WYNN RESORTS, facing a series of legal and regulatory challenges to its proposed $1.7 billion casino in Everett, is also facing financial challenges as a company.
The Las Vegas firm’s stock price has fallen precipitously over the last year. The 52-week high was $192 on October 29 last year and the low was just under $51 a week ago. The stock closed on Wednesday at $71.51.
Many of the company’s key stats are down from the levels they were at when the Massachusetts Gaming Commission awarded Wynn the Greater Boston casino license last year. Wynn’s financial strength was one of the key factors cited by commissioners in awarding the license to Wynn.
The company’s return on investment is 4.1 percent, compared to 21 percent at the end of 2013. Other key financial barometers are also down, although the company’s current ratio, an indicator of its ability to pay its bills, is up slightly, from 2.04 to 2.09.
Most of the downturn is attributable to a sharp falloff in business at Wynn’s Chinese casino in Macau. Once a gusher of revenue, Wynn’s Macau business has slowed considerably amid a Chinese government crackdown on shadowy junket operations that brought high-stakes gamblers to the area’s casinos. Other Macau-based casino operators are also seeing a downturn in business.
Macau gambling revenue at all casinos topped $40 billion last year, but is off more than 35 percent this year, according to the Wall Street Journal. At Wynn’s Macau casino, revenues were off 37 percent in the first six months of this year, falling to $1.3 billion. Even as revenues decline, Wynn is preparing to open a second casino in Macau costing $4.1 billion in the first half of next year.
Michael Weaver, vice president of marketing and communications at Wynn, issued a statement saying the company’s stock price has no impact on the company’s plans for Everett. He said the majority of the financing for the Everett project is already in place.
In November 2014, Wynn entered into an agreement with a group of lenders for a $375 million revolving credit line and an $875 million secured term loan. Quarterly payments on the loan are set to start in June 2018, which is the same year the Everett casino is scheduled to open.
Enrique Zuniga, the Gaming Commission member who reviewed Wynn’s finances as part of the licensing award process, said he continues to monitor the company’s financial situation and is not worried about the firm reneging on its commitment to Everett.
“They’re still very strong,” he said. “They have their money. They’re going to do this.”
Zuniga said Wynn has been taking a hit in the ultra-rich junket market in Macau. He said the opening of a second casino there next year may actually be good news since that project is designed to cater to the non-junket, mass-market customer.
“In my opinion, they’re a conservative company,” Zuniga said, referring to Wynn’s selective nature in expansion. The company currently operates casinos only in Las Vegas and Macau. “It still makes sense for Wynn from a financial standpoint to be here in Everett,” Zuniga said.