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Jeff Simpson

Wynning in Macau

7 December 2005

Steve Wynn didn't have to look far when it came time to figure out how to best capitalize on his valuable Macau casino concession.

The Wynn Resorts chairman merely had to check out Las Vegas Boulevard to see that offering some of the world's best casino operators a chance to join with him in a major Macau development would give each party a chance to share in some of the big money being generated in the Chinese enclave.

But Wynn and his company's investors would be the biggest winners, experts predict.

One year ago Wynn said he planned to develop "the best two or three places" in Macau, and do them himself. "Why would you want to share?" he said at the time.

Times change, and so did Wynn's mind.

"My approach is simple -- I think it would be good to have a Caesars Palace or a (Kerzner International) or a Station Casinos join with us in an imaginative development," Wynn said. "I'm going to invite our friends to join with us on a joint-venture basis.

"I'd love to be partners with Harrah's (Entertainment) and Caesars Palace. I'd love to be partners with (the Kerzners) and their imaginative properties. And Station Casinos -- the Fertittas are smart, and I'd like to join with imaginative and bright guys like them."

One top Wall Street analyst said Wynn's joint-venture plans would make sense for three reasons.

First, the more high-quality brands on Macau's Cotai strip, a new venue for casinos, the more quality customers who will play there.

Second, by clustering brands such as Wynn and Caesars, the area becomes Cotai's anchor.

And third -- and most significantly -- the money invested by joint-venture partners limits Wynn's investment while providing significant income, increasing the return for Wynn's investors.

Wynn said he is not prepared to announce any firm deals at this time. He said he has yet to finalize acquisition of land on Cotai, but expects to acquire a parcel of about 50 acres.

Wynn would supply the land and the right to open a casino, Wynn Design & Development would design the properties and the joint-venture partners would invest the money needed to build separate branded properties.

The partners would then share in the properties' proceeds -- "just like we did (at formerly Wynn-owned Mirage Resorts) with the Gold Strike guys (eventual owners of Mandalay Resort Group) with the Monte Carlo, and like we did with Boyd in Atlantic City (a partnership that became the ultrasuccessful Borgata resort)," Wynn said.

Instead of building a convention-oriented cluster of hotels on Cotai as Venetian owner Sheldon Adelson plans, Wynn will place a major shopping destination in the middle of his project.

"Sort of like the Mirage and Caesars surround the retail at Caesars Palace," Wynn said, referring to the Forum Shops. "It's user-friendly. It's a couple of hotels surrounding shopping -- a pretty good idea."

Harrah's Chairman Gary Loveman has said the company would be interested in Macau and looks at opportunities to get involved in the lucrative market. Harrah's executives declined Tuesday to comment on Wynn's remarks, as did Station Casinos executives.

Harrah's has recently been on an international feeding frenzy, announcing deals to build Caesars-branded casinos in the Bahamas and Spain and another deal to build a casino in Slovenia.

Kerzner is a major international resort company that operates Atlantis, the biggest casino resort in the Bahamas, and is slated to operate a multibillion-dollar casino in Dubai, United Arab Emirates.

Station Casinos President Lorenzo Fertitta, on a June broadcast of "Face to Face With Jon Ralston" said that the company had a responsibility to check out casino opportunities in Macau as well as in the United Kingdom, Florida and Pennsylvania, and had done so.

It is no surprise casino operators want to get in on the Macau action.

Macau is expected to soon supplant Las Vegas as the world's biggest market. There are more than 100 million people within a three-hour drive and more than 1 billion people within a three-hour flight of the semiautonomous enclave that was ruled by Portugal until 1999.

The Wall Street analyst said it makes sense for major operators to partner with Wynn.

"A company that's licensed in the U.S. could not do business directly with Galaxy or Stanley Ho (the other two Macau concession-holders), because neither Galaxy nor Ho would pass regulatory muster," he said.

UNLV public administration professor Bill Thompson said Wynn and his partners will all benefit -- and so will Las Vegas and Macau.

"He showed with the Monte Carlo that these joint ventures are good business," Thompson said. "He can just sit back and collect the money."

Las Vegas will gain business because Wynn will have incentive to bring his big Macau bettors to Wynn Las Vegas to take advantage of Nevada's low 6.75 percent gaming tax rate. Macau's tax is almost 40 percent.

Macau will gain the prestige of Wynn-associated resorts, Thompson said.

"He'll bring Strip-style upmarket properties to the place," Thompson said. "These deals will be a winner all the way around."

Wynn doesn't have to wait for partners to get a taste of the Macau sugar.

He said his billion-dollar Wynn Macau on the Macau peninsula is set to open in September, with the builder set to turn over the finished 600-room property in July, giving Wynn Resorts an unprecedented six weeks to train the 4,600 employees before opening.

"I want the best-trained workforce in Macau," Wynn said. "More time will make them more prepared, and there will be less stress for the employees. I want them to have more fun and less anxiety."

The company began taking job applications for Wynn Macau two weeks ago and hopes to get 40,000 in six weeks. They received 30,000 applications in the first eight days, both online and in person. Half of the jobs must go to Macau residents.

For now, Adelson's Las Vegas Sands is the only Las Vegas company bringing Macau gambling revenue back to Las Vegas.

"Our Cotai developments won't open until 2009 or 2010," Wynn said. "We haven't seen the peninsula bloom -- that will happen in '06 and '07, when we open, MGM opens, Galaxy opens and (Stanley Ho's) expanded Lisboa opens."

Wynn seems to relish the prospect of competing against Adelson. The two have sparred over the lack of parking spaces at the Venetian. The Clark County Commission, at Wynn's urging, forced Adelson to prove he will have enough spots at the new Palazzo hotel he's building next to the Venetian.

"There are four major joints opening next to Sheldon's box of baccarat," Wynn said. "Then we'll see how he does."