The widely anticipated approval by the Macau government of the Cotai land concession for Wynn Macau occurred last month, but not after some last-minute jitters for the company.
In March, the company filed a statement with the U.S. Securities and Exchange Commission saying it had received the concession, but it was immediately withdrawn, citing a clerical error. That announcement followed an announcement issued by the company late last year when it had negotiated the agreement but had not yet been given the official approval.
In the meantime, a feud broke out between Wynn Chairman Steve Wynn and former Vice Chairman Kazuo Okada, who claimed that a $135 million contribution from Wynn Resorts to the University of Macau smacked of bribery, a charge denied by all involved. Wynn on the other hand has charged Okada with bribing Philippine regulators to get a license to build a $2 billion casino resort in Manila. Wynn’s main gripe with Okada, however, is a claim that the Manila resort will compete with the company’s Macau properties. Lawsuits are flying and the issue is far from resolved.
Nonetheless, Wynn Macau received one of the two land concessions in Cotai the government plans to grant this year. The final concession will go to either MGM China or SJM.
Steve Wynn was notably humble when the deal was announced.
“Our company has enjoyed the privilege of being included in the remarkable modern history of our community,” he said in a statement. “The official transfer of real estate in Cotai makes possible the commencement of the construction phase, of what will be the single most important project in the history of Wynn Resorts. We are mindful of our responsibilities to the citizens and government of Macau.”
Wynn Macau paid the Macau government a down payment of $62.5 million in December and will pay close to $1 million annually for the land concession. The land is more than 200,000 square meters, and will host a casino resort that Wynn estimates will cost between $3 billion and $4 billion. The lot is located behind Melco Crown’s City of Dreams on the water.
Analysts praised the Wynn deal, saying it would be accretive to the $765 million in operating income the company generated from its two existing resorts in Macau. The announcement caused a nearly 5 percent rise in the company’s share price, jumping to $130. But that was still far below its previous high of $178 that it reached last summer.
Meanwhile, MGM Resorts remains confident it will receive the next Cotai concession to be granted. During a second-quarter conference call with investors, Chairman Jim Murren called the concession “imminent,” saying the Wynn grant was a good sign.
“Our process through this since 2007 has been deliberate, measured and tracking to that type of outcome,” Murren said.
Grant Bowie, the CEO of MGM China, said the company is ready to commence construction on a $2.5 billion resort.