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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Inside gaming: After guiding success in Macau, exec moved up

25 March 2008

LAS VEGAS, Nevada -- Wynn Resorts Ltd.'s new chief financial officer was a big supporter of Macau long before the financial markets knew it even existed.

Matt Maddox, 32, has held finance and investor relations positions with Wynn Resorts since its startup in 2002. Last week, he was named the casino operator's chief financial officer, replacing John Strzemp, who was promoted to the company's chief administrative officer.

Maddox had never been to Macau when Chairman Steve Wynn moved him there soon after the October 2002 completion of Wynn Resorts' initial public offering. At $13 a share, the IPO fell more than $10 per share below what the company expected. Wall Street was giving Wynn Resorts zero value for its Macau casino concession.

Maddox, who was given the title of Wynn Macau CFO, was the company's first employee on the ground in the Chinese gaming enclave. From a small office, Maddox put together the project's initial $400 million in financing, worked on legislative initiatives and negotiated land concessions.

"When we were doing our IPO, Macau had not yet hit the radar screen," Maddox said. "We brought along a map to show everybody where it was. By the time I left Macau in 2005, The Wall Street Journal had done a story on the best places to eat in Macau. That's how quickly things changed."

Last year, Macau reported $10.3 billion in gaming revenues. The 600-room Wynn Macau, which has a 205,000-square-foot casino, generated $364.1 million in pretax earnings, a 26.2 percent margin on net revenues. A second hotel tower is expected to open in 2010.

Give the gaming analysts at Deutsche Bank an A for effort. For the second time in six weeks, they have tried to tie the upcoming federal tax rebates with potential gaming-revenue windfalls.

Beginning in May, 117 million taxpayers will receive rebate checks of up to $600 per individual and $1,200 per couple.

In a March 13 report to investors, Deutsche Bank's chief economist said consumers would spend at least one-third of the $152 billion in tax rebates toward paying higher costs for gasoline. That, surmised Deutsche Bank gaming analyst Andrew Zarnett, would mean Americans won't be shy about driving to their nearest casino.

"We remain optimistic that the federal stimulus package will benefit gaming operators, especially those that cater toward day-trippers," Zarnett said in a note to investors earlier this month.

In January, Deutsche Bank gaming analyst Bill Lerner said the nation's casino industry could see roughly $750 million of the tax rebates wind up on gambling tables and in slot machines. Historically, Lerner said, 0.75 percent of consumers' annual disposable income has been spent on casino gambling.