Casinos Up the Ante

May 29, 2002

While some may argue the cultural relevance of casinos, no one is arguing that the four casino facilities in Northern Michigan are impacting our communities. In Petoskey, Victories Casino is planning a $24 million dollar expansion. The Little River Casino in Manistee also continues to expand.
Collectively the casino operations in Northern Michigan generate over $500 million dollars in annual revenues. Each casino under a state agreement is required to contribute 2% of their electronic gaming revenues to local governments and schools. The four gaming operations during the last year contributed $5 million dollars to benefit area law enforcement agencies, restoration of river wildlife and countless school programs including grants to bring writers and musicians to entertain and educate area students.
The casino operations are having a daily tourist and economic impact on the area as they attract numerous visitors who pump millions of dollars into the local economy. Collectively the casinos are spending over $1 million annually on entertainers with that number to increase substantially in the coming years.
The casinos generate more income in one day then most cultural, art and entertainment organizations in the area have in their budgets for a year. While area businesses and organizations are looking for grants and other means to subsidize cultural and entertainment offerings the casinos are giving grants to many and seem to just need to open their slot machines to fund their own entertainment operations.
Recently local resort owners have suggested that area casinos are operating from an unfair competitive vantage point. Some resort owners believe casinos are taking customers away from traditional resorts that are unable to offer gaming on site. Casinos counter that gaming operations have given Native Americans economic, social and cultural opportunities not previously available in the traditional marketplace.
With no legal hurdles in front of them, Traverse Bay Entertainment will move forward with phase IV of their $75 million expansion plans at Turtle Creek in Williamsburg. Plans that call for an 8-story 318-room, 20 suite hotel, a 330 seat Fresh Market Buffet, 120-seat steakhouse, video arcade, gift shop, kids entertainment area and 27,000 additional square-feet of gaming space. The expansion will also include the construction of a covered amphitheater with 5,000 bench seats and room for additional 5,000 in the lawn.

VIEW FROM THE TOP
Jeff Livingston, CEO of Traverse Bay Entertainment and the Grand Traverse Band Economic Development Corporation, took time to share his perspective on how the two gaming operations he oversees are impacting Northern Michigan. He arrived in Traverse City last September and immediately embarked on a plan to expand the Band’s gaming operation. Traverse Bay Entertainment currently employs 1,200 with an additional 500 to be hired as the expansion plans are completed.

NE: Discuss how Traverse Bay Entertainment has been impacting the community from a cultural and entertainment standpoint:
Jeff Livingston: We have been in the area for 20 years in the gaming business. The way the members of the Grand Traverse Band and in particular the Economic Development Corporation have looked at our role in the community is that it is vital that we are good community citizens. A recent example of this is our name change from Casino Resorts to Traverse Bay Entertainment. We are not one the old style gambling halls from the ‘50s, rather we are in tune with tourism, entertainment and the impact we have on the overall economy and image of northern Michigan.
We value the customer experience. Our focus as a business has become not a focus on gambling but rather our approach is to vye for a total entertainment experience for the customer. We do this by approaching our offering to the consumer in the same dollar continuum as if they would choose a movie, going out to dinner or to a professional sporting event. Then there are the obvious impacts, the jobs we provide, and the money we contribute into the community and the money spent in the community by visitors to our casinos.

NE: How do you feel that Traverse Bay Entertainment has made the area a better place to live?
Livingston: Certainly the dollars alone have had a tremendous impact. The fact that we have made several jobs available well above minimum wage certainly has made it better for many who live here. While we have and will continue to add a lot of jobs to the area, one of our goals is to strengthen the community that we all live and work in so we don’t want to take from other employers but our vision is being good stewards to train employees that will help us grow but also benefit other businesses.
From a concert prospective our Sands Showroom and the outdoor shows we have done and will do in the future have brought international acts that area residents in the past would have to travel downstate for. The millions of dollars we have contributed back into the community for various programs have certainly helped to make this a better place to live.

