Melco Crown Entertainment’s new Macau casino Studio City has formed a contingency plan covering the possibility that its gaming table allocation will be lower than anticipated.
Studio City International Holdings has involved Kirkland & Ellis LLP as its counsel and Moelis & Company LLC as its investment banker to assist it with contingency planning ahead of any table allocation decision for Studio City, which is set to open on October 27, 2015.
Lawrence Ho, co-chairman and CEO of Melco Crown, which owns 60% of Studio City International Holdings, said that a mass market-oriented strategy for Studio City depends on the number of tables that will be granted by the Macau government’s chief executive Fernando Chui Sai On.
Melco Crown has been consistent with its request of 400 tables from the government.
“The ultimate table-grant number would determine what we’re going to do. But if we are on the low end of it, there’s always a chance that we would just focus on the [VIP segment] and premium mass”, said Ho during Melco Crown’s Q2 earnings presentation. “We’re extremely concerned about the table allocation. If we get the low end it would have a drastic impact on our financial modelling.”
Focusing on the non-gaming attractions of the new resort, which has been demanded by the government’s policy, Ho stressed that Melco Crown has been “a model citizen in Macau in terms of investment and in sticking by their [government’s] policy.”
“We hope the government will reward us more, for the hard work we have put in over the last 10 years,” said Ho during the announcement of Studio City’s opening date. “Gaming will always be the financial engine for Melco Crown, while non-gaming amenities are an additional draw for customers.”
Deutsche Bank Securities Inc. expects Studio City to receive 150 gaming tables like Galaxy Macau Phase 2 but Ho described Galaxy Phase 2 as “more of an extension, whereas this [Studio City] is really a standalone integrated resort.”
Studio City International Holdings also reaffirmed that the company is on track to open as scheduled on October 27.
