Meltdown

Quote: Pacomartin

Studio city Macau opens in 8 days.

Studio City, a $2.3 billion, Hollywood-inspired gaming and entertainment complex, hired Terence Winter (The Wolf of Wall Street) to write the script and Brett Ratner (Red Dragon; X-Men: The Last Stand) to produce. Directed by Martin Scorsese starring Robert De Niro, Leonardo DiCaprio, and Brad Pitt. This $70 million dollar film is strictly for promotion material. And get this, the government is going to give Studio City only 150 tables (same as they gave Melco's casino last month).

Steve Wynn's rant at the quarterly review is that he is expecting the same treatment (about 150 tables) for his $4.1 billion resort due to open next year.


Right now Wynn Macau has 465 table games but the VIP tables are making $19,953 per day for the first 9 months of 2015 vs $34,263 per day for the same period last year. The mass market tables are making $11,988 per day in 2015 vs $17,070 last year

In comparison the 233 table games in Wynn Vegas are making $5502 /day vs $7396 /day last year. The average blackjack table on the Vegas strip makes $1600 per day.

Unless the governments relents and give him more tables, Wynn could be facing a total debacle.
"In my 45 years of experience, I've never seen anything like this before." Wynn ranted.

This creates an interesting dynamic for the bureaucracy. Recent efforts to "clean up" the government's practices there have made it difficult for the monied casinos to throw their weight (and Pataca's) around to get things done their way. However, there is so much pressure on the casinos (and I suppose a greater willingness to invest in "goodwill", payments... aka "bribes") to expand their offerings to capture as much of the tightened flow of capital from China, that I wonder which gasket is going to blow first. It is amazing how much corrupt money was flowing into Macau before the crackdown.

Quote: Ayecarumba

It is amazing how much corrupt money was flowing into Macau before the crackdown.

I wonder if Steve can trade VIP tables for mass market tables. If he only gets 150 tables and has to split them at 75 VIP and 75 mass market, he is better off getting 400 mass market tables.

I mean if the mass market tables earn $12K/day and the VIP tables are earning $20K/day perhaps he should become the poster child for the new cleaned up Macau. What precisely do you get at a VIP table ? Do you get money laundering rights?

The so called "mass market tables" in Macau are still earning big bucks. The tables at Wynn Las Vegas earn $5.5K/day, they seem pretty upmarket to me. The blackjack tables in downtown Las Vegas make $577/day. To me that is "mass market".

Quote: Pacomartin

I wonder if Steve can trade VIP tables for mass market tables. If he only gets 150 tables and has to split them at 75 VIP and 75 mass market, he is better off getting 400 mass market tables.

I mean if the mass market tables earn $12K/day and the VIP tables are earning $20K/day perhaps he should become the poster child for the new cleaned up Macau. What precisely do you get at a VIP table ? Do you get money laundering rights?

The so called "mass market tables" in Macau are still earning big bucks. The tables at Wynn Las Vegas earn $5.5K/day, they seem pretty upmarket to me. The blackjack tables in downtown Las Vegas make $577/day. To me that is "mass market".

My suspicion is that the size of the mass market is fixed or shrinking, and that offering more tables will only dilute an already declining market. The real profit has been in VIP rooms, providing luxury amenities to junket/syndicate backed high rollers.

While Wynn's Macau tables may +earn 12k per day, the overhead on each of those seats has got to be huge when you consider a resort cost 4+ billion to build. Perhaps they should increase their efforts to attract whales in from Vietnam, Australia, Korea, or Japan?

Quote: Ayecarumba

Perhaps they should increase their efforts to attract whales in from Vietnam, Australia, Korea, or Japan?

That's a good question. Almost every jurisdiction that legalizes gambling hopes to make most of their profits from people outside of the jurisdiction.

Any bets on the 3rd quarter results?

Sands Casino 2nd quarter results/ 3rd quarter in two days on Wednesday
-31.7% The Venetian Macao Operations
-32.0% Sands Cotai Central
-15.5% Four Seasons Hotel Macao and Plaza
-23.1% Sands Macao
-12.5% Marina Bay Sands Operations
-17.1% Las Vegas Operations
+9.6% Sands Bethlehem Operations

Quote: Pacomartin

That's a good question. Almost every jurisdiction that legalizes gambling hopes to make most of their profits from people outside of the jurisdiction.

Any bets on the 3rd quarter results?

Sands Casino 2nd quarter results/ 3rd quarter in two days on Wednesday
-31.7% The Venetian Macao Operations
-32.0% Sands Cotai Central
-15.5% Four Seasons Hotel Macao and Plaza
-23.1% Sands Macao
-12.5% Marina Bay Sands Operations
-17.1% Las Vegas Operations
+9.6% Sands Bethlehem Operations

Well Four Seasons went off the rail. Fortunately things are leveling out at Singapore. Bethlehem is still the tiny star.

