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OPINION: Is Osaka’s RFP extension really about fairness?

Andrew W Scott and Ben Blaschke by Andrew W Scott and Ben Blaschke
Thursday 1 April 2021 at 06:48
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When Osaka announced earlier this month that it would extend the RFP submission period for new applicants until 6 April, it did so under the pretence of ensuring fairness in the process.

The Osaka IR Promotion Council doubled down on that reasoning this week, telling IAG Japan, “Regarding the additional open call for participants, we originally started the application before the [revised] Basic Policy of the central government came out. We started the additional application based on the law and to maintain fairness to entities who see the Basic Policy of [the] central government and the revised implementation policy (draft) and may consider applying.”

But the question remains: fairness to who?

Certainly not to MGM Resorts and its local partner ORIX – currently the only consortium to have expressed an intention to bid (and to have fulfilled all requirements under Osaka’s original RFP timeline). MGM understandably declined a request for comment for this story.

MGM Resorts, along with its local partner ORIX, was last man standing after its original competitors in Osaka – including Las Vegas Sands, Galaxy Entertainment Group, Wynn Resorts, Melco Resorts & Entertainment, Genting Singapore and Caesars Entertainment – all withdrew almost immediately after Yokohama confirmed its IR candidacy in mid-2019.

Having since consistently reaffirmed its commitment to Osaka, MGM’s President and CEO Bill Hornbuckle stated as recently as February that the company had its RFP documents ready for submission as soon as the final call went out.

Given the impact of COVID-19, delays were to be expected but it’s possible MGM was at least somewhat taken aback by Osaka’s decision to court more suitors.

In outlining its “fairness” case, Osaka has pointed to changes it recently made to its own IR Implementation Policy, particularly the timeline for completion of MICE facilities. Although the operator will still be required to provide 100,000 square meters of MICE space, it can now be rolled out in stages with 20,000 square meters at IR opening, expanded to 60,000 within 15 years and eventually the full 100,000.

However, there are other working theories at play too. One is that Osaka’s decision to open the door to new applicants revolves around plausible deniability over suggestions that MGM is in fact a done deal. A more cynical theory suggests Osaka wanting to create a competitive dialogue to address concerns that both MGM and ORIX were in fact having second thoughts. Or possibly readying themselves for a tough negotiation with Osaka. There has been plenty of “goalpost moving” over the years in the Japan IR process – who’s to say a candidate operator couldn’t seek to engage in a little goalpost-moving of their own?

In any event, some will say it is not a good look for Japan’s second most populous city to close RFP submissions for a second time and still have just one applicant on board.

An innocent reading of the circumstances would say that Osaka must have extended its RFP submission period because it had good reason to expect renewed operator interest. Yet in reality, who could there possibly be?

Given the short time frame Osaka has offered, and the fact that national government will start accepting applications from candidate locations and their chosen partners from October this year, there is simply not enough time for any brand new operators to join the fray.

Osaka, given its size and multi-billion USD IR investment expectations, is also reaching for the world’s biggest integrated resort operators. That leaves only a handful of companies which might reasonably consider a return. Realistically, given that Las Vegas Sands and Wynn Resorts have essentially withdrawn from the market, for now at least, it leaves only Genting Sinagpore, Galaxy and Melco.

Sources have told IAG that Genting Singapore is now very strongly positioned in Yokohama and is therefore unlikely to want the distraction of another location. Melco, too, has made no secret of its “Yokohama First” policy and will be encouraged that neither LVS nor Wynn remain as competitors in that market.

Galaxy has remained largely quiet on the matter but IAG understands it is one a handful of companies keeping a close eye on Aichi, which has yet to rule itself either in or out of Japan’s first round of IR bidding.

All of which means there will likely be no winners to emerge from Osaka’s decision to open submissions to new applicants, including the city and prefecture itself.

That doesn’t seem fair to anyone.

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Tags: Galaxy Entertainment GroupGenting SinaporeirMGM resorts JapanOrix CorpOsakaRequest for proposal
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Andrew W Scott and Ben Blaschke

Andrew W Scott and Ben Blaschke

A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

Born in Australia, Andrew is a gaming industry expert and media publisher, commentator and journalist who moved to Hong Kong in 2005 and then Macau in 2009, when he founded O MEDIA, one of Macau’s largest media companies and parent company of Inside Asian Gaming.

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