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Wynn Resort’s, Ltd. 2008
Teaching Note
Victoria Page and Alan Hoffman
Bentley College
1. What is the importance of Mr. Steven Wynn himself, to the company? What
potential problems could arise if he left the company?
Very few people win big, and even fewer make their lives fortune in ‘Sin City’;
Steve Wynn is one of the lucky few who has. From humble beginnings with a family
Board, President, and CEO of Mirage Resorts. In 1997 under his leadership, Mirage
Resorts was ranked by Fortune magazine as the second most admired company
among American companies; it was also rated in the top three for innovativeness
regularly on the casino floor talking with customers and employees. His passion for
perfection can be seen throughout Las Vegas, from the Golden Nugget on Fremont
Street to the Bellagio, and including the Wynn Casino, which shares his name. When
talking about the Wynn Macau and its scale in comparison to some of the other
those in direct competition.
If Steve Wynn left the company for any reason other than death or a severe
disability, the resort would lose all lines of credit. Although Mr. Wynn is an
operational strength, the company’s complete dependence on him is a significant
weakness. “Our ability to maintain our competitive position is dependent to a large
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2. What is Wynn Resorts competitive advantage, and which firms are direct
competitors?
Steve Wynn feels unaffected by competition, as he believes his casinos cater to
travelers who have higher demands. Wynn’s main-focus is to target high-end
players with fancy new suites and baccarat tables. Wynn focuses on differentiating
itself by concentrating on the atmosphere and design of the resorts and by
enhancing customer service and luxury as a full service provider. The product that
Steve Wynn is by no means a newcomer to Las Vegas and he knows the
Direct competitors of the Wynn Resorts, Ltd include:
Ameristar Casino
3. What are the strengths and weaknesses of Wynn’s Macau (People’s Republic of
China) strategy?
Strengths:
In the resort casino industry, the ability to find land and licenses in legal areas is
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resource provides the company with a remarkable advantage. Under the concession
granted to Wynn Resorts, Wynn is able to develop an unlimited number of casino
resorts in Macau with the government of Macau’s approval.
iii
This legal opportunity
provides significant value for Wynn Resorts since they are one of a select few with
such a right. In addition, since a limited number of companies have casino operating
rights in Macau, Wynn is operating in a somewhat restricted competitive
environment because they hold one of those gaming licenses.
iv
Recently, Wynn
Resorts was granted concession for its land application for 52 acres in Macau’s Coati
Strip. This legal right is essential for Wynn Resorts future expansion plans.
increase as well.
v
The Chinese government has and is expected to continue to relax
restrictions on travel and currency movements between China and Macau. Thus far,
by relaxing its currency and travel restrictions, Chinese citizens from certain urban
educated and wealthy. The “premium customer” in China, those in the top income
brackets, will increase to approximately 180-200 million over the next 10 years.
vi
Weaknesses:
this situation by granting more concessions they would in essence alleviate this
particular barrier to entry for other casinos and Wynn could potentially see more
competition in the area. Additionally, Wynn Macau is subject to the strict regulatory
controls by the government, which limits their freedom of operations and creativity.
capital stock.
vii
The Macau government must approve this executive director and
any successor, and they have to approve all contracts for the management of the
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Currently, Wynn Macau is charged a 35% tax on gross gaming revenue, and they
are forced to contribute up to 4% of gross gaming revenue for the promotion of
public interests, social security, infrastructure, and tourism in Macau.
viii
If
on money it never received if it was unable to collect on the debt.
ix
term success of Wynn Macau will depend on the successful development of the
political, economic and regulatory framework in Macau. Wynn Resorts could be
affected if an unfavorable environment develops in Macau. As the competitive
4. What are the three main issues that Wynn Resorts must focus their efforts on,
in order to preserve their two largest revenue sources; the Wynn Las Vegas and
Macau?
As it stands now there are three major challenges the firm will need to address in
the future; the first being that they need to secure a way to maintain their
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certainly not the final concern, is the loss of Mr. Steve Wynn himself. If this loss was
to occur, someone else with his expertise, passion and governmental ties
MGM, Inc.
If any of these main issues are to be ignored by Wynn Resorts they will have a
much larger problem on their hands. All three of the above mentioned issues will
undoubtedly lead to a shortage of cash flow for the firm. Alone, a shortage of cash
defaulting on that debt. Because of the riskiness of the gaming industry this debt is
secured by many covenants that if, in the case of a default would lead to a
liquidation of the firm. Therefore, Wynn must pay close attention to issues that
could arise that pose a threat to their cash flows, as these represent the future
existence and success of the firm.
i
ii
Schuman, Michael, “Egos Bigger than China,” Time, Vol. 168, Issue 7, October 23, 2006.
iii
“Wynn Resorts, Limited: Form 10–K” United States Securities and Exchange Commission. Filed 31
December 2006. Available Online. Thompson Research.
iv
www.etrade.com.
v
“Macau.” BuyUsa.Gov. 18 September 2007. Available Online.
www.buyusa.gov/hongkong/en/macau.html
vi
Ibid.
vii
December 2006. Available Online. Thompson Research.
viii
“Wynn Resorts, Limited: Form 10–K” United States Securities and Exchange Commission. Filed 31
December 2006. Available Online. Thompson Research.
ix
December 2006. Available Online. Thompson Research.
x
“Wynn Resorts, Limited: Form 10–K” United States Securities and Exchange Commission. Filed 31
December 2006. Available Online. Thompson Research.