MPEL For Sale and Thoughts on Galaxy
I got an email from fellow VegasGang'r David McKee this morning re: MPEL and Galaxy and I kinda think my response to him is worth sharing. It's a bit more conversational that the usual conversational tone, as it was written primarily as an email.
Here's his original missive:
I'm waiting with bated breath for that PBL Melco data. I dunno about you but I think Ho Jr. and Packer Jr. would be crackers if they sold -- especially to Harrah's, which probably can't afford PBL Melco, for a variety of reasons. I agree with your assessment that they've eaten everyone else's lunch and it doesn't look like they've peaked yet. Besides, when you're sitting on a gold mine and growth market, why sell out? It makes no sense to me. None. Nada.
Now, Galaxy, that's another story...
With MPEL's theoretical valuation blasting through the stratosphere since the AMA vip deal ramped up, is it even possible for Johnny Checkbook to string together enough zeroes in this economic climate?
Harrah's seems like the obvious choice, given their desire to get into the Macau game. Harrah's current post-public financial state make any acquisition of Melco PBL doubtful, at least in the near term. MPEL was prime target for takeover during the single digit doldrums a few months ago. With Crown Macau commanding +/- 25% of market share in Macau, MPEL is in the drivers seat when it comes to any possible purchase agreement.
MPEL just gets it. They're pwning the game there in so many ways it's hard to come up with the correct words to describe it. To draw a Las Vegas parallel, imagine if Red Rock cost US$400M to build, was nicer and more intimate than the best of the best Strip behemoths AND snagged 25% market share before it's first year of operation drew to a close. If such a scenario happened in Vegas, the fallout would be enormous, to say the least. This somewhat proves that the Macau gaming business, at least in the eyes of a lot of investors and even industry watchers is still a Rumsfeldian 'known-unknown.'
Galaxy - well... they just don't get it. They need to seriously consider replacing upper management with a team that not only understands the Asian gaming market but has Western marketing panache - i.e. the MPEL brain trust. Galaxy has a no-sale clause in some contract with LVS. I haven't researched the details of this, but knowing LVS' penchant for litigation I'm not surprised they'd add a preemptive finger-in-the-asshole clause to protect their own.
StarWorld is a gorgeous property, but when Wynn is literally 50 steps away you're in trouble no matter how you slice it. As for the MegaResort thing, I honestly don't think they're quite sure what they're doing there beyond building their own copy cat of a Vegas "megaresort." I'm not sure if the general public will understand the post-modernist irony - intended or not - in such a deviously ridiculous 'megaresort themed megaresort.'
It's been about a month or so since I contacted Galaxy Entertainment's press relations contact and have yet to receive any response. By comparison, MGM pinged us back within a week and Melco PBL they initiated contact with us. That's not to say that MacauTripping is equivalent to the New York Times or any major news outlet, but we're obviously worth MGM and MPEL's time.