The ringmaster

Moving between hotel and gaming CEO, dragon and chairman may seem like running a circus but Mitch Garber juggles them all.

Until recently, Mitch Garber was relatively unknown in his home province. But in the past year, his appointment as chairman of Cirque du Soleil, his spot as a dragon on the French-language version of Dragons’ Den — Dans l’œil du dragon — and his much-talked-about guest appearance on ICI Radio-Canada’s popular Sunday night TV program Tout le monde en parle have thrust the Montreal anglophone lawyer/businessman into the spotlight. Here is a self-made man who charted a course all the way to Las Vegas and dreams of reconciling the two solitudes.

In late February, between two tapings of Dans l’œil du dragon at Radio-Canada’s Montreal headquarters, Garber hopped on a plane to Las Vegas to attend the release of the 2015 financial results of Caesars Acquisition Co. (CAC), the US hotel, casino and online gaming giant he heads as CEO. Judging by the numbers, it was a worthwhile trip for Garber: CAC’s revenue rose 25.6% to US$2.35 billion from US$1.8 billion in 2014. The company, which has 8,000 employees, reported earnings before interest, income taxes, depreciation and amortization (EBITDA) of US$632.3 million, an impressive increase of 51.9% compared with US$416.2 million in 2014. The results are even more gratifying since the company operates in a highly competitive and changing industry.

The most successful companies are those with the “best shops, the best shows, the best chefs and the best nightclubs,” says Garber, adding that revenue sources in Vegas have made a switch in the past decade. In the past, gambling generated 60% of revenue and profit, while 40% came from entertainment, shopping and restaurants. Today, gambling accounts for only 35% of sales and related activities make up 65%.

Mitch Garber at Caesars Palace and on the set of Dans l'œil du dragon. Cirque du Soleil artists at a performance of "O". 

A FLAIR FOR BUSINESS

Online gaming has gradually entered the new landscape, a shift that also explains why Garber finds himself at the helm of CAC, a major global gaming group that recruited him in 2009 to launch and run an online gaming company, Caesars Interactive Entertainment (CIE). Before that, from 2006 to 2008, Garber was living in Europe, where he was CEO of PartyGaming, a lucrative British online gaming company. One of his first moves as head of CIE was to purchase the rights to the popular World Series of Poker tournaments, for which CIE would later develop an online application.

Then in 2011, CIE acquired Playtika, the Israeli online gaming developer of Slotomania for mobile devices and social media, one of the most popular slot game apps on Facebook with more than 100 million downloads. “This was by far my most profitable acquisition,” Garber says.

“Mitch has a flair for business. He’s a visionary who can accurately assess projects,” says tax expert Anne-Marie Boucher, Garber’s wife and one of the founding lawyers of business law firm BCF.

The upshot: last year, CIE posted revenue of US$766.5 million, a 30.6% increase from US$586.8 million in 2014. EBITDA was up 59.7% to US$282.7 million from US$177 million. The subsidiary suffered less than other businesses from the economic crisis that began in 2008. “Las Vegas was affected because there have been fewer tourists, and those who come stay for a shorter time and spend less. But people will always find $15 to spare on entertainment, like going to the movies or playing online games,” Garber notes. However, to sustain its momentum and stay ahead of the pack, “the company has to continue innovating and developing games accessible on all platforms,” he says.

The success of CIE, which also operates Bingo Blitz and House of Fun, prompted CAC to offer him the CEO position at the parent company. “The company was going through a restructuring, and since I was head of the group’s most profitable subsidiary, I was asked to be CEO,” says Garber, who spearheaded CAC’s initial public offering on Nasdaq in 2013. In addition to CIE, CAC’s asset portfolio is made up of a number of hotels and casinos, including Planet Hollywood, Bally’s, The Linq and The Cromwell in Vegas, as well as Harrah’s in New Orleans and the Horseshoe in Baltimore, which opened its doors in 2014. “There’s still potential to set up hotels and casinos in states with large population centres and where operating permits are limited,” Garber says. “Baltimore is a good example. But that’s not the case for strips where you have 20 other casinos in a row.”

CIE has another ace up its sleeve to open the door to development opportunities. “Most of our revenues come from English-speaking markets, such as North America, England, Australia and New Zealand. So there’s growth potential elsewhere in Europe, Asia and even South America,” adds Garber, who manages the company from his Montreal office and travels to Vegas twice a month for two-day stays.

