Good-bye Paradise Park and welcome back to life Wynn Las Vegas Golf Club.
Wynn Resorts Ltd. said Wednesday it was scrapping a planned $1.5 billion, 38-acre development on the golf course site behind Wynn Las Vegas and Encore that was to include a large lagoon for water sports, surrounded by white-sand beaches, a convention facility and new hotel rooms.
The company is keeping the 400,000 square foot convention center, which is under development and is expected to open in next 12 to 18 months.
However, Wynn CEO Matt Maddox said on Wednesday’s third quarter earnings conference call the company struggled with the rest of the plans.
“We didn’t want to build a public pool for the Strip,” Maddox said. The golf course’s closure in December 2017 caused Wynn Las Vegas and Encore to lose “$10 million to $15 million in domestic casino business.”
Maddox said the company engaged noted golf course designer Tom Fazio, who developed the original 18-hole layout, to redesign the two holes lost for the convention center construction and revive the course that hasn’t seen play for nearly a year.
“The golf course will be restored and back in action by this time next year,” Maddox said. “We are just beginning the design and development.”
Earlier this year, Wynn acquired 38 acres across the Las Vegas Strip – site of the mothballed Alon project and once home to the New Frontier. Maddox called the location “a far superior site” for a hotel-casino complex. Maddox said the company is just beginning to conceptualize ideas for the site, adding it takes “two years to think through the next great thing for Las Vegas.”
The closure of the Wynn Golf Course – built on the grounds of the former Desert Inn Country Club – removed the last golf course on the Strip associated with a hotel-casino. The high-end layout attracted celebrities and players willing to shell out $500 to play a round to play.
“We lost a cash business,” said Maddox, who didn’t discuss green fees for the new course. The was no mention or reopening the popular Country Club restaurant associated with the course.
Paradise Park was announced during a 2016 analyst day by former Wynn Resorts founder Steve Wynn and took the investment community by surprise. The company put out a press release with conceptual details after several analysts issued investors notes discussing the development.
Maddox said Wednesday the convention center was a much-needed addition to the Wynn-Encore complex and would bring in additional hotel business.
Wynn, which operates hotel-casino in Las Vegas and Macau and is building a $2.6 billion resort in the Boston area, has other non-gaming attractions under development and design.
In Las Vegas, the company opening Wynn Plaza this weekend. The retail and dining attraction is attached to Wynn Las Vegas. In Macau, Maddox discussed plans for a 7-acre site next to Wynn Palace where the company to build 1.5 million square-foot attraction that would include a 600-seat theater and other entertainment venues. Two non-gaming all-suite hotels on either side of the development would give Wynn Palace a combined total of 3,000 hotel rooms.
“We’ve known (the 1,700-room) Wynn Palace needs more hotel rooms,” Maddox said.
He said the company will spend the next year designing and dealing with Macau’s approval process and begin construction in 2020.
Maddox added that Encore Boston Harbor is on track to open in eight months. He made no mention of the investigation by Massachusetts gaming authorities into this year’s departure of Steve Wynn following allegations of sexual harassment.
In the quarter that ended Sept. 30, Wynn’s operating revenue was $1.71 billion, up 10.2 percent over the 2017 third quarter. The company broke out the results in three divisions – Wynn Las Vegas, Wynn Macau and Wynn Palace – the company’s newest property in Macau.
Las Vegas operations, which includes Wynn Las Vegas and Encore, saw revenues decline 14.1 percent to $398.9 million. Wynn Macau, which includes the Wynn Macau and Encore resorts, saw revenue increase 3.1 percent to $579.6 million. Wynn Palace, located on Macau’s Cotai Strip, grew revenue 39.2 percent to $730.6 million.
Net income for the company grew 95.7 percent to $156.1 million with earnings per share at $1.44. The company’s three Macau casinos attributed to jump in profits.
In Las Vegas, Wynn Resorts said its gaming revenue declined 25.6 percent in the quarter, hotel revenue fell 6 percent and other non-gaming revenue was down 10 percent, all of which reflected the softness the Las Vegas market felt from July through September.
Credit Suisse gaming analyst Cameron McKnight said Wynn had a good quarter facing low expectations.
“The Las Vegas results (were ) unlikely a surprise as third quarter gaming was very weak,” he said.
Wynn’s cash flow in the quarter was $505.4 million, up 6.6 percent.
Shares of Wynn, traded on the Nasdaq, were up $4.30 or 3.92 percent to close at $113.99. In after hours trading, Wynn shares were down almost 13 percent.
In a note to investors Wednesday evening, Stifel gaming analyst Steven Wieczynski said Wynn could be viewed a take-out candidate.
“Additionally, though hard to predict with any degree of certainty, we have to think Wynn remains in play as a potential acquisition target, particularly in the event the shares trade off further from here,” Wieczynski said.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
