Wynn Resort to hold money until virus scare over
By JOSH RESNEK
First came the grand opening of the Encore Boston Harbor in our city in June 2019.
The president at the time, Rob DeSalvio, in an indescribable moment of self-delusion, said the doors would be open forever.
The mayor cried. Everyone on the podium in front of the hotel cheered. The fireworks were launched into the sky. The thick stream of customers flowed into the casino and hotel.
If he noted the opening of this stunning gaming and entertainment achievement on one of the most polluted pieces of land in the United States, Steve Wynn was left to mumble to himself somewhere far away. He was unwelcome at the opening.
Little did DeSalvio know he would soon be asked to leave and then in October the taste of things to come.
Revelations that Wynn Resorts had not paid the city more than $6 million due to it in the form of an in lieu of tax payment got out in the local media.
Company officials reacted swiftly at the time. A check was cut or the money transferred by wire to stop the embarrassment at so rich a company being so late on its payment to the city.
It left you wondering about how rich your relative really is, and whether or not he or she could keep his word.
Encore Boston Harbor’s first year anniversary has been postponed or canceled, however one chooses to look at it, by the coronavirus.
After a stuttering start, with lower than expected attendance and earnings, the virus closed the place down on March 18.
Since that time, and for some months before, it has not paid its rental bill to the city of Everett.
Wynn Resorts owes the city about $12 million right now. Company officials have apparently told the city they are holding back the payments until the virus emergency ends.
Despite its income being entirely stopped, the company paid its 5,200 employees their full salaried – even part time employees got paid until May 31.
This was an extraordinary thing that went far beyond the call of its responsibility to its employees.
But now May has turned to June and 850 employees have been furloughed and for the most part, paychecks have been slashed or cut out entirely as the company comes to terms with the harsh economic realities imposed upon it by the virus and the nation’s reaction to it.
In Macau, where Wynn Resorts generates 75% of its revenues, income reports released earlier this week indicated that revenues for the month of May were off 93%.
Mind you, Macau has reopened but very few gamblers have arrived to stay at the five star hotel – and even they come to Macau, they must be quarantined for two weeks.
What’s worse, is the Chinese government is imposing odious new laws to restrict freedom in Hong Kong, about 35 miles away. This is another reason for investors to tremble about prospects in Macau getting better any time soon.
This month, Wynn Resorts has cut its dividend of $1.00 a share to zero, making the company’s stock less attractive to investors and to hedge funds who own so many of its outstanding shares.
It is not alone.
MGM, one of Wynn’s rivals in the lucrative gaming and hotel business, has maintained its dividend but has cut it from sixty cents per share to one penny.
When Encore Boston Harbor will reopen is anyone’s guess.
Its sister facilities in Las Vegas are opening this week, but with Draconian curtailments that don’t allow for huge and bustling crowds filling restaurants, hotels and casinos.
At half open, the casino cups cannot be filled.
They will remain half empty for the next few months at the best and for at least 6-8 months at worst or maybe longer.
The so-called “New Normal” and how it plays out or how long it will take to play out or to last remains to be seen.
This is not only bad for business. It is a horror show of epic proportions for the nation’s bad economy at a time when we were just beginning to come back from the virus – which has not left us.
For Everett, for the mayor, for the residents and taxpayers who believed the casino and hotel would be panacea, that it would solve all the city’s financial problems, its presence now raises more questions about the future financial solvency of the city.
Call this a Perfect Storm.