Despite all this success, there are some questions. CAC is part of the Caesars family of companies, which includes Caesars Entertainment Co. (CEC), owner of the world-famous Caesars Palace, and there appears to be a financial cloud hovering over the family. How this affects CAC was unknown at press time.

Garber says he is not particularly worried about the financial and legal woes CEC is currently facing. “No, on the contrary CIE is the most successful entity in the Caesars family of companies; it has no debt and is largely seen as an asset that can Caesars Operating Co. — which I have never worked for and don't have shares in — settle or emerge from its bankruptcy. All of my stock is in the private CIE.” (For more on the Caesars family of companies, see "Murky Waters," below.)

FROM HAMPSTEAD TO LAS VEGAS

Garber’s entrepreneurial journey began at an early age. “My desire to work and make money started when I was very young,” says Garber, who was a paperboy at age 11 before running a small concession stand at a public pool in Hampstead, Que., at 14. Born in 1964 in Montreal, Garber’s mother was a schoolteacher and his father was a restaurateur who owned the Rib’N Reef Steakhouse and started the Pizza Pan chain.

After an early education in the Jewish school system, Garber wanted to study at Marianopolis College, but the private English-language CEGEP rejected his application. “I was actually a poor student,” says Garber, who nevertheless obtained a BA in industrial relations from McGill University. “I really enjoyed it. We talked about business, labour law and unions.” He then earned a law degree from the University of Ottawa before enrolling at Quebec’s École du Barreau (bar admissions course), where he met Boucher. “Mitch was always the centre of attention and he brought great energy to a group,” she says, also pointing out his easygoing personality and immense generosity.

Garber began his career as a lawyer in 1990 at a small Montreal law firm, Lazarus Charbonneau. That’s where he got his start in the gaming industry and developed a new practice: gaming law. “That speaks to his entrepreneurial spirit. At the time, he found an untapped field of law,” Boucher recounts. Back then, the law firm specialized in collecting debt from Canadian gamblers for US and overseas casinos. His expertise also led him to advise large US casinos looking to expand by exploring business opportunities in Canada. He helped Caesars and Hilton establish the first casino in Windsor, Ont., in 1994. When the Casino de Montréal opened in the fall of 1993, he used his expertise to advise equipment suppliers.

In 1999, Garber left his law practice to become vice-president of SureFire Commerce, a Montreal-based company specializing in securing e-commerce transactions, namely for online gaming companies and casinos. Through mergers and acquisitions, SureFire became Terra Payments, then Optimal Payments, a Nasdaq-listed company that appointed him CEO in 2003.

This career path helped him amass a fortune estimated at $200 million, something he does not like to admit or discuss. However, his net worth would have been even more impressive had he accepted an offer from one of Hotmail’s founders to join and invest in one of the first free email services, which was launched in 1996. But “there’s no money to be made here in free email,” he believed. One year later, Microsoft bought Hotmail for US$400 million.

REINVENTING CIRQUE DU SOLEIL

Cirque du Soleil is synonymous with Vegas. Over the past 20 years, the entertainment company has been an integral part of the city, where its shows, such as The Beatles LOVE, “O” and , have been running for more than a decade. “The Cirque is a flagship of Quebec,” says Garber. In April 2015, the entertainment gem was sold to a consortium led by US private investment firm TPG Capital, which also owns Caesars Entertainment. The Chinese investment group Fosun and the Caisse de dépôt et placement du Québec also became shareholders, while Cirque founder Guy Laliberté retains a 10% share.

Garber, who played a key role in the discussions that led to the sale, was named chairman of the Cirque’s board, much to the delight of president and CEO Daniel Lamarre. “Mitch has a lot of business acumen. He can quickly identify and assess opportunities as they arise. Since the Cirque is solicited for numerous projects, he’ll help us choose the best ones to ensure our growth,” adds Lamarre, who likes the boundless enthusiasm of his friend of 20-plus years. Another advantage for Cirque: “Mitch is one of the few Montrealers with an extensive knowledge of the international market and a vast network of contacts.”

Garber sees infinite possibilities for the company Laliberté created more than 30 years ago. He maintains that reinventing the circus arts can be done without reinventing the wheel. “Cirque du Soleil can build on other successful models,” he says. Examples include musicals such as Les Misérables or Mamma Mia, which have had long runs in New York and London, while touring the world. “Vegas shows like The Beatles LOVE and “O” could play in London or Shanghai and tour internationally,” Garber believes, adding that on May 25, Cirque du Soleil will put on its first Broadway production in New York. Entitled Paramour, the show combines the Cirque du Soleil’s signature style with the usual trappings of Broadway musicals.

