The Vice Chairman and CEO of SJM Resorts, Ambrose So Shu Fai, said Monday that the company has adjusted upwards its share in revenