Wynn Resorts earnings fall sharply
CEO nonetheless calls Everett prospects ‘titillating’
WYNN RESORTS, WHICH is planning to build a $1.7 billion casino resort in Everett, announced lower-than-expected earnings for the fourth quarter, largely because of a falloff in revenue at its high-flying Chinese casino.
Net revenues for the three-month period ending December 31 were $1.1 billion, down from $1.5 billion during the same period in 2013. Revenues at the Wynn resort in Macau, in China, were down 32 percent to $761 million, while revenue from the company’s two Las Vegas properties was off nearly 6 percent to $377 million. Overall, the company’s adjusted net income was down 47 percent to $122 million.
Steve Wynn, on a conference call late Tuesday with investment analysts, sounded concerned but not alarmed about the slowdown at the company’s Chinese resort. Gambling, particularly by high-end players, has fallen off in Macau amid a government crackdown on corruption. “China remains a big question mark,” Wynn said.
But Wynn struck a very optimistic tone when asked about his proposed $1.7 billion casino in Everett, which he said will help the company diversify its operations. He said financing is proceeding smoothly and mentioned no other problems, although Boston, Somerville, and Revere are all suing the Massachusetts Gaming Commission in a bid to overturn the Wynn license award.
Wynn estimated the company spent or committed to spend about $230 million to win the eastern Massachusetts casino license. “We’re going to be one of the top five private employers in the history of the state of Massachusetts,” he said. “We’re going to be responsible for $50 million a month in revenue for the state, probably another $50 million in related revenues to all the surrounding communities. We’re going to employ thousands and thousands of people. It’s the largest construction budget in recent history in Massachusetts, maybe forever.”
But Wynn was troubled about the crackdown on corruption in China, where the bulk of the company’s revenue comes from and a second hotel casino is under construction and due to open next year. At one point, Macau’s anti-corruption agency was probing payments made in connection with Wynn’s purchase of land for its second casino, but company officials say nothing came of that investigation.“There’s an uncertainty in China these days about things that are a little foreign to us here,” he said. “What is expected of them? What’s the relationship of Chinese businessmen to Chinese government officials? Is corruption as widespread as people say it is? I read the South China Morning Post. I talk to people, and this campaign against corruption has been a big wake-up call in China.”
Wynn said there is little to do about the Chinese situation but wait it out. “We wait for announcements from the government with bated breath to understand what their perceptions are of Macau and what the related activities will be as a result of those perceptions. So I think what we’re seeing across China is a retrenchment of spending instincts, and how long will that last, I don’t know.”