Company's Development Plate Full with Macau and Wynn Las Vegas Expansion
Wynn Resorts Ltd. has withdrawn from bidding for one of the two proposed gaming-resort sites in Singapore because the Las Vegas-based casino operator cannot devote necessary resources to the project, company Chairman Steve Wynn said Friday.
With one casino under construction in Macau and a second Las Vegas hotel-casino in the planning stages, the operator of Wynn Las Vegas couldn't commit the time to developing a plan for the 50-acre site in Singapore's downtown marina district. Gaming analysts have predicted the casino could be worth more than $1 billion in annual revenues and has drawn the interest of the gaming industry's major casino operators.
A November report by Merrill Lynch that handicapped the marina district bidding said MGM Mirage, Las Vegas Sands Corp. and Harrah's Entertainment were favorites to win rights to the project.
Once the marina district project is awarded, Singapore is expected to open bidding for a second casino site on the resort area of Sentosa Island.
Wynn, however, said the company's development plate was full.
"Our resources are stretched. (Singapore) is a very involved process and we don't have the time or the manpower to devote to that effort," Wynn said. "Whoever wins the Singapore site is going to be very happy. It's a fabulous location."
Wynn Resorts is spending more than $1 billion on Wynn Macau in the Chinese gaming enclave. The first phase is scheduled to open late next summer with a 600-room hotel and a 100,000-square-foot casino. An additional 92,000-square-feet of casino space is also under construction and is expected to open in fall of 2007.
In addition, Wynn said the company hopes to break ground next spring on Encore, an estimated $1.5 billion, 2,000-room hotel-casino that will be integrated into Wynn Las Vegas. The project is expected to open in 2008.
"Singapore would have involved all of my time, and that just isn't possible," Wynn said. "We're hoping to get the building by July and start training our staff. We'll have 4,900 employees initially and it will grow to 8,000 when phase two opens."
Wynn said he expects to hire almost 3,000 dealers to handle 500 baccarat tables at the Macau casino.
"Between doing construction in Macau, 3,600 miles from Las Vegas, and planning for Encore, we have a major challenge already," Wynn said.
The Singapore government will accept bids on the marina district site through March. A winner for the project is expected to be announced by the end of 2006. Singapore officials placed an upfront development fee of more than $700 million based on the value of the marina district land in addition to development costs.
"When you look at the value of the land, Singapore has been very clear that it wants somebody to build something fantastic," said John Knott of the CB Richard Ellis Global Gaming Group in Las Vegas, which worked with the Singapore government to establish a value to the marina district site.
"Singapore wants an iconic landmark and it's going to take a company with substantial resources to enter the ball field," Knott said.
Wynn is the fourth group to withdraw from the Singapore bidding since the Singapore Tourism Board distributed the comprehensive bidding package, which laid out the rules for casino size and specifications, last month. In addition to the three Las Vegas-based casino operators, two other bidders remain for the site; Genting from Malaysia and a venture between Australian billionaire Kerry Packer's Publishing and Broadcasting Ltd. and Melco International Development Ltd., controlled by the family of Macau gaming tycoon Stanley Ho.
One gaming analyst thought the upfront site fee and limiting the casino size to 150,000 square feet may have factored into Wynn's withdrawal.
"It may be difficult to attain a good return, given high land costs, casino space limitations, potential tax rates, and other issues surrounding the Singapore project," Deutsche Bank gaming analyst Marc Falcone said. "Further, we believe the company maintains the potential for considerable exposure to Asia through its concession in Macau, which essentially allows an unlimited number of developments."
Wynn holds one of three concessions in Macau that allows his company to offer joint ventures. He said the potential in China and the attention he needs to focus on that project, made Singapore too much of a challenge.
"We're already a builder in Macau so it's a little different," Wynn said. "I'm spending a week a month in Macau and that's where my attention needs to be focused."