Wall Street Tumbles, Boyd Stock Craters
“Panic on Wall Street”
April 2, 2007: New Century, an American real estate investment trust specializing in subprime lending and securitization, filed for Chapter 11 bankruptcy protection. I saw the crawl at the bottom of the television screen as I watched CNBC. I had never heard of New Century, nor did I pay much attention. All I knew was that my Dania Beach house had risen in price since our purchase in 2003. I was more concerned with the share price of Boyd Gaming, who now owned Dania Jai-Alai. I had purchased a couple hundred shares thinking with the future success of slot machines in South Florida, especially at our property, the stock would soar. With my past investments, you would never mistake me for Warren Buffett. But, me being on the inside… this had to be different.
July 19, 2007: The Dow Jones Industrial Average (DJIA) closes above 14,000 for the first time at 14,000.41. Boyd Gaming’s price was rising. I was a genius. I was making money! Boyd’s $4 billion Echelon project in Vegas would certainly send the stock higher. Though still unsure of my future role with the company, I felt our new fronton/casino would be first class, a major asset to their gaming empire.
August 6, 2007: American Home Mortgage filed bankruptcy. The summer had been slow. Construction on our new facility had not begun. Drawings and renderings were being revised. We were trying to adapt to the new Boyd corporate policies. John Knox was still running the show locally. But, he began getting questioned on payroll, time clocks, vacation policies, human resources.
January 11, 2008: Bank of America agreed to buy Countrywide Financial for $4 billion in stock. Shortly thereafter, stock markets fell to a yearly low. By the end of the month, U.S. stocks had the worst January since 2000. I began to worry as Boyd Gaming’s stock began to slide. How would this affect their planned expansion? During past recessions, gambling usually picked up. People trying to make an easy buck. Would this continue to happen in what appeared to be a normal downturn in the stock market? Or, was this anything but “normal?”
March 17, 2008: Bear Stearns, with $46 billion of mortgage assets that had not been written down and $10 trillion in total assets, faced bankruptcy. Bear Stearns? One of the most respected investment banks in the U.S. I remember Roger Wheeler hiring Bear Stearns to help with selling World Jai-Alai. This was huge news and the markets began to plummet.
Rumors began to circulate around Dania Jai-Alai that Boyd might “pause” on the construction of Echelon. The foundations of some of the hotels and casinos had already started. How can you delay a project of that magnitude? Surely, our minor $200 million Dania Jai-Alai Casino plan would continue. That had to be peanuts for them, I figured.
September 15, 2008: After the Federal Reserve declined to guarantee its loans as it did for Bear Stearns, the Bankruptcy of Lehman Brothers led to a 504.48-point (4.42%) drop in the DJIA, its worst decline in seven years. Three days later, in a dramatic meeting, United States Secretary of the Treasury Henry Paulson and Chair of the Federal Reserve Ben Bernanke met with Speaker of the House Nancy Pelosi and warned that the credit markets were close to a complete meltdown. Bernanke requested a $700 billion fund to acquire toxic mortgages and reportedly told them: “If we don’t do this, we may not have an economy on Monday”.
Echelon Place was officially put on hold. Other options for Dania Jai-Alai were now being discussed. Apparently, even a $200 million investment in a new facility was dicey. The Board of Directors for Boyd Gaming were now in survival mode. No one had ever seen anything like this hit the U.S. economy since the Great Depression of 1929.
Meanwhile, while walking through the airport in Atlantic City, a Boyd executive bumped into a past consultant who was hired to establish HR policies for a newly acquired Boyd property. His name was Dave Winslow. Winslow was between jobs and was asked if he might consider working for the company in South Florida, at Dania Jai-Alai. He would be responsible for establishing and implementing new Boyd HR policies. Winslow quickly accepted.
Dave Winslow arrived in Dania the following week. He was introduced to John Knox as our new Director of Human Resources. Of course, John had worn both hats in the past, but mainly just on paper. Under Steve Snyder’s ownership, there was really no actual Human Resource position. John, CFO Clint Morris, and Snyder himself made those decisions, similar to a family-run business. And it certainly seemed to work. I remember I was told I got two weeks vacation. But, if I needed time off, Steve and John didn’t hesitate to accommodate me. I remember when my dad was seriously ill and I needed to take some time to be with him, Steve didn’t hesitate to tell me, “Take all the time you need.” I never saw a handbook for Dania Jai-Alai.
Well, it seemed Boyd Gaming, being a major NYSE corporation and over 40,000 employees, attempted to do things one way, the Boyd way. Dave Winslow’s job was to memorialize these policies in writing and make sure John had the employees follow them.
Shortly, things began to change. As the economy got worse and “the bloom began to come off the rose,” it became apparent that Boyd wanted to streamline our operation. Dave Winslow seemed to be working more on cutting personnel than just writing a new Boyd/Dania Handbook. John began getting enormous pressure to fire employees, consolidate departments and positions. The excitement from being acquired by this new company, with the future looking so bright, now started to become a treacherous landmine. Black Friday was coming. Few would survive!