NE: Describe your employees:
Livingston: We are a customer service business. I consider our employees to be entertainers. They are performers and are working with people who are on vacation sometimes just for an hour and other times for a week. Our employees know that their responsibility is to make sure that each of our customers enjoys their visit and to make them feel good. We reward our employees on that basis.
We are essentially selling “good times” and our employees are key to creating that, which results in return visits by our customers. You don’t need a degree out here what you need is a positive attitude and we will teach you the rest. We are not in this to give our employees jobs but rather to enhance their lives. We look at the bigger picture and our goal with our employees is to help them have a better life.

HELPING THE TRIBE:
NE: The original philosophy behind Indian gaming operations was to benefit the economically deprived Indian nations that existed throughout the country. How has Traverse Bay Entertainment benefited the Grand Traverse Band?
Livingston: Through the revenues we generate from our businesses we turn them back over to the (tribal) government. In turn the government uses these funds for the nation of the Grand Traverse Band.
In reality we are building an economy, instead of just building businesses; we have built an economy for the Band. We have formed a Native American bank with 16 other tribes. These economic dollars have created many educational opportunities for Band members. We have been able to build roads and make other infrastructure improvements. We have programs for the Elders that include retirement funds. We look to continue to benefit the Band with a possible grocery store in the future. We are even giving consideration to starting a university.

NE: Do you feel that tribal leaders from 150 years ago would be pleased with all the changes that have been made to tribal life in recent years?
Livingston: I feel that they would and probably are extremely proud. Our Elders often comment on the insight of the current tribal leadership and how the leadership has made a tremendous positive impact on the tribe by its decisions. Tribal leadership has created a lot of self-sufficiency and the ability to wean us off of several federal government assistance programs. We have been able to build a medical facility and create several other opportunities for the Band. So I believe if the Elders from 150 years ago could speak to us they would say we are very proud of you.

NE: How do you take a step back and look at your operation with a critical eye?
Livingston: I believe in challenging paradigms. We know people like coming here today but what about tomorrow? We are constantly evaluating ourselves and we do that through several means. We do employee surveys, customer opinion surveys, and management surveys. In all these surveys we ask what we are doing right and try to do more of it, but we also ask what we are doing wrong and work to eliminate that. We critique ourselves and have set up a mechanism to do that effectively. We hired Michigan State University to come in and analyze our operation from a tourist and customer service perspective.

ADDRESSING CRITICS:
NE: When Turtle Creek was first proposed 10 years ago several in the community suggested it would bring crime and serious gambling problems, however this does not seem to be the case after 6 years of operation. Do you still have critics of your operation?
Livingston: We know there will always be critics to what we are doing. We know that some people object to what we are doing. I actually applaud people for holding strong to their opinions and their morals.
That said we have developed a great rapport with many. We have a great working relationship with Whitewater Township and also with Acme Township. Often there was a lack of information about who we are and what we were doing that led to unknowns and misinformation. Like for example increasing crime. What we do doesn’t increase or attract crime in itself but studies show that crime increases anywhere population bases increase. So while we may be increasing the population base of the area we are also contributing to our local law enforcement agencies.
We have met with groups that view what were are doing as a sin. We sit down with these groups and for that matter with any group in the community to listen to their concerns. If someone brings up something that is viable we will make an adjustment. Our door is always open out here. Others may close the door on us but we do not close the door on anyone.

TOUGH CUSTOMERS:
NE: Every business faces challenging customers. How do you handle the customer that has a gambling problem?
Livingston: There are addictive natures and behaviors in people. We cannot monitor nor catch all of them but we do try to respond when it becomes apparent that someone does have a problem. We have to be careful and not just come out and challenge someone. I have had some of my better gamers that tell me that this is none of my business, but we have had to “86” customers which means banning them from the property for life. If we feel someone is showing signs of addictive behaviors we take steps to ban them and provide them with information to get assistance.
We have people that have come to us and say they have blown their paycheck. They are “86” immediately, offered assistance, but are banned for life. There isn’t a belief from our perspective that someone accomplished the addiction and should be given another shot they are simply not allowed back for their own good. We believe that our customers should be entertaining themselves but not jeopardizing their financial situation. When someone says it is my money and I can do what I want with it, we agree with him or her -- we just tell them they can do what they want somewhere else.

