Earnings calls differ for Wynn, Mohegan Sun
Wynn gains, Mohegan Sun ‘less than stellar’
The two companies competing for the Greater Boston casino license reported their quarterly financial numbers on Tuesday, and the tone of their conference calls with analysts was very different.
Wynn Resorts, which wants to build a casino in Everett, was very upbeat. The company reported gains in net revenue (up 6 percent to $1.4 billion) and adjusted net income (up 41 percent to $215 million). Steve Wynn, the company’s founder and CEO, said he was very happy with the results and spun out one of his trademark anecdotes about how the company’s success is rooted in the fable of the three little pigs.
Mohegan Sun, which is seeking a license to build a casino in Revere alongside the Suffolk Downs racetrack, reported a 5.2 percent decline in net revenue to $326 million and a 19 percent drop in adjusted net earnings to $69 million. Kevin Brown, the chairman of the Mohegan Sun Tribal Gaming Authority, called the results “less than stellar.”
Mitchell Etess, the CEO of Mohegan Sun, said the company is experiencing the same challenges that its peers in the industry are facing, namely a sluggish economy still rebounding from the Great Recession. He said customers are still coming in the door, but they are generally spending less. He said the company is building its market share in Connecticut and Pennsylvania and aggressively trimming costs ($13 million last quarter).
Wynn, calling in from Macau in China, talked at length about how his company’s properties typically don’t have as many rooms, slots, or gaming tables as its competitors. But he said his hotel/casinos do a good job of targeting high-end customers with lots of discretionary income, so they generally generate more revenue per machine or per room than competitors.
Wynn likened his company to one of the pigs in the fable of the three little pigs. “We build houses of brick and our houses of brick take a little longer to build than the others, but they last,” he said.
A big concern for Wynn right now is whether a new hotel being built in Macau at a cost of $4 billion will cannibalize business from the company’s existing hotel there. Wynn said he didn’t think it would. In Vegas, Wynn reported a 12.5 percent increase in net revenues. He said the company’s two Vegas hotels are pushing toward $50 million in profit in July, and company officials are trying to reach a record $500 million in profit for the year.
Wynn said the company’s strong results are occurring in markets with a lot of competition. “We thrive on the intensity of the competition,” he said. “We do better when the competition is better.”
Regarding the competition for the Massachusetts casino license, Wynn said nothing except that he was looking forward to the Sept. 12 decision by the Massachusetts Gaming Commission. Etess said Mohegan Sun is the better choice for Massachusetts because it already knows the northeast market and has a more outward-looking marketing approach with the surrounding communities and local businesses. He said choosing Mohegan Sun would also save the Suffolk Downs racetrack.In response to a question, Etess said the ballot question seeking to repeal the state’s casino law is worded confusingly. But he said by election time in November voters will know what they are voting on. He said Mohegan Sun will participate actively in the ballot campaign but wouldn’t divulge how much the company plans to spend. He said all the casino operators with licenses or seeking licenses in Massachusetts have agreed to participate in the campaign except for Wynn, who until now has chosen to remain on the sidelines.
Etess expressed confidence the ballot question will be defeated. “There is still definitely support for legalized gambling in the Commonwealth,” he said, adding that his polling data suggests support is stronger if Mohegan Sun wins the license.