Inside Asian Gaming

INSIDE ASIAN GAMING | September 2010 22 11 (12) Linda Chen Chief Operating Officer Wynn Resorts (Macau) S.A. 12 (10) Jack Lam Chairman Jimei Group It’s a truism of sport that consistency of management leads to consistency in a team’s success. Wynn’s Macau market rivals Las Vegas Sands Corp and Melco Crown Entertainment have been changing senior executives in Macau almost with the regularity that soccer players change their boots. Wynn, meanwhile, appears to have focused on choosing the right people first time around and then cultivating their talent and adequately rewarding their achievement. The prime example is Linda Chen, Chief Operating Officer of Wynn Resorts (Macau) S.A. She signed a new 10-year contract in May worth a basic US$1.5 million per year. If All industries occasionally go through periodsof realignmentwheremarket leading companies experience a dip in performance and hungry newcomers begin to rise. The casino industry is no exception. That cyclical phenomenon has been seen recently in the Macau junket sector—the vital component in the territory’s massive gaming revenues. A few decades ago, it was Dr Jack Lam who was the hungry outsider, starting out as modest sub-agent feeding players to junkets. The typical career path for a talented newcomer to the world of junket performance related pay and stock options are added to Ms Chen’s basic salary package, the deal should ensure she remains one of the highest paid female executives in any industry. The new contract runs until 24th February, 2020, and appears to be a major vote of confidence by Steve Wynn and the rest of the board in Ms Chen. It comes after another successful and within budget launch of a Wynn property in Macau—the US$600 million Encore at Wynn Macau, which opened in April. Cornell and Stanford-educated Ms Chen is creditedwithplayinga vital role inensuring that Wynn’s core product in Asia—Wynn Macau—had agreements with high roller agents when it opened in September 2006. That allowed Wynn Macau to grab market share disproportionate to the property’s footprint and table count. Ms Chen, a former Executive Vice operations is eventually to set up a VIP business in his or her own right. This usually involves a core junket operation in Macau, typically supplemented by a casino cruise ship steaming out of Hong Kong. Dr Lam took a slightly broader path, turning his business international, with interests in the Philippines, including holiday resorts and telephone betting targeted at offshore customers. He also became a casino operator in his own right with Jimei, the SJM-licensed casino attached to the Grand Lapa Hotel in downtown Macau. These are considerable achievements for this native of Mouming in Guangdong province, mainland China. Dr Lam moved to Hong Kong in 1979 at the age of 18. According to his official company biography, he started out as a bookkeeper at his uncle’s factory, sendingmost of his salaryback home to help his family. He got his introduction to gaming through his uncle, who played regularly in Macau. After accompanying his uncle on several trips to Macau, Dr Lam built up a network of contacts and started working as a junket sub-agent—a ‘ground floor’ role that gave him insights into building and maintaining customer relationships. In 1981, Dr Lam started work as a representative for a small junket in Macau, and gradually worked his way up to becoming a junket operator in his own right, and now effectively a junket consolidator, using economies of scale to Asian Gaming 50 – 2010 President of International Marketing for MGM MIRAGE in the US, is also a member of the Wynn Resorts board. It’s likely she will be tackling a new challenge shortly after her boss, Steve Wynn, announced in June that the company plans to build a third resort in Macau, on Cotai, with an expected opening date in 2014. create back office efficiencies. Part of Jimei’s traditional appeal for junket agents has been a willingness to pay competitive commissions. That contributed to a rapid growth in Jimei’s Macau operations following market liberalisation in 2002. The growth was sustained even after the Macau government imposed a 1.25% cap on commissions payable to junkets in September last year. But along with that reputation for being a competitive payer went an equally strong reputation for Jimei demanding its rights from junket partners. This is potentially problematic if pushed beyond certain limits. VIP operations in Macau are still remarkably informal by Western commercial standards, relying often on verbal agreements between players and agents, rather than formal contracts. As such, the relationship between those involved is at times more like a love affair than a business deal. The suggestion in the industry is that recently Dr Lam’s organisation has gone lighter on the love, and heavier on the bottom line. Younger, possibly friendlier, companies operating in the Macau VIP sector either as junket aggregators or working capital providers for junket agents, are now putting pressure on Jimei’s business. Whether Dr Lam can reverse this trend and regain some of the ground he appears to have lost in recent months will be interesting to see this time next year.