Inside Asian Gaming

INSIDE ASIAN GAMING | May 2012 22 “These approvals could take up to one year, although we suspect a more likely time frame is several months. This would give Galaxy Entertainment a many-months head start on its Galaxy Macau Phase 2 relative to Wynn Macau’s Cotai property.” Mr Govertsen adds: “Contrast this to recent commentary fromMGM China, which is imminently anticipating a draft land concession from the government. It took Wynn Macau seven-plus months to have its Cotai land gazetted following receipt of its draft land concession in September 2011. As such, we wouldn’t be surprised that if MGM China (and presumably SJM Holdings) were to receive draft land concessions in the near- term, that the landwouldn’t begazetteduntil sometime in 2013. This could easily push the start of construction to mid-2013 or later for MGM China and SJM Holdings, or about one full year after Galaxy Entertainment and Wynn Macau.” Wynn’s Cotai plot spans 51 acres (approximately 206,000 square meters) and is expected to cost at least US$3 billion. The resort, featuring about 2,000 hotel rooms and 400 gaming tables, is likely to open sometime in 2016, said Deutsche Bank gaming analyst Carlo Santarelli in a note to clients. Mr Santarelli pointed out the Cotai announcement was “a meaningful positive for Wynn as it provides a much-needed growth story and likely alleviates concerns over other popular Wynn-related topics right now.” Chief among those topics is the ongoing legal dispute between Steve Wynn and the company’s co-founder, Japanese tycoon Kazuo Okada. The 400 tables are also not guaranteed, and Wynn Macau will need to separately negotiate a table games allocation from the government during the development stage of the project. Mr Govertsen expressed optimism that Wynn Macau would get the tables it seeks: “We continue to believe that the government’s table cap scheme is somewhat flexible and subject to interpretation, grandfathering and possible exceptions/waivers based on prevailing supply and demand trends and other undefined factors. As such, we are not concerned that WYNN will not receive an appropriate table games allocation.” Late to the race MGM China Holdings’ Cotai project calls for 500 tables, 2,500 slots, 1,600 rooms and a budget of approximately HK$15billion-$20 billion (US$1.9 billion-$2.6 billion) to be spent over a period of 36 months. The company has applied for a site of approximately 17.8 acres (72,000 square meters)—about one-third the size of Wynn Macau’s Cotai site. MGM expects to finance its project through cash flow and a credit facility. SJM has earmarked two sites for development on Cotai—one adjacent to Wynn Macau’s site and another smaller site next to Studio City (as pictured in the map above). The 70,000-square-meter site currently under consideration is the one next to the Wynn Macau site. SJM’s plot size also pales beside that of its neighbor and seems especially small compared to the 2 million Cotai