האגודה הישראלית לחקר יחסי עבודה

week it was announced that workers had "overwhelmingly" voted for union representation. It is a knockdown scored for the union, which has waged a bitter conflict with the former Station Casinos. It is not a knockout, but this fight is going into a new stage.

BACKGROUND

Local Culinary Union 226 has been raging a relentless war against the non-union Station Casinos for the better part of twenty years. It, with its affiliated Bartenders Union Local 165, has over 57,000 members in Nevada and represents the workers in most major resorts in Las Vegas.

Past labor troubles ramrodded by the Culinary Union included a 1984 strike that closed the Las Vegas Strip, and led to much better wages and working conditions for Sin CIty workers. A six-year strike versus the old New Frontier forced a change of ownership.

The Culinary Union has also done well in the last few years. In 2014, it negotiated new 5-year contracts with most of the major players. It also has brought in the formerly non-union independent resorts SLS and Cosmopolitan to its union fold.

The glaring exception was that old Station Casinos and now Red Rock Resorts evaded unionizing until now. The bitter battle between the two parties has been at times comical as it has played out in the meeting rooms and the streets of Las Vegas. The Union transfixed on the Fertitta family, not only its ownership of Station Casinos, but everything Fertitta.

An article written by Conor Shine of the Las Vegas Sun nicely summarized the lengths the Culinary Union would go to embarrass the Fertittas, including its past ownership of the UFC.

It included an effort by several dozen red-shirted union members at a planning meeting for approval of a water fountain in front of UFC headquarters. Testifying before the planning board, the members testified about the "irresponsible" use of water during a time of drought.

And more, according to Mr. Shine:

The union, and its national affiliate UNITE HERE, has chased the promotion company to Boston, where it protested the 2013 bout of fighter Chael Sonnen, who had been convicted of money laundering, and to New York, where it lobbied to keep a law in place banning mixed-martial arts events in the state. The union even took to YouTube in 2012 to lambaste pop star Mandy Moore over her enthusiasm for ultimate fighting, accusing her of not being a "good role model."

The Union has delivered coal to Station Casinos properties during the holidays, and convinced members of UNITE HERE affiliated unions to not attend events held on Station Casinos properties. Still, the current Red Rock Resorts had evaded unionization until now.

BOULDER STATION

The results of the Labor Day election showed 67% voted for representation by the Culinary Workers Union Local 226 and Bartenders Union Local 165. A total of 532 of the 576 eligible employees voted with 355 approving Culinary representation and 177 voting against it.

That last fact should give both sides something to chew on. Almost all of the Boulder Stations employees who could vote (out of the approximately 1500 total employees) voted for representation, but a very large slice did not want the Culinary and Bartenders Unions as their reps.

Meaning it is still too soon to see exactly how things are going to lead from here. It is sure that very soon Red Rock Resorts and the two unions will have to sit down and hash out a Collective Bargaining Agreement (CBA). Given the comments coming out of the election results, labor strife could be ahead:

Station Casinos' president Richard Haskins said, "While we are disappointed with the manner in which the Union conducted the Boulder Station election campaign and with the election result, we accept it and will satisfy our legal obligation to bargain in good faith, with a sincere desire to reach agreement." He also denounced the union's tactics during the election as a "corporate terrorism campaign."

As far as the union's announcement, it "continues to call on Station Casinos to agree to a fair process so that workers can decide whether to unionize free from management interference, intimidation, bullying, and litigation."

Boulder Station is merely one property out of the extensive Red Rock Resorts portfolio. However, labor has a foothold.

THE FUTURE

As I wrote in a previous article, Red Rock Resorts is on the cusp of breaking out of its Local Casinos mold, with its upscale properties Red Rock Resort and Green Valley Resort, and the newly purchased Palms Resort and Casino looking to cater to a less local, more upscale Las Vegas clientele. Meanwhile, their Tribal Gaming management elements in California and the Upper Midwest are seeing healthy double-digit growth. Not to mention, it owns a number of Las Vegas and Reno area properties with high development potential.

RRR data by YCharts

Of course, this has been built without going through oft times painful process of banging out CBAs with a union. Thus some of Red Rock Resorts' competitors, such as Boyd Gaming Corporation (NYSE: BYD) who has already gone through the process, may have a bit smoother sailing in the coming years.

Now the Red Rock Resorts management team can look forward to a likely contentious contract process at Boulder. Meanwhile, the Culinary Union can feel emboldened and set its sights on the other Station Casino and Fiesta Casino properties that remain unrepresented.

In the past, the war with the Culinary Union has been nothing more than a constant but minor irritation to Red Rock Resorts. Now labor has scored a mid-round knockdown. Culinary is inside the fence, even if it is just one location.

There are a lot of rounds still to be fought. Investors need to keep a close monitor on the Red Rock Resorts labor situation.

Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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