NE: What are some of the other challenges you are faced with, especially with the expansion plans?
Livingston: Certainly there is a concern with having enough employees without taking them from other businesses in the community is one area of concern. Another challenge we see is the ability for the community to work together, so that all of us are working towards common visions for our area.

NE: Speaking of that, other providers of entertainment and cultural resources certainly have commented privately and even publicly about your growth and how your operation is and will impact their operations possibly even negatively. Are you aware of these concerns and if so your thoughts on working with others?
Livingston: We consider ourselves as much a part of the community as anyone else. We are not outsiders and maybe we haven’t done the best in the past communicating our visions with the community. We realize that essentially all of us share similar visions and goals for making life better in Northern Michigan.
We understand the value say Interlochen has or the Cherry Festival has to our community. Each business or organization in our area is committed in their own way to make our quality of life better and we are no different. We see the value in the Cherry Festival and have been a major sponsor for them. Now we have the opportunity to assist them further in handling their headline entertainment. This is a great example of two groups working together. We believe that all the entertainment venues up here need to be communicating so we are not duplicating efforts. We know concerns exist. I am about the easiest person to work with. If someone sees that something we are doing is working against what they are doing then come and see me and we will work together to benefit both of us. We are building this 10,000-person amphitheater and we never said other people couldn’t use it.

THE NEW AMPHITHEATRE:
NE: Speaking of the 10,000-person amphitheater, what type of entertainment acts should we expect?
Livingston: We want to be able to facilitate higher price acts. We also want to be able to host one signature type act every year, someone that is at the top of the charts like a Dave Mathews Band. However not all of our events would be at that level. Our shows will primarily be acts that are in the middle to upper crest of price ranges, people like Sugar Ray or Alan Jackson. We also want to create a family environment with people bringing blankets, and certainly keeping prices affordable. We don’t want to bring these artists in and then say you can’t afford to come to the show. Our facility should open with a full line up of concerts for the 2003 season.

NE: Is there evidence suggesting that our area will be able to support shows that will attract 10,000 on a regular basis?
Livingston: We have done studies that show what we are proposing is needed and will work. We have aligned ourselves with the Palace downstate. We look to work with them and that relationship will help create a synergy between up north and downstate in regards to performers and customers.

FUTURE OF THE SANDS:
NE: All the attention seems to be on your Turtle Creek facility and rumors have circulated that your operation north of Suttons Bay will be closed down. What is the future of the Sands?
Livingston: There is no truth to those rumors about us closing down our operation in Leelanau County. In fact that operation is very viable. Certainly the Turtle Creek operation has had an impact on it. We are looking to put 50 chalets out there. We are planning on a kid’s facility. We also have plans for re-opening Eagle‘s Ridge on the weekends with an upscale buffet.
As for the Sands Showroom, we were getting some overpriced acts and I had to re-evaluate what we were doing. We just were not showing a return on our investment with the shows we were doing. There will be great shows in the future but the acts will better facilitate a 1,000-seat venue.
Our thoughts are that Turtle Creek will be our short stay property and our Peshawbestown property will be geared towards longer visits it will become a destination resort. We see it like Disney did Orlando and that is our plan for out there because Peshawbestown is our crown jewel. We see a lot of opportunity to build a world class community with cultural offerings such as museums, schools and even a theme park that would be considered amongst the best in the Midwest. There is talk of some retail development that would add to but not take away from existing retail in the area. It is our goal that when we are done the community of northern Michigan will say boy what they have done has really added value to our area not only economically but culturally.