Industry Insider by Ray Poirier | Last year, major money magazines were writing about Las Vegas billionaires, people like Sheldon Adelson, described in Forbes as the third richest man in the world; Kirk Kerkorian and Steve Wynn.
At the time, their companies were highly popular with investors on Wall Street. And since the gaming gurus had most of their money invested in these companies – Adelson in Las Vegas Sands Corp. (LVS), Kerkorian in MGM MIRAGE Inc. (MGM) and Wynn in Wynn Resorts Ltd. (WYNN) – their net worth grew as the price of their shares skyrocketed.
But that was before the current economic slowdown and the resultant plummeting of most major stocks, including the above mentioned.
Over the weekend, the financial newspapers and magazines filled their pages with stories of the billionaires and the decline in the value of their companies. And predicted more doom and gloom for casinos, especially those in Las Vegas.
Kerkorian received headlines because of his recent failed gamble in Ford Motor Co. (F). He purchased some 130 million shares just before the company lost about 75% of its stock value. Unfortunately, Kerkorian had pledged some 100 million shares (or about two-thirds of his holdings) in MGM MIRAGE as collateral for a loan from Bank of America to purchase the Ford shares.
Late in the week, Kerkorian’s holding company, Tracinda, announced that he would take his Ford lumps and redirect his investing interest in gaming and hotel companies.
Some felt initially that the move would be to acquire a greater part of the MGM outstanding shares but the drop in trading price undermined that thinking.
Meanwhile, Adelson reportedly was scouring lending institutions in Asia seeking upwards of $2 billion to complete his Macau construction projects. And his project in the Philadelphia suburb of Bethlehem, Pennsylvania, was being affected by the lack of funds.
Bethlehem Mayor John Callahan said he expected the casino and parking garage to open in June, 2009, but that workers have been told that the timetable for the hotel, events center and mall had been delayed.
Steve Wynn probably summed up the problems last week when he was quoted as saying "2009 will separate the men from the boys."
Both MGM MIRAGE and Wynn Resorts will review their third quarter financial experience later this week.
In trading on Monday, Wynn Resorts closed at $33.46; MGM MIRAGE at $10.05 and Las Vegas S ands at $5.80.