The Macau joint venture between James Packer’s Publishing and Broadcasting Ltd and Lawrence Ho’s Melco International Development Ltd. will float about 20 percent of its casino business in the Chinese gambling precinct, reports Bloomberg. The IPO will be listed on NASDAQ and investors will be able to buy 20 percent of the joint venture.
That venture is still waiting for officials to bless its purchase of the Wynn Resorts’ sub-concession but it already has two casinos under construction and last week bought land for a third on the traditional gambling drag in Macau.
An Australian analyst tells the news service there’s strong investor demand to get into Macau but that just brings out my contrarian streak. Everyone cites the statistic that Macau will soon surpass the Strip in gambling revenue. That overlooks the very other very important sources of revenue in Las Vegas - entertainment, eating and rooms. Macau still has to develop that potential if it has it.
But, say the boosters, the Chinese love gaming and it’s only available in Macau and there’s a billion or more players and so many of them are getting so much richer.
Hmmm. That’s probably all true but this modern “land rush” smells a bit like the old arguments made my businessmen a century or more ago when they imagined a market for millions of pairs of shoes and all kinds of other manufactured goods. The potential was great but it never lived up to expectations and sooner or later someone will build too much capacity in Macau. We just don’t know when that will be.
And there’s already evidence that Las Vegas (or Melbourne gaming, which looks a lot like Las Vegas) doesn’t translate easily or quickly to the Chinese style. Last year, the Business Press reported there was a steep learning curve for American companies in Asia.
On the other hand, Packer’s big moves are very reminiscent of his father’s operations: Find a government-regulated business and move in with a big investment - so big that he can’t be challenged. And that’s pretty much what Lawrence’s father Stanley has been doing in Macau for years.
