worked in it.
“To us it didn’t seem like he had a seat-of-the-pants feel for the business. It was all analytics. It was spreadsheets and pie charts,” Ireland says of the man MIT Technology Review dubbed “The Experimenter.”
For many, the ultimate affront came when Caesars announced it was closing Showboat even though the property was still reporting a profit to state casino regulators.
Assemblyman Chris Brown, who took to the Boardwalk in July to decry the announcement, has been calling for greater scrutiny over Caesars ever since.
Asked Friday about Loveman’s legacy, Brown said the CEO’s poor decisions have “led to crushing debt and bankruptcy.”
Closing Showboat was just one of the decisions “that he made for the global corporation … at the expense of working families in our county,” Brown said.
“If the measure of success is leaving a place better than when you found it, then Mr. Loveman falls short in Atlantic City.”
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