Greff predicts MGM will be cash-flow negative this year but will generate $1.4 billion next year, $2.3 billion in 2022. Macanese returns this year and next will be negligible. But on balance, it’s a hopeful report.
Greff’s colleague Daniel Politzer didn’t even wait for Churchill Downs‘ 3Q20 report to ratchet down his cash-flow projections by $41 million to an increment under $100 million. (The price target is still an impressive $185/share.) As you may have anticipated, the underperforming Kentucky Derby is to blame. Other reasons for concern are that a number of capex expansions are on hold. No news yet on the company’s Waukegan casino—the earnings call may disclose something from that front. Of his Derby estimates, Politzer wrote, “We prefer to be conservative here given the virus/uncertain near-term outlook for large gatherings.” Casino gambling is expected to drive the largest portion of CHDN’s revenue this quarter, an estimated $63 million. The company also just opened two historical-racing parlors in Kentucky, whose impact won’t be fully felt until 4Q20. Despite all of his caution flags, Politzer bumped his price target up by seven bucks.
Jottings: Remember what we said yesterday about cratering room rates on the Las Vegas Strip? Well, Las Vegas Metro is citing the $10/night room as a contributing factor in the ongoing crime wave. Seems cheap rooms are bringing in the undesirables. Gov. Steve Sisolak (D) is in deep denial, saying, “Las Vegas is a safe place to come, and I want to stress that to all of our visitors that are coming here. I am in discussion with the resort community.” Discussing what, may we ask? And who in their right mind pays $64 to stay in a Super 8 motel in Downtown? … Absinthe returns to Caesars Palace on Oct. 28, with two shows a night Wednesday through Sunday. Caesars promises “Guests can expect a new cabaret-style seating format … which will allow parties of two to five to reserve tables positioned no less than six feet apart.” This, ladies and gentlemen, is the new normal … Paragon Gaming has lost CEO Scott Menke, deceased at age 59. Our thoughts are with his family … Tune into YouTube at 4 p.m. on the 24th to hear 60 Minutes correspondent John Dickerson read from his book, The Hardest Job in the World, a profile of the American presidency. It’s part of the 2020 Las Vegas Book Festival’s Virtual Book Week and will be moderated by the Las Vegas Review-Journal‘s Steve Sebelius. When I was at Las Vegas CityLife, Steve was one of the best editors I ever had. When times are tough Sebelius has your back.
I think you need to re-read that article David, it cites a $10 on average drop in the room rates from a year ago, not $10 rooms… And Las Vegas Metro blaming a ten dollar drop in room rates for violent crime is disingenuous, it suggests that criminals walking around with guns committing crimes are driven by lunch money savings. Las Vegas opened up, that would seem to be the driving factor if you ask me, the gangs got bored roaming around areas that are closed.
I should have been clearer. Companies like Caesars Entertainment have been offering rooms for as little as $10/night (plus resort fees). Hence the reference. My apologies to the readership. As S&G mentioned yesterday, the average daily rate for 11/1-7 is $99/night.
Its notable as well that the violent crime is in the Strip area, the Fremont Street cluster of resorts does not seem to be suffering from a spike. The Strip is a vast area, much harder to police, especially if there are less crowds. There is some comfort in the Covid era being around crowds… And Fremont Street has its own private security guards…