Mitch Garber gets $210-million payout from down-on-its-luck Caesars
|Montreal Gazette 18 Apr 2017 at 09:30|
Mitch Garber, CEO of Caesars Acquisition Co. at his Montreal office in 2015. At the time, he was the newest Dragon on the Quebec version of Dragon s Den. John Mahoney / Montreal Gazette
Mitch Garber watched his father go broke and had some of his school costs paid with donations from strangers. In the past year, he’s scored one of the largest cash payouts to an executive of a publicly traded U.S. company — $210 million — thanks to a simple formula: put a little money at risk and look for smart partners.
Garber, a 52-year-old Canadian who heads Caesars Entertainment Corp.’s (NASDAQ: CZR) online gaming unit, owes his big payday to the sale last summer of the company’s social-gaming business to a Chinese consortium for $4.4 billion, about 18 times what Caesars paid. The sale helped Caesars complete a debt restructuring and paves the way for its main subsidiary to exit bankruptcy this year.
“I looked at my tax stub, the number even surprised me,” Garber said when reached by phone in his car. “My comp is outstanding.”
The haul includes almost $168.3 million for stock options and restricted shares, along with a more down-to-earth $1.7 million in salary and bonus. Garber also owned stock in the interactive unit worth $40.3 million. His windfall puts him in the same league as such buyout titans as Blackstone Group LP’s (NYSE: BX) Steve Schwarzman, who collected $425 million in deal profits, salary and other compensation last year, and KKR & Co. (NYSE: KKR) founders Henry Kravis and George Roberts, who took home $116 million and $119 million, respectively.
Garber is already a celebrity of sorts in his native Quebec, where he once worked as a TV sportscaster and a judge on a French-language version of the business competition show “Shark Tank.”
In addition to his duties at Caesars, Garber is chairman of the acrobatic troupe Cirque du Soleil, which was purchased by an investment group led by TPG Capital in 2015. He’s also been working with Seagram Co. heir Stephen Bronfman to .
“I’ve learned to be a little more conservative than my father was,” said Garber, whose W-2 tax form listed income of about $180 million. “I put my money in, but I surround myself with great co-investors.”
It could have gone the other way. His father, Steve, was a restaurateur who dropped out of school in eighth grade. Garber père was among the first to deliver pizzas to homes in Montreal. The Rib ‘N Reef, a steakhouse he owned, is still in operation. But the elder Garber suffered from depression and financial troubles, and took his own life in his early 40s, according to his son.
“I probably just slid into university,” he said. “McGill didn’t come looking for me.”
Garber got a law degree, according to his website, and specialized in casino work, advising local gambling establishments and their suppliers. He left law in 1999 to join a payments-processing spinoff of Bell Canada (TSX: BCE), which was a client, and was later recruited to run PartyGaming Plc, an online gambling business then traded on the London Stock Exchange. He joined Caesars in 2009 to capitalize on a potentially lucrative new business, online betting in the U.S.
Garber invested $1 million of his own money in the founding of Caesars Interactive Entertainment, which was then valued at $35 million. But online betting took off more slowly than anticipated and is still only legal in three states: Nevada, New Jersey and Delaware.
From a friend, Garber heard about a social-gaming business in Israel called Playtika. It consisted of 13 employees and was generating $10 million a year in earnings before interest, taxes, depreciation and amortization. In 2011, he persuaded Caesars’ then-chief executive officer Gary Loveman and the company’s controlling shareholders, Apollo Global Management LLC and TPG, to buy it for about $110 million. Subsequent acquisitions brought the total investment to $250 million.
Playtika’s most popular title, Slotomania, an online slot-machine game, transitioned perfectly to mobile phones and tablets. Garber credits co-founder Robert Antokol with keeping the business on top of the latest trends and rolling out new features that keep players hooked. Playtika is projected to earn $400 million this year, Garber said.
Being early helped, as did those smaller acquisitions that built up the business, according to John DeCree, an analyst with Union Gaming in Las Vegas.
“They were able to develop such an enormous active user base they’ve become this gargantuan social network,” he said.
The sale provided Caesars with billions of dollars at a critical time — the Las Vegas-based company was negotiating a debt restructuring with creditors, a legacy of its 2008 leveraged buyout. Garber’s remaining business, which includes the World Series of Poker, will merge back into the parent company.