Inside Asian Gaming

INSIDE ASIAN GAMING | September 2012 14 Asian Gaming 50 – 2012 venture also has invested in operational control of the US$1 billion Belle Grande Manila Bay resort in the Philippines capital. With Crown’s 50% of Betfair Australasia, he’s got a tidy share of the world’s largest betting exchange and one of the great innovators in the online sector. He’s established his credentials as a solid operator as well, hiring and retaining strong management at Crown’s casinos in Melbourne and Perth, which has enabled the properties to grow amid increasing regional competition and the most difficult market conditions the Australian industry has faced. Likewise in Macau, he’s wisely deferred to the Chinese brain trust at Melco Crown to steer his investment there to increasing profitability. And he’s reinvested heavily in his core holdings,fundingasix-year,A$2.2billioncapital expenditure program at Crown Melbourne and Burswood in Perth that will ensure they remain among the best-appointed and most attractive resorts in the industry. In steadily exiting the “old media” holdings he inherited to focus on gaming, he continues to exhibit vision and single- mindedness of purpose. He amassed more than A$4 billion in 2006 by selling off half the family flagship, Publishing and Broadcasting Ltd, and spinning off Crown as a publicly listed pure-play casino operator, the largest in Australia. He stands to realize another $1 billion once a pending sale of his remaining media interests is completed—fattening a bankroll he’s using to extend his reach into Sydney through a decisive stake in rival Echo Entertainment and a planned luxury resort at the Barangaroo complex at Sydney Harbour that will be a game-changer for the country’s largest city. The truth about James Packer is that he sees more for gaming Down Under than it sees for itself. He understands that if amarket isn’t growing, invariably it must contract as newer and more innovative competitors sweep up the opportunities. He recognizes that Echo, Sydney’s monopoly operator, holds the key—and not only to Barangaroo, which needs Echo’s license, but to the possibility of a Crown-Echo partnership aimed at cornering a greater share of Asia’s lucrative VIP trade and restoring the Australian industry to a leadership position in the region. As Echo’s largest individual shareholder he’s in a unique position to apply the combination of persuasion and force needed to make this happen. But this isn’t the youthful aggressor of 2007. He’s learned, as his father knew so well, that hardball is an art both brutal and subtle. 9 James Murren Chairman and CEO MGM Resorts International Jim Murren knows Wall Street and the Street knows Mr Murren. The ex- Deutsche Bank managing director knows how investors and bondholders think, and they like him, and they trust him all the more for it. That intimacy, backed by no small measure of financial acumen, proved critical to keeping debt-laden MGM Resorts International afloat during the 2008-09 global credit crisis, when it was struggling to open CityCenter and its very survival hung in the balance. It continues to drive the big ship forward through a stubbornly persistent US recession. It’s also served him well in Macau. Mr Murren’s hand was evident last May when the IPO for MGM China Holdings went off on the Hong Kong Stock Exchange at the top of its prospective range, garnering US$1.5 billion. His influence was there in the capital restructuring with partner Pansy Ho that landedMGMResorts 51%of MGMChina with a US$3.5 billion accounting gain on the books and operational control of the new company’s prime asset, the casino at MGM Macau and its 430 table games, 1,200 slot the property 63 additional VIP tables. By the end of 2011, rolling chip turnover was up 72%, and gross VIP win had nearly doubled, contributing to a 65% increase in total casino revenues and bringing HK$3.28 billion (US$420.5 million) to the bottom line. Sustaining those gains has been challenging in this year’s noticeably cooler market, but operations have remained solid, and the positive impact of that in terms of EBITDA (counted since the restructuring as part of MGM Resorts’ consolidated returns) has been enormous. Consider that of the US$567 million the company’s 17casinos generated inoperating income through the first half of this year, 28% of it came from one of them, MGM Macau, which accounted for an incredible 71% of all the cash generated by operating activities. Since MGM China’s listing last June, the Macau operation has delivered more than 38%of MGMResorts’consolidated cash flow, an amount exceeding $658 million. There is no way to overstate what this has meant to Mr Murren’s ongoing efforts to deal with the company’s US$13 billion-plus of long-term debt, $997 million of which is due to mature within the next 12 months, not counting $1 billion in interest payments due over the same period as the debt is currently structured. machines and 580 hotel rooms and suites. That control has been the key to MGM Macau’s ability to hold its own as a single- property operation in an increasingly competitive, increasingly multi-store marketplace, and itmeans China’s indefatigable gamblers will continue doing their part to bulk up the parent company’s income statement back home and maintain the viability of its heavily stressed balance sheet. Within weeks of taking charge in Macau, MGM’s management got to work improving the casino’s presence in the VIP sector, signing on new junket partners and converting a number of luxury villas and spa areas into gaming rooms, moves that netted