pacomartin
pacomartin
Joined: Jan 14, 2010
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June 2nd, 2010 at 4:11:36 AM permalink
Looking at the summary of Wynn (& Encore) Las Vegas properties only. The Las Vegas properties have been losing money for 9 quarters now.

My people realize that the profitable Macau operations have been subsidizing the LV properties recently. What surprises me is how much money the LV properties are losing.

25-Oct-2002 Wynn Resorts Limited formed
28-Apr-2005 Wynn Las Vegas opens
06-Sep-2006 Wynn Macau opens
22-Dec-2008 Encore Las Vegas opens
21-Apr-2010 Encore Macau opens

Consolidated Statement of Operations Data (Las Vegas): 2009 2008 2007 2006 2005 2004 2003 Total
Net revenues $1,230,120 $1,099,891 $1,295,851 $1,139,348 $722,292 $- $- $5,487,502
Pre-opening costs $346 $72,373 $6,457 $2,020 $67,454 $41,073 $16,437 $206,160
Operating income (loss) $(144,279) $(58,616) $200,621 $116,456 $13,056 $(46,431) $(18,981) $61,826
Net income (loss) $(309,870) $(129,794) $124,219 $9,808 $(45,274) $(160,502) $(7,180) $(518,593)


Even though revenue is about the same for 2007 and 2009 the difference is that 2009 is revenue on two properties, while 2007 is on a single property. Costs and expenses are much higher.
ruascott
ruascott
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June 4th, 2010 at 9:40:08 AM permalink
Its more important from an investor and managerial perspective to look at EBITDA. Wynn/Encore Las Vegas had positive EBITDA of over $60M in the 1st Quarter 2010 alone. So Wynn Macau is not subsidizing Wynn LV. Wynn LV and Macau are both producing postive operating cash flow to cover the debt of Wynn Resorts. I agree that Wynn Macau is doing much better than LV operations regarding growth, but Wynn LV is currently producing an annualized rate of $250M/yr in cash for the company...certainly A LOT better than many LV properties.
FleaStiff
FleaStiff
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June 4th, 2010 at 10:33:36 AM permalink
Quote: pacomartin

Looking at the summary of Wynn (& Encore) Las Vegas properties only. The Las Vegas properties have been losing money for 9 quarters now.

I note that you have segregated Wynn and Encore. For most purposes that is clearly proper. I however wish to propose that the Wynn and the Encore share a certain facade of aloofness. Wynn and Encore wish to remain aloof from the actions of the hoi-paloi. This is in the same spirit as The Venetian wishes to avoid having a monorail stop and forces the arriving airport shuttle to stop at a remote and rather undignified entrance, since the desired perception is that patrons of The Venetian arrive in limousines at the prestigious main entrance.

Wynn uttered some mouthings quite some time ago about "in tough times, you tighten your belt a bit but do not fire your waiters and dealers in an unwise short-term effort to lower your costs so much that you impair service levels". Oh, I'm sure you can look up the actual statement he made but that is about the gist of it.

The trouble is that in all actuality, there beats a constant tattoo that the Wynn actually made cuts in their staffing that were deep. Too deep. The lines at their buffet are now said to be the shortest in town and lets face it, that means the people eating there are tourists reacting to pre-recession hype rather than those au-courant enough to react to present conditions. The Wynn buffet seems to have taken a very steep nose dive. I've heard from a variety of sources that the Wynn is now blemished. Sure much of this is unreliable and some of it is unverifiable but I suggest that the Wynn simply started from a very high point and therefore has not slunk to such a level that the bean counters are as concerned as they perhaps should be.

It is not that the Encore is dragging the net figures downward. Its that the Encore is responsible for most of the drag and that the Wynn is riding largely on its laurels but may not be able to sustain the wounds of the actual deep cuts that were made when Wynn announced a mere belt tightening.
Nareed
Nareed
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June 4th, 2010 at 11:47:30 AM permalink
I went to the Wynn casino for a little while and everyone was frinedly and attentive. As to the buffet, keep in mind the 800 lb gorilla sitting on the Strip right now: the Harrah's promo for all 7 buffets at their properties. That has to be syphoning people off all other hotels.

But come to think of it, how much does it hurt the Wynncore not to have a neighbor to the north? I mean, the Strip pretty much ends at the Wynn/Encore right now.
You can visit my blog Kathy's Cooking Corner at kathyscookingcorner.blogspot.mx ... .... When someone offers you friendship with one hand and stabs you in the back with the other, you tend to notice the knife a little bit more.
DeMango
DeMango
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June 4th, 2010 at 4:42:55 PM permalink
Well I just got a comp offer in the mail from Wynn. Three nights, available between June 28 and July 1. Bright people.
FleaStiff
FleaStiff
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June 4th, 2010 at 5:19:25 PM permalink
Congratulations on the Comp and if you decide to utilize it, good luck to you. I'm sure they will consult a calendar more carefully next time but will honor the obviously required included date. Perhaps there were heavy personnel cuts in that department and the remaining individuals are over-worked and therefore offering poor service which will eventually reflect on their bottom line in an increased fashion. Perhaps not.

