{"id":15731,"date":"2015-03-17T12:47:36","date_gmt":"2015-03-17T20:47:36","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=15731"},"modified":"2022-12-22T07:24:28","modified_gmt":"2022-12-22T15:24:28","slug":"macaos-great-recession-caesars-shreds-contracts","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/macaos-great-recession-caesars-shreds-contracts\/","title":{"rendered":"Macao’s Great Recession; Caesars shreds contracts"},"content":{"rendered":"

Yes Virginia, there is a recession in Macao<\/strong>. With two consecutive quarters of negative GDP growth<\/a>, the casino city meets Wall Street<\/strong>‘s definition of a recessionary economy. Eighty \"Venetian<\/a>percent of Macanese revenue comes from gambling, so when the central government in Peking<\/strong> cracked down on VIP players, cash transfers and visas, banned smoking, and put the brakes on several infrastructure projects the stage was set for Macao to take a fall.<\/p>\n

Bank of America<\/strong> analyst Shaun C. Kelley<\/strong> says not to panic<\/a>:\u00a0“Macao is not empty. General traffic patterns around the properties felt OK … [casino operators]\u00a0are cautious, but not overly fearful or bearish.” Some may institute austerity measures such as not replacing employees who leave or are dismissed.<\/p>\n

Meanwhile\u00a0on Wall Street, one investment firm is backtracking on its advice to wait until mid-year, then buy into gaming stocks with Macanese exposure. Now Morgan Stanley<\/strong> is \"wynn_macao\"<\/a>saying it’s premature\u00a0to predict a mid-2015 turnaround in Macao and the visibility beyond that is too cloudy.\u00a0“It appears we misjudged the extent of the near-term headwinds (the full effect of which we may not have even fully yet reflected) and we should have stuck to our initial cautious stance,” read Morgan Stanley’s mea culpa<\/em>. It’s predicting a 25% falloff from last year. What’s more, it says of new gambling\u00a0product, “We estimate that each casino with 300 tables needs [gross gaming revenue]\u00a0of US$200mn\/US$350mn per quarter to break even,” with Wynn Palace<\/strong> in the worst position<\/a> because it’s the last new casino coming out of the chute.<\/p>\n

Wynn Macau<\/strong> is showing signs of desperation by rescinding a ban on proxy betting in Manila<\/strong> casinos over telephone lines in its Macanese VIP rooms. The practice raises fears of money-laundering<\/a> among some, which may explain why Sands China<\/strong> has banned it.<\/p>\n

The worst may be yet to come: The Chinese government is said to be planning further scrutiny of illegal transfers of funds. What’s more, it may extend the smoking ban to VIP rooms. If that happens, it may mean healthier gamblers but casino balance sheets will take on a sickly cast.<\/p>\n

* We’re getting a foretaste of the everything-over-the-side strategy Caesars Entertainment<\/strong> will pursue as it endeavors to keep the company afloat. It’s received bankruptcy-court approval to dump the rental of a luxury skybox<\/a> for Kansas City Chief<\/strong>s games (losing an\u00a0$12,580 deposit in the process), voiding a $310,000 lease with a Springhill Suites<\/strong> hotel near Horseshoe Bossier City<\/strong> and in which it holds a minority \"CAESARS-ENTERTAINMENT-LOGO\"<\/a>stake, and booting Monster Inc<\/strong>. from its promotional space at Britney Spears<\/strong>‘ concerts at Planet Hollywood<\/strong>.<\/p>\n

Monster was in default on the latter arrangement but the Bossier City<\/strong> contract-shredding could have real consequences.\u00a0“Without these guests, the hotel will not survive,” wrote Springhill attorney Sara Lorber<\/strong>. Caesars didn’t get everything it wanted. Requests to void promotional arrangements with the New York Mets<\/strong> ($2.4 million a year) and Los Angeles<\/strong>‘ The Forum<\/strong> ($720,000) were rejected by\u00a0Judge Benjamin Goldgar<\/strong> because Caesars didn’t file them in a timely manner and will have to go back to Square One. The same applies to an agreement Caesars has with an unnamed motor-coach company it pays $1 million a year to ferry guests to and from Horseshoe Bossier City. Judging by events to date, we’ll be waiting for a closet-ful of other shoes to fall.<\/p>\n","protected":false},"excerpt":{"rendered":"

Yes Virginia, there is a recession in Macao. With two consecutive quarters of negative GDP growth, the casino city meets Wall Street‘s definition of a recessionary economy. Eighty percent of Macanese revenue comes from gambling, so when the central government … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[34,14,4,7,84,62,101,192,6,25,12,74,32,19,100,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/15731"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=15731"}],"version-history":[{"count":7,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/15731\/revisions"}],"predecessor-version":[{"id":32092,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/15731\/revisions\/32092"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=15731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=15731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=15731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}