Wynn Blasts China Officials as Macau Resort Debut Loomsby
Casino mogul doesn't yet know how many tables he's allotted
CEO's personal fortune shrinks by $1 billion as stock tumbles
Wynn Resorts Ltd. Chairman and Chief Executive Officer Steve Wynn criticized Chinese bureaucrats who haven’t told him how many gaming tables he’ll get at his $4.1 billion resort scheduled to open in Macau on March 25.
The uncertainty is complicating decisions about hiring and training workers and could force Macau operators to terminate employees, Wynn said on a conference call Thursday with analysts after reporting third-quarter sales that missed analysts’ estimates.
“None of us are really clear on what our environment is going to be like going forward, and it makes planning and adjusting almost a mystical process,” Wynn said.
Macau, the world’s largest gambling market, accounts for more than half of Wynn Resorts’ revenue. A government crackdown on corruption, coupled with a softening Chinese economy, has prompted high-rollers to shun Macau’s casinos. Industrywide gambling revenue there fell 33 percent in September, the 16th month of decline.
The first of the large U.S. casino operators to announce third-quarter earnings, Wynn Resorts posted revenue that trailed analysts’ estimates after a large drop in gambling in Macau. Profit beat projections.
The Las Vegas-based company said profit fell to 86 cents a share, excluding items, from $1.95 a share a year ago. That still beat the 84-cent average of 15 analysts’ estimates compiled by Bloomberg. Revenue fell 27 percent to $996.3 million as results in Macau shrank by more than a third. Analysts had been expecting $1.03 billion.
Wynn Resorts fell 8 percent to $67.79 in extended trading after the results were announced. The stock is down 58 percent the past year, cutting the value of Wynn’s personal stake in the company by over $1 billion. Shares of the Macau unit plunged as much as 6.6 percent in Hong Kong trading Friday to HK$11.12, the biggest intraday loss since Sept. 29.
The slump in Macau comes amid a wave of new casino projects, many of which had been planned to operate with 500 baccarat tables each. Galaxy Entertainment Group Ltd. opened its newest property in May with just 150 tables. The next major resort, Melco Crown Entertainment Ltd.’s Studio City, is scheduled to open Oct. 27.
“The notion that a person who spent $2.5 billion, I’m talking about Melco now, would not know how many tables they’re going to have three weeks before they open is so preposterous that it’s worthy of comment,” Wynn said. “We are hopeful that we’ll be able to press the issue and get more clarity from the leadership of the local government.”
Wynn, 73, has often used company conference calls to opine on issues such as U.S. government policy and even U.S. gambling regulators, but his public comments about Chinese officials Thursday were unusual for executives doing business there.
High-roller play by all tourists is down as much as 50 percent in Las Vegas, where overall revenue also fell in the quarter, according to Wynn Resorts.
“I don’t know if this is the most satisfying quarterly phone call we’ve ever had, but at least it’s been the most candid,” Wynn said.