Wynn juggles mega-resorts

Jun 25, 2002 9:02 AM

Shoveling another half-billion dollars into his emerging casino empire, Steve Wynn is ready to roll in Macao.

Combined with Le Reve, the Las Vegas gaming developer will have an estimated $3 billion in play on the Strip and in Asia.

Just a week after announcing an initial public offering for Le Reve, Wynn inked a deal with Macau’s government to erect a casino there. In fact, Wynn went one better, pledging to build two resort complexes: one on the Macau Peninsula and the other on Macau’s offshore island Taipa.

The peninsula project will be near Stanley Ho’s flagship Lisboa Casino. Ho signed the first of three new casino-concession agreements with the Macau government on March 28. The 80-year-old Ho’s Sociedade de Jogos de Macau/SJM (Macau Gaming Co) pledged to invest at least $587 million over 18 years.

(The third player ”” still to be signed ”” is Galaxy Âí­Casino Co. Ltd., controlled by Las Âí­Vegas Sands owner Sheldon Adelson.)

Wynn’s high-wire act ”” balancing high-end properties across the Pacific ”” has earned praise as well as criticism. Las Vegas is hoping that his venture on the old Desert Inn property will propel the Strip to new heights. Macau obviously shares that enthusiasm.

But Wynn, 60, has also been blasted by some investors and a few Wall Street analysts for overspending. The costly Bellagio and Beau Rivage dragged down Mirage stock performance, which has improved since the takeover by MGM.

"There is no precedent for something that costs $2.4 billion on the Strip,’’ Prudential Securities Research gaming analyst Bill Lerner said last week. "It sounds like an enormous price tag.’’

Wynn Resorts still has not declared a firm groundbreaking date after missing several previously announced dates. Latest word from COO Rob Oseland indicates that dirt will fly "some time in September," with an opening pegged for March 2005.

Sources say Wynn’s decision to re-enter the public market showed he was having trouble raising funds for what will be the world’s most expensive hotel-casino. Now, with twin projects in Macau and Las Vegas, the market for additional debt and/or investor equity.

Betting on the come, the Le Reve filing with the Securities and Exchange Commission this month actually included $23.3 million for the Macau project. Also included: $46.4 million for a corporate aircraft.

The Macau contract requires that Wynn invest $512.8 million within seven years and finish construction of the first phase of the resort and entertainment complex by 2006.

Wynn has noted that local construction costs run about 60 percent less than those in Nevada, and that wages are also much lower. "I think it’s a really fascinating opportunity,’’ he said of Macau last winter. "What fun! This is what I was trying to do when I left Mirage: Build more hotels.’’

But adding to the angst, former President Bush recently cited problems in the insurance market for skittishness in the high-end resort sector. He said that because insurance against terrorist attacks had become unaffordable or unavailable in the wake of Sept. 11 resort financing was tougher than ever.

"A $2 billion resort in Nevada. . . (that) could provide 16,000 jobs is on hold because they can’t get insurance for terrorism,’’ Bush complained. "That’s not right.’’

Though Wynn has not responded to those comments, insiders have downplayed the concern. One source involved with construction of Le Reve told GamingToday unequivocally: "We’re moving full-speed ahead."


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