There have been, by Matt Maddox’s reckoning, “three or four months of bliss” since he became chief executive of Wynn Resorts. Aside from that respite in late 2019, it has been nonstop crisis.
Steve Wynn’s signature still shines out over the Las Vegas skyline, three years after the billionaire who transformed the Nevada gambling hub resigned from his casino company over sexual misconduct allegations he denied.
Gaming regulators in Nevada and Massachusetts opened investigations, a pension fund claimed the board had “knowingly turned a blind eye” to decades of alleged misconduct and analysts questioned what would happen to the business without its founder. As one bluntly put it: “Steve Wynn is the company.”
But in February 2018, Mr Wynn’s company became Mr Maddox’s problem. He had been with the group for 16 years, so his first challenge was to explain how he and the rest of Wynn’s leadership had missed Mr Wynn’s alleged conduct and why they then dismissed the allegations when they came to light.
In hindsight, he says now, “people were in shock, including me”. The company ended up admitting to regulators that its leaders had been “in denial”, but Mr Maddox, 45, could not stay on the defensive for long.
“Employees were terrified, activists were coming after us, people were making bids. It was unclear if we were going to keep our licences,” he recalls.
Regulators in Nevada and Massachusetts ended up imposing $55m in fines but letting Wynn keep its gaming licences. The Massachusetts Gaming Commission also fined Mr Maddox $500,000 after concluding that his “clear failure” to investigate an employee’s complaint about Mr Wynn raised questions about his judgment.
That left Mr Maddox urgently needing to prove that he was a suitable leader. The authorities were ultimately persuaded by moves he took in his first months as CEO to turn “a company that was about one man” into one that was thinking about all of its 25,000 people.
He began by resolving to co-operate transparently with the investigations and to put out as many other fires as he could.
“I realised we had too many wars going on,” the former banker says. Within 60 days, he had put out three which involved litigation with large shareholders. He placed Steve Wynn’s stock in the hands of institutional investors, resolved legal disputes with Mr Wynn’s ex-wife Elaine and settled “six years of horribly intense litigation” with Universal Entertainment, a Japanese gaming group, for $2.4bn.
The clean-up was not painless, but it was fast, and accompanied by a sweeping overhaul of Wynn’s board and management team. Within months Mr Maddox recruited a new general counsel, a new head of human resources and new leaders for its properties in Las Vegas and Boston. He had inherited a board packed with white men aged over 70 but a rapid overhaul left white men in the minority and brought the average age down to 61.
According to Betsy Atkins, one of three female directors he brought in, Mr Maddox is “the reason I joined”. He has, she says, “no ego” and an ability to solve several complex problems simultaneously while staying focused on fixing the hardest of them first.
“Ultimately, a crisis is about well-informed but speedy decision-making, the courage to solve the biggest problems first, and the commitment to put the effort and time in to get through it,” says Ms Atkins, who has served on more than two dozen boards. “He has great clarity on that and that’s foundational in a leader.”
As Mr Maddox tells it: “The only way for us to survive was to take fast action.”
He was also faced with the challenge of preserving the best of what Mr Wynn had created, protecting a brand known for its extravagant premium service, while overhauling its corporate culture to guard against future scandals.
He sent all employees to be trained in preventing sexual harassment, circulated a statement of the company’s values, established a committee to review any complaints independently and pushed staff to volunteer in their communities to demonstrate that Wynn could be a good corporate citizen.
Within 18 months, Mr Maddox had put the crises he had inherited behind him and opened a new resort in Boston, renovated Wynn Macau and developed a new convention centre in Las Vegas. In December 2019, as the board extended his contract, he declared that Wynn’s future “has never been so bright”.
Then Covid-19 hit.
By early February 2020 local authorities had closed Wynn’s casinos in Macau. In mid-March, after engaging a Georgetown University health expert, Mr Maddox decided to shut its US resorts too.
Closing pre-emptively was controversial, he says, but he resolved to keep paying employees’ wages and compensate them for lost tips. The gesture cost $250m, he says, but he saw it as an investment in a culture he has been trying to build since 2018.
“Everyone that’s alive today is going to remember 2020 and everyone is going to remember how they were treated,” he says: “So this is our moment to make sure people know that we’re there for them. I knew that investment would pay off for our shareholders in the long term.”
Three questions for Matt Maddox
What was the first leadership lesson you learnt?
It’s something I call the dark side of ambition. As a leader you have to know that if you want to be in the sun there’s going to be a lot of shade and you have to treat that shade like the shadow behind you and keep walking towards the sun. You are always going to have to deal with a crisis, and if you let the crisis define your strategy you will not be a good leader; you will freeze.
Who is your leadership hero?
I’m a big fan of David Solomon at Goldman and what he’s done. I talk to [the banker] Ken Moelis all the time [and] I’ve always been an enormous fan of Mike Milken [the financier]. There are many others but it’s just people who understand adversity and they own it and change things — people who understand the dark side of ambition and don’t let it hold them back.
If you were not doing this, what would you be doing?
I like creating things with creative people. That’s what I love; the development side, whether that would be on the hospitality side or thinking about what comes next and what is it that people want to do. People always want to get together and they always want to have fun and no pandemic can stop that; it can only freeze it. So being in that business of fun is something I want to do.
But shareholders also had shorter-term worries, and by mid-April Mr Maddox was issuing a reopening plan whose safety measures were widely admired and copied. The comprehensive planning allowed Wynn to reopen in Las Vegas in June and in Massachusetts in July, albeit at much reduced occupancy.
He used the time when Wynn’s casinos were quiet to upgrade them, displaying the demanding attention to detail for which Mr Wynn was known. If an attraction is not perfect when it opens, he says, he will shut it down and fix it: “If it’s a B, you don’t keep it, because if something’s a B, that B will quickly become a C in a couple of years.”
Now, he says, his challenge is to get back to Wynn’s core business of bringing crowds of strangers together for escapist entertainment. That will mean turning Las Vegas from a place to have fun into “the safest place to come and have fun”.
To that end, Mr Maddox has recently opened a PCR, or genetic, Covid-19 testing lab for customers in Wynn Las Vegas that can process 6,000 tests a day. His hope is that this will let the company create “safe zones” — nightclubs, concert venues or convention centres open only to guests who have recently tested negative for Covid-19.
Three years of almost uninterrupted crises have not dented his optimism about the post-pandemic future. “We need to be around other people,” he says. “It will be like the Roaring Twenties coming out of this.”
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