Penn National Gaming has announced it will introduce new steps in an attempt to help reduce the financial damage caused by the ongoing COVID-19 outbreak.
As previously announced, Penn National is expected to continue paying maximum salaries and benefits to its team members until March 31. Having said that, some states now have declared extensions to their temporary closure orders with other states expected to follow suit.
As a result of this, the uncertainty surrounding the length of the pandemic, as well as the lack of ‘meaningful revenue’ that the corporation is expected to receive, would result in Penn National introducing unpaid furloughs that will affect approximately 26,000 team members around the business starting April 1.
Penn National’s Chairman and Chief Executive Officer Jay Snowden said: “As the global COVID-19 health crisis continues to evolve, we are navigating through this unprecedented time for our Company, our industry and our nation.
“With all of our 41 properties in 19 states temporarily shuttered, like many others in the gaming and hospitality sector, we are making difficult decisions to help preserve our liquidity and ensure a brighter future for our Company’s team members, customers, shareholders and other key stakeholders.
“This decision was extremely difficult to make for all of us at Penn. Penn National is a family, and we deeply regret the hardship this will place on you and your loved ones.
“We are extremely motivated and focused on re-opening our properties as soon as it is safe and legal to do so. To try to help ease some of the burden, we’re maintaining your medical benefits through June 30, for those team members who are currently enrolled in our health plans.”
In addition, Penn National announced the creation of a COVID-19 Emergency Relief Fund to support team members and local community service organisations.
The organisation has, as it stands, raised over $1.2 million in team member support funds, including over $425,000 in personal donations from Snowden and his senior management staff, the company’s board of directors, and property managers general.
Snowden added: “We are committed to doing all we can to help our affected team members get through this. I am proud of the fact that when the call came down from our governors across the country to temporarily close our facilities, we managed the process in a safe and orderly fashion, ensuring the health and well-being of our team members and guests.
“I’m equally proud of the fact that since closing our doors over a week ago, our properties have donated more than 45 tons of food to local food banks and homeless shelters in our communities, ensuring our perishable food items can help those in need. In addition, our properties have donated thousands of unused masks and surgical gloves to first responders and health care providers.”
Penn National has also reached an arrangement with its principal landlord, Gaming & Leisure Properties (GLPI), to sell the Tropicana Las Vegas real estate properties, which Penn will continue to run. This includes a new ground lease in exchange for $337.5 million in rent credits for its proposed Category 4 casino in Morgantown, Pennsylvania.
Talking about the GLPI deal, Snowden concluded: “In addition, the deal includes an option for us to acquire the operations of GLPI’s Hollywood Casino in Perryville, Maryland at a future date.
“We greatly appreciate the cooperation, creativity and partnership shown by GLPI during this challenging time. While this transaction will help to relieve liquidity pressure in terms of rent obligations, we are committed to taking further steps to reduce our ongoing operating expenses in order to ensure we have a healthy business to return to when we are able to re-open our doors.”
In conclusion, Penn National is taking the following additional short-term actions during the closures of the property to reduce its cost structure:
- Meaningful pay cuts for the CEO and remaining property and corporate leadership teams effective April 1 until such time as the Company determines that its properties have substantially returned to normal operations.
- The Board of Directors have elected to forgo any of their cash compensation effective April 1 until such time as the Company determines that its properties have substantially returned to normal operations.
- The majority of Corporate team members will also be furloughed, and the Company will be operating with a minimum, mission critical staffing of less than 850 team members companywide during the closures.