A PHILANTHROPIC DRAGON

Being a sports enthusiast, Garber was involved in bringing the CFL’s Montreal Alouettes back to the city in 1996. Currently, along with the city’s mayor and other business leaders, he is busy trying to orchestrate the return of major league baseball to Montreal. “It would bolster the city’s image and economy,” he says. It’s a challenge worthy of Mitch Garber. “He adores Montreal and loves helping others, and he thinks big. The tougher the project, the more he’s drawn in,” says Boucher. Martin-Luc Archambault, who also appears on Dans l’œil du dragon, concurs. “Nothing’s impossible for him. He’s a unifier who brings the right people together to make every project a success,” says the entrepreneur who launched the AmpMe music app and the Wajam social search engine.

This spring, Garber will appear in his second season of Dans l’œil du dragon. “I agreed to be a dragon because, first and foremost, I wanted to try to build a bridge between the French- and English-speaking communities, who live differently but share a love for Montreal and Quebec,” says Garber. He also saw it as an opportunity to promote francophone entrepreneurs and demystify the business world for young people. “In school, we are taught geography and history, but we don’t learn about business or finance. Yet we all have to negotiate an employment contract or calculate the cost of a mortgage,” he says.

Garber’s career and wealth have paved the way for his philanthropic ventures. He sits on the board of the One Drop Foundation, a nonprofit organization founded by Laliberté. He recently established the Garber Family Post Doctorate Fellowship in Hereditary Cancer at McGill University to attract the world’s leading scientists to Montreal. He also co-chairs the Centraide (United Way) campaign of Greater Montreal. “Wealth is very unequally and sometimes unfairly distributed in our society and around the world,” he says. “I feel a great sense of solidarity. We have to help the less fortunate. When my great-grandmother left Russia, she chose to come to Canada by chance. But she could’ve chosen another country where I wouldn’t have had the same opportunities,” says Garber, who donates between $500,000 and $1 million a year to charity. “These are our family values,” Boucher says. “Mitch and I started with nothing and we successfully built what we have together. We also want to share it with others.”

Garber, who pays several million dollars a year in taxes, insists that the wealthy have an important obligation to pay taxes. And what about the issue of tax havens and tax avoidance schemes used by thousands of businesses registered in the state of Delaware, including CAC? “I’m also a manager trying to find legal ways for my company to pay the least amount of tax possible. Otherwise, there wouldn’t be any work for CPAs,” Garber answers.

Despite his increasing presence on the Quebec scene, Garber is not sure he can be considered part of Quebec Inc. “I’m not a builder like the Desmarais, Coutus, Molsons, Bombardiers or Bronfmans,” he says. “I was just lucky to be in the right place at the right time and to have seized the opportunities."

 

MURKY WATERS

Caesars Acquisition Co. (CAC) is a part of the Caesars family of companies. At press time, there were nagging questions about the financial situation of Caesars Entertainment Corp. (CEC), owners of the world-famous Caesars Palace, another part of the family. How this troubled financial situation will affect CAC is unclear.

Here is the main outline of a somewhat cloudy story.

In December 2014, CEC and CAC announced a merger, but both companies are still listed independently on the stock market. As far as CPA Magazine has determined, the merger has not been completed.

Between December 2014 and January 2015, lawsuits were filed against the board of directors of CAC by law firms representing shareholders of CAC. Also Andrews & Springer LLC, a Delaware law firm investigating the issue, is alleging in January that the merger “is merely intended to place CEC in a better position to restructure its $18.4 billion debt load in preparation for bankruptcy.”

In January 2015, Caesars Entertainment Operating Co. — a subsidiary of CEC “that owns and operates many of the properties in the Caesars Entertainment network” — filed for Chapter 11 bankruptcy protection.

In March 2015, a Delaware judge quashed an attempt by CEC to dismiss a number of suits. In July 2015, a Chicago bankruptcy judge did the same. In December 2015, an appeals court in Chicago ruled that the request to halt the lawsuits be reconsidered by the lower court judges.

In March this year, Moody’s Investors Service downgraded CEC’s wholly owned subsidiary Caesars Entertainment Resort Properties LLC (CERP), and Caesars Growth Property Holdings (CGPH), from B3 to Caa1. CGPH is “a wholly owned subsidiary of Caesars Growth Partners, LLC, a joint venture between CEC and CAC.”

All the people contacted for this sidebar declined to comment. — Yan Barcelo

About the Author

Pierre Théroux


Pierre Théroux is a writer based in Montreal.

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