Spin Doctors

Macau casino executives are seeking to put the best gloss on tough market conditions

The possible scenario of Galaxy being forced to suspend work on Cotai would have seemed shocking just a few months ago. Given what’s been going on in the Macau market since the final quarter of 2008, it now looks perfectly rational—normal even. In any case, since Las Vegas Sands Corp’s decision to halt work on its new Cotai projects in November, few events retain the power to shock.

The terms ‘phased opening’ or ‘soft opening’, when applied to one of Macau’s new integrated gaming resorts, used to be accepted by industry observers as a practical solution to a genuine logistical problem—i.e., how to organise the smooth transition of a massive project from building site to paying attraction. Now, following the global meltdown of debt and equity markets, ‘phased opening’ seems to be a term used increasingly to cover the backs of casino executives as they scramble to meet their massive capital commitments in order to avoid having their stocks and bonds classified as junk because of missed payment deadlines on debt.

An awful lot of casino executives were busy in the final weeks of 2008 making a virtue out of necessity, with phrases such as “realignment with existing market conditions” to explain away their embarrassment on funding. Such talk may not be entirely self-serving. A consensus view appears to be forming that oversupply of product in an immature market has been at least one contributing factor to Macau’s current woes. The spectre of the global credit disaster does, though, continue to cast a long shadow over the Macau gaming market and Asian gaming markets in general.