As to the 800 lb. gorilla, my information on the Wynn buffet's decline was from sources that predated the Harrah's AllBuffets offer.

As to being at the de-facto "end" of the strip, yes perhaps that has an effect that I hadn't even thought of.
pacomartin
pacomartin
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June 4th, 2010 at 5:20:08 PM permalink
Quote: Nareed

I went to the Wynn casino for a little while and everyone was frinedly and attentive. As to the buffet, keep in mind the 800 lb gorilla sitting on the Strip right now: the Harrah's promo for all 7 buffets at their properties. That has to be syphoning people off all other hotels.

But come to think of it, how much does it hurt the Wynncore not to have a neighbor to the north? I mean, the Strip pretty much ends at the Wynn/Encore right now.



I seriously doubt that someone staying at the Wynn or Encore is going to buy the city-wide buffet from Harrah's. The dinner buffet at Wynn is $34-38, which as much or more than the all day city wide buffet at Harrah's.

By my calculation there are 4500 rooms at hotels and motels (some with small casinos) that are within walking distance of a Harrah's buffet. These hotels are not the kind of places where you would normally spend much of your day at anyway. They include the Westin Causarina, Super 8, the Travel Lodge, Econo Lodge, etc. The buffet will be a powerful pull on these guests since they don't even have to get on a bus.

Then the second level is places that are within a short bus ride. That includes motels like Motel 6 and America's Best Motel, but also casinos like Terribles, Circus Circus, Riviera, etc.

But I doubt that Harrah's buffet will attract a lot of people out of the 4-5 diamond resorts (TI, MIRAGE, BELLAGGIO or VENETIAN/PALAZZO, and WYNN/ENCORE). The Excalibur and Luxor have their own all you day buffets.

Circus Circus and Stratosphere also have all day buffets, but despite the lower cost, they limit your flexibility to walk around.

I think that Steve Wynn wanted to see the Plaza go up across the LV Boulevard. I get the feeling that he was not afraid of the competition, but he wanted the neighborhood to look better.

pacomartin
pacomartin
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June 4th, 2010 at 6:27:22 PM permalink
Quote: ruascott

Its more important from an investor and managerial perspective to look at EBITDA. Wynn/Encore Las Vegas had positive EBITDA of over $60M in the 1st Quarter 2010 alone. So Wynn Macau is not subsidizing Wynn LV. Wynn LV and Macau are both producing postive operating cash flow to cover the debt of Wynn Resorts. I agree that Wynn Macau is doing much better than LV operations regarding growth, but Wynn LV is currently producing an annualized rate of $250M/yr in cash for the company...certainly A LOT better than many LV properties.



It is pretty difficult to have a negative EBITDA. Even Circus Circus has a positive EBITDA. Wynn also makes the very clear point that they don't want EBITDA to be considered synonymous with cash flow.

But you are correct, the $60M EBITDA is almost as good as the Bellagio.
bluefire
bluefire
Joined: May 24, 2010
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June 4th, 2010 at 11:15:31 PM permalink
Quote: ruascott

Its more important from an investor and managerial perspective to look at EBITDA. Wynn/Encore Las Vegas had positive EBITDA of over $60M in the 1st Quarter 2010 alone. So Wynn Macau is not subsidizing Wynn LV. Wynn LV and Macau are both producing postive operating cash flow to cover the debt of Wynn Resorts. I agree that Wynn Macau is doing much better than LV operations regarding growth, but Wynn LV is currently producing an annualized rate of $250M/yr in cash for the company...certainly A LOT better than many LV properties.



I think we should judge Steve Wynn on the measures he doesn't hate.
pacomartin
pacomartin
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June 5th, 2010 at 1:42:58 AM permalink
I suppose it does look a lot better from this table.
        2010                 2009        
Net Revenues
Wynn Las Vegas, including Encore $318,271 $291,276
Wynn Macau $590,647 $448,679
Total Net Revenues $908,918 $739,955
Adjusted Property EBITDA (1)
Wynn Las Vegas, including Encore $60,305 $43,851
Wynn Macau $181,590 $114,643
Total $241,895 $158,494
Other operating costs and expenses
Pre-opening costs $2,311   
Depreciation and amortization $104,565 $101,468
Property charges and other $1,881 $16,485
Corporate expenses and other $17,899 $13,397
Equity in income (loss) from unconsolidated affiliates $391 $(5)
Total $127,047 $131,345
Operating income $114,848 $27,149
Non-operating costs and expenses
Interest income $288 $314
Interest expense, net of amounts capitalized $(49,261) $(57,032)
Increase (decrease) in swap fair value $(3,602) $1,095
Gain on extinguishment of debt    $10,635
Equity in income (loss) from unconsolidated affiliates $391 $(5)
Other $264 $(76)
Total $(51,920) $(45,069)
Income (loss) before income taxes $62,928 $(17,920)
Provision for income taxes $(5,069) $(15,894)
Net income (loss) $57,859 $(33,814)


It looks better than this summary.

Net Income 2010 (first quarter)
$139,551 Macau
$(81,692) Las Vegas
$ 57,859 Total

Net Loss 2009 (first quarter)
$ 61,650 Macau
$(95,464) Las Vegas
$(33,814) Total

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