KUALA LUMPUR (Oct 28): Genting Malaysia Bhd's bid to finance “Genting Macau” could wipe out all the borrowing capacity of the group, a company that is currently bidding for a downstate licence in New York, which would likely need around US$1 billion to US$1.5 billion (RM4.72 billion to RM7.08 billion) to finance.
In an opinion piece published in industry magazine Inside Asian Gaming on Tuesday (Oct 25), gaming industry expert and media publisher Andrew W Scott said finance experts consulted for his article estimated that a combined “Genting Malaysia Macau” had the ability to raise around US$2.5 billion to finance its bid.
“Is US$2.5 billion enough money for Genting Macau? Probably not.
“Over the past 20 years, each of the incumbent concessionaires have spent an average of around US$7 billion on at least two integrated resorts apiece. Even the smallest of the six spent just under US$5 billion on construction cost,” said Australia-born Scott.
He said it’s possible US$2.5 billion from Genting may not even match a lowball bid from one of the smaller incumbent concessionaires.
“And surely for a newcomer to usurp an incumbent, the newcomer’s offering would have to not just equal the incumbent’s — but be substantially better?” he said.
Genting's advantages
Scott said there is no doubt Genting offers some advantages that may well be attractive to the Macau government.
He said as they are not American, and they are not even western, so that ticks the “geopolitical tensions” box, given the current state of play between China and the West.
“They also have a long and storied history in the cruise business (despite the Genting Hong Kong debacle), and this may tick the 'maritime tourism' box the Macau government referred to in the tender documents.
“They also have theme park assets with Universal Studios at Singapore’s Resorts World Sentosa and the newly opened SkyWorlds theme park in Genting Highlands. 'Themed tourism' was another of the items mentioned by the Macau government in its tender requirements,” he said.
Downsides
Scott, however, said there are downsides to Genting too, aside from the finance question.
He said that most importantly, there is a big question mark around whether Genting can operate effectively in a hyper-competitive environment.
“Such competitive markets like Macau and Las Vegas are completely different kettles of fish to monopolies like Genting’s operation in Malaysia or even the Singapore duopoly.
“Genting has spent most of its history simply enjoying the monopoly that came with operating the only legal casino in Malaysia.
“As a result, the 'monopoly mindset' is firmly entrenched in Genting’s DNA,” he said.
For most of its existence, Scott said Genting was best served by focusing on government relations and staying under the radar of public attention, given its nature as a casino operator in a Muslim-majority country, instead of prioritising the improvement of its service delivery standards or focusing on building a better mousetrap.