By JOSH RESNEK
With the virus raging across the nation and throughout the world, the months to come for Encore and for all major industries like it are fraught with the unknown.
There is certainty in the industry that income figures will remain flat and insubstantial until a vaccine is found that kills the virus and allows crowds of people to feel empowered to travel, to gamble, to eat at fine restaurants and to shop.
Until this comes about, staying alive in a business without crowds necessary to meet financial obligations is the equivalent of having a major coronary artery bleeding profusely as the heart slows to a halt.
Encore executives and executives at their parent Wynn Resorts is not hard pressed to meet all of its financial obligations…right now.
The burn rate of good company cash being poured into a bad situation is a perilous situation to be in.
Wynn Resorts executives must answer to their stockholders. Stockholders will not want to allow the company to bleed to itself to death while waiting for the miracle cure.
Stockholders have so far been patient.
In the end, if this crisis doesn’t correct itself and right Wynn Resort’s financial ship –sooner rather than later – stockholders and investment groups with large holdings in the company will make their voices heard to get out while the company still has substantial equity.
Selling Wynn Resorts becomes a real possibility in such a retrograde financial situation.
A possible sign of things to come is this week’s closure of Wynn Resorts office in Yokohama, Japan, where the company has been trying to secure a license for quite some time.
With the Japanese government dragging its feet about casino gambling because of the Coronavirus resurgence, Wynn is temporarily stepping back because the process has become too expensive and slow at the same time.
Another perilous position is Wynn Resorts Macau facilities, so close to China and the political scene there becoming quite unstable with the US and China jousting with each other in financial markets.
There are also serious political questions about China restricting democracy and democratic rule in Hong Kong with a new set of repressive orders and laws enforced by China’s conservative security apparatus.
The short term, in other words is perilous and expensive with not much of a return, if any on invested capital.
The longer term looks brighter.
Everything always comes back.
No one can predict when the comeback is going to materialize right now.