Wynn properties losing staggering sums of money

Encore hopes to reopen by next week.(Photo By Jim Mahoney)


Encore Boston Harbor Casino and Hotel is now preparing to reopen for the first time since the COVID-19 virus shut it down on March 15.

Since that time, the financial losses all around from the closing have become apparent as almost 4,000 employees have been laid off, no money has come in, millions more have been spent to conform with Massachusetts Gaming Commission health and hygiene standards. Overall, the shorter term outlook is grim.

Encore has not paid the city of Everett more than $12 million it is owed for in lieu of tax payments. The hotel, which will be opening only four days a week with no amenities, has not generated any room tax fees for the city – a tremendous loss – and many aspects of the Encore operation have been called into question.

Even with the reopening, the limits put upon capacity and the requirements for health and hygiene with social distancing, masks, and a lack of roulette, craps and card games, translates into a cycle of impossibility as executives try to bring back revenues enough to carry the operation.

Encore Boston Harbor. (Photo By Jim Mahoney)

There is also the recurrent theme from Wynn Resorts executives that the five star status of the operation is out the window, for now.

Even at optimum running conditions before the virus, Encore Everett was experiencing growing pains and an inability of company executives to figure out exactly what will work at the location.

Crowds and income were smaller than expected from the start when it opened in June 2019.

Pro-rated annual income from gaming expected to be about $60-$70 million a month, were coming at closer to $45 million a month on average.

Slots income was extremely soft.

In addition, an unusual amount of violence was occurring there regularly. However, the closure of the entertainment club which could hold 5,000 brought that to an end.

How the Encore’s restaurants will survive in such a people-less atmosphere is another vexing question for executives.

Bottom line, executives are pleased to be reopening. Something coming in is far better than nothing coming in.

Longer term views of the overall situation in Everett do not portend to be positive.

The virus has crushed the normal style of doing business.

Tourist visitation to Boston has plunged.

Local interest in the casino has lagged.

However, the longer view right now held on Wall Street and among casino analysts is that over time, everything will come back.

With companywide losses averaging $6 million a day for its locations in Macao in China, in Las Vegas and in Everett, casino analysts are taking a closer look at Encore and its sisters as things get going again.

Wynn stock prices gained brilliantly last week, closing at near to $80 a share.

The market cap, the total value of the company’s stock, put on an additional $1 billion from the week before. However, the dividend has been suspended to save cash and the stock price is nowhere near its 2019 high of $153.

The Macao operation is key to Wynn and to several other American casino giants like MGM and Las Vegas Sands, owned by the billionaire, Sheldon Adelson, who grew up in Dorchester. Adelson is believed to be interested in buying Wynn Resorts.

Wynn President Matt Maddox insists that Wynn Resorts is not for sale, but with revenues so far off, and so much in cash resources being poured down the drain to maintain the operations, stock holders will shortly rebel in order to save the value of the stock.

The only way to do this, according to analysts, is for a sale of the stock and the company to a larger entity that can afford it.

When Macao earnings were announced last week, there was audible shock in casino analyst circles.

Wynn Resorts takes in 75% of its yearly revenues in Macao.

Yearly revenues in Macao are down 97% right now – an apocalyptic situation for the company, which, however, remained cash rich with about $3 billion on hand to weather the storm.

More troubling than the lack of business due to the restrictions placed upon operating by the virus are recent authoritarian laws and restrictions on personal freedom put down on the people of Hong Kong just 35 miles away by the Chinese government.

Authoritarian edicts do not help business, travel or leisure. Political and economic unrest in Hong Kong, one of the world’s richest cities, is prone to causing short term uncertainties for casino operators there.

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