Sands Casino 3rd quarter results.
-27.0% The Venetian Macao Operations
-34.7% Sands Cotai Central
-41.5% Four Seasons Hotel Macao and Plaza
-26.6% Sands Macao
+2.0% Marina Bay Sands Operations
-22.5% Las Vegas Operations
+13.5% Sands Bethlehem Operations


Casino Revenue 3rd quarter (2nd quarter | 1st quarter )
$127.9 million Sands Vegas ($86.5 m | $111.8 m)
$134.3 million Sands Bethlehem ($128.4 m | $118.8 m)

Despite the negatives (Net Revenue)

Hotel	Q3 2015	Q3 2014	Q/Q	YTD 2015	YTD 2014	Y/Y
The Venetian Macao	699,553	943,037	-25.8%	2,226,198	3,160,374	-30%
Sands Cotai Central	550,159	816,463	-32.6%	1,676,154	2,428,822	-31%
Four Seasons Hotel Macao/Plaza Casino	167,947	265,432	-36.7%	533,314	863,940	-38%
Sands Macao	207,364	280,079	-26.0%	674,289	906,882	-26%
Total Macao	1,625,023	2,305,011	-29.5%	5,109,955	7,360,018	-31%
Marina Bay Sands	750,677	735,505	2.1%	2,248,535	2,375,618	-5%
Las Vegas	385,472	380,461	1.3%	1,107,871	1,116,194	-1%
Bethlehem	144,003	127,338	13.1%	409,204	370,644	10%
Other Aisa	43,422	41,439	4.8%	117,428	113,286	4%
Intersegment Eliminations	-54,914	-56,632	-3.0%	-166,267	-167,904	-1%
	2,893,683	3,533,122	-18.1%	8,826,726	11,167,856	-21%

Now that said, margins are still good; Sands is reducing costs in step with reducing revenue and is showing that it is weathering the recession well.

Adjusted EBITDA as a % of Percentage of Net Revenue

Hotel	Q3 2015	Q3 2014	YTD 2015	YTD 2014
The Venetian Macao	36.6%	37.4%	35.1%	38.8%
Sands Cotai Central	31.0%	32.7%	29.3%	32.2%
Four Seasons Hotel Macao/Plaza Casino	35.0%	38.1%	33.3%	32.7%
Sands Macao	24.7%	31.5%	25.9%	28.9%
Marina Bay Sands	51.9%	47.8%	52.0%	50.7%
Las Vegas	20.7%	23.7%	18.8%	21.1%
Bethlehem	26.1%	23.4%	24.8%	22.7%
Other Aisa	19.4%	7.6%	14.3%	1.1%
Total	36.4%	36.3%	35.3%	36.5%

Quote: boymimbo

Sands is reducing costs in step with reducing revenue and is showing that it is weathering the recession well.

Actually I made a post about that three months ago. It is truly remarkable that they are capable of doing that given the depth of the revenue cut. I have to think that there are vast executive perks that must have existed to allow them to make those kind of cost cuts almost overnight.

Wynn Resorts has not followed Sands. So far this year they have not been able to cut costs to keep up with drop in revenue.
-27% Net revenues
-19% Total operating costs and expenses
-52% Operating income

It was less than 3 years ago that there were news articles about Sands selling all their US properties and being solely in China and Singapore.

Quote: Matt Assad and Nicole Radzievich, Of The Morning Call, January 17, 2013

Parent company Las Vegas Sands floats trial balloon to see how much the Lehigh Valley property could fetch. Sands Casino Resort Bethlehem is on the selling block, a source familiar with company thinking told The Morning Call. Las Vegas Sands, the world's largest casino company, is asking as much as $1 billion for the Bethlehem casino. But the source cautioned it's part of company policy to gauge outside interest on every company property in the United States.In other words, while Las Vegas Sands' highly lucrative Macau properties are off-limits, every Sands casino in the U.S.— even the Venetian — theoretically could be had, for the right price.

If they were wise and stored some of the astronomical profits during the rise of the bubble, they should have a softer descent now that the revenue is coming back to earth. If they sank the money into expansion (like Wynn), the big trouble is only starting.

Quote: Ayecarumba

If they sank the money into expansion (like Wynn), the big trouble is only starting.

Sands is a larger company and is on the hook for a less expensive resort. However, if either resort is only awarded 150 tables they are probably both in trouble.

Sands is currently developing The Parisian Macao – its fourth property at Cotai Strip Resorts Macao – expected to open in 2016. It is to feature approximately 3,000 rooms and suites, gaming space, a retail mall, replica Eiffel Tower, MICE space, diverse food and beverage options, and entertainment. The total cost of the project is an estimated US$2.7 billion.

Wynn is currently constructing Wynn Palace, an integrated resort containing a 1,700-room hotel, a performance lake, meeting space, a casino, a spa, retail offerings, and food-and-beverage outlets in the Cotai area of Macau. In July 2013, we signed a $2.6 billion guaranteed maximum price ("GMP") contract for the project’s construction costs. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is approximately $4.1 billion. We expect to open our resort on Cotai in the first half of 2016.

In November 2014, Wynn was awarded a gaming license to develop and construct an integrated resort in Everett, Massachusetts, outside of Boston. The resort will be located on a 33 acre site along the Mystic River. The resort will contain a hotel, a waterfront boardwalk, meeting space, a casino, a spa, retail offerings, and food-and-beverage outlets.

Quote: Pacomartin

In November 2014, Wynn was awarded a gaming license to develop and construct an integrated resort in Everett, Massachusetts, outside of Boston. .

Construction hasn't started yet, Wynn can
still back out.

http://www.wcvb.com/money/wynn-preparing-site-of-massachusetts-casino/35207564