Inside Asian Gaming

INSIDE ASIAN GAMING | September 2009 20 17 (-) Jim Murren Chairman and Chief Executive Officer, MGM MIRAGE Jim Murren had a torrid time in the first half of 2009 with a constant juggling act to meet lenders’ covenants on the company’s US$13.5 billion global debt burden. Given that MGM MIRAGE is only a 50% partner in MGM GRAND Macau (alongside Pansy Ho), the property was never going to command quite as much of Mr Murren’s attention during the funding crisis as CityCenter in Las Vegas, which accounts for around US$8.6 billion of the money the company owes. Those existential pressures eased slightly in May after the company announced a refinancingpackage.That allowedMrMurren some breathing space to think tactically about the company’s business, rather than just strategically. Once Mr Murren had some time and spacetoreflectmoreontheMacauoperation, he came out fighting. In July, in comments reported by Bloomberg , he described MGM GRAND Macau’s performance from the time of its opening in December 2007 as “underwhelming”. “Our Macau market share is half what it cooperation, especially at a time when the horse racing industry has to compete for customers against an East Asian casino and lottery market that is growing in capacity year by year. These benefits include the ability to cross-promote events and to offer greater market coverage to advertisers and television companies. In May this year, the JRA announced a joint initiative with the Hong Kong Jockey Club (HKJC) known as Hong Kong-Japan Tourism Exchange Year 2009. As part of the scheme, the promotion of tourism between the two markets is being tied in with major horse racing events, namely: Japan’s Yasuda Kinen (which was held in June) and the Cathay Pacific Hong Kong International Races in December. Horses from Japan regularly race in Hong Kong, and vice versa. The Yasuda Kinen, a Group 1 race over 1,600metres, took place at Tokyo Racecourse on Sunday 7th June. On the same race card that day, the JRA designated race nine as ‘The Hong Kong Jockey Club Trophy – Hong Kong Japan Tourism Exchange Year 2009’. In turn, the HKJC will host ‘The Japan Racing Association Trophy – Hong Kong Japan Tourism ExchangeYear 2009’as part of the Cathay Pacific Hong Kong International Races meeting at Sha Tin in Hong Kong on 13th December this year. This is the flagship 18 (12) Kenji Tsuchikawa President and CEO, Japan Racing Association event in the Hong Kong racing calendar sponsored by Hong Kong’s main air carrier, Cathay Pacific. Top international race meetings such as the Audemars Piguet Queen Elizabeth II Cup and the Champions Mile also in Hong Kong, and the Japan Cup, Yasuda Kinen and Sprinters Stakes in Japan, attract thousands of overseas visitors every year. Dr Tsuchikawa of the JRA said at the time hewasexcitedbythecooperationagreement with HKJC. “On the commemorative race day in Hong Kong in December, there will be special promotion of Japan’s tourism attractions. I hope many Hong Kong people will see this and that it will be an incentive to visit Japan,” he said. Mr Tsuchikawa is a career horse racing official—the first to have risen through the ranks to become president. He joined the JRA in1968 as a veterinary surgeon. InSeptember 2007, he was named president and CEO of the association. The JRA was founded in 1954 and centrally manages horseracing in the country, as well as racecourses, betting operations and horse-training facilities. Mr Tsuchikawa has expanded the JRA’s efforts to promote the sport in Japan and elsewhere in Asia by leading the association into a greater cooperative role with the Asian Racing Federation. should be,” he added, adding rather ruefully, “the other US-based andother newer casinos have been more aggressive in marketing, more aggressive in recruiting and junket relationships.” This was some admission, which must reflect as strongly on the company’s joint venture partner Ms Ho as it does on MGM MIRAGE and its management. Ms Ho, after all, had the advantage (in theory) of local knowledge and an inside track on the elements required for the successful launch of a casino in that market thanks to her father’s unique and pre-eminent role in Macau. Whether it was by good luck or good management, in the same month Mr Murren’s comments were reported, MGM GRAND Macau saw its monthly share of Macau gross gaming revenues leap from 8% to 12%. Some industry insiders linked the improvement with several high rollers being lured away from rival properties, instead of a major improvement in the fundamentals, such as the mass-market appeal of the property. The July returns weren’t, however, just a flash in the pan, with MGM GRAND Macau recording an 11% share of GGR in August. Mr Murren’s headaches regarding the Macau operation aren’t over just yet. The company is still waiting to hear what action, if any, the gaming regulators in the US will take regarding the company’s partnership with Pansy Ho. It follows reports in May that state attorneys in New Jersey, which licenses the Borgata Hotel Casino & Spa in Atlantic City—run by MGM MIRAGE and Boyd Gaming—had found Ms Ho to be an “unsuitable” partner for MGM in Macau. Expect 2010 to be just as busy for Mr Murren as was 2009. Under Kenji Tsuchikawa’s leadership, the Japan Racing Association (JRA) has extended its marketing and cooperation programme with other horse racing jurisdictions in the Asia Pacific region. The arrangements do not yet constitute a horse racing international ‘tour’ of the sort promoted to spectators in sports such as Formula 1 motor racing or the Professional Golfers’ Association PGA TOUR for golf. There are, however, significant strategic benefits available to the JRA from international