Internal fight in Snoqualmie Tribe spills over into casino
February 22, 2011
A fight in the Snoqualmie Tribal Council prompted an unexpected $14 million buyout of the Snoqualmie Casino’s CEO, but doesn’t threaten the casino’s viability in the short-term.
The decision caught many members off guard because it came only two months after the council had voted to maintain casino CEO Mike Barozzi’s contract. The experienced casino manager had been an integral part of the tribe’s pitch to investors when they put together the casino’s financing.
Losing Barozzi could affect the interest rate the tribe gets when it has to refinance the casino’s debt in a couple years.
The controversy is the latest episode in a long series of internal troubles for the insular, tight-lipped tribe.
The council didn’t offer any explanation for its Feb. 13 vote.
The decision to buyout Barozzi, which passed 4-3, was a compromise between council members who “wanted to run him off so the tribe could get more control, operationally (and specifically over hiring and firing decisions related to native employees) and some on the council that wanted to support Mr. Barozzi unequivocally,” Tribal Administrator Matt Mattson wrote in an e-mail to the Star.
However, Councilwoman Maryann Hinzman offered a different view.
“It was his decision to leave,” she said.
Some tribal members filed an emergency injunction in tribal court following the vote, claiming that the council couldn’t spend more than $2 million without approval from the general membership.
Mattson said he could not comment on ongoing litigation.
Barozzi had originally asked for $19.5 million, which the council decided was too much at a Dec. 19 meeting.
However, at least one councilman — Ray Mullen — was absent from the meeting and brought the matter up again at the February meeting.
This time around, Barozzi and the council settled on $14 million.
The motion was introduced in council by Hinzman and Mullen. Their council seats are up for election this year, and they have come under criticism in recent months from many in the general membership.
Both members declined to comment on the matter.
After Barozzi’s last day Feb. 18, the casino’s chief financial officer, James McDermott, has been serving as the interim CEO.
The tribe is conducting a nationwide search for a new director. Among the candidates are Jon Jenkins, who has extensive experience in Arizona.
Jenkins did not return phone calls.
While Jenkins is qualified, “…there will most assuredly be other candidates,” Mattson said.
Whoever the tribe picks to take over at the casino could affect interest rates when it refinances its $330 million debt in 2013 and 2014, after its bonds mature.
Barozzi had been key to the good interest rates the tribe secured and the casino’s success after a lackluster opening in November 2008. He offered investors the knowledge that the casino had stable, experienced leadership.
Financers will want to know how much of his management team is still in place when the tribe goes to refinance its debt, according to W. Ron Allen, chairman of the Jamestown S’Klallam tribe and chairman of the Washington Indian Gaming Association’s executive committee.
“If they’re still in place, then there’s confidence that the decisions that are being made are consistent with past patterns,” Allen said.
The management team that Barozzi put in place has proven its ability to succeed, he said.
The casino could suffer if important jobs become political bounty for council members.
While that has been a “historic concern” for tribal casinos, most have a buffer between the council and the casino to prevent political spillover, Allen said. “I haven’t seen it seriously affect” a casino’s operations.
The tribe is trying to train members to become experienced gaming managers. It recently started a management internship program at the casino for tribal members.
Buying out the final eight years on Barozzi’s contract also reduced the amount of equity the tribe has in the casino. That will hurt the refinancing terms, which has some tribal members upset.
“They’re spending the tribe’s money!” said Pat Barker, one of the tribe’s two sub-chiefs.
The full cost, he noted, will be felt for years in larger interest payments.
Dan Catchpole: 392-6434, ext. 246, or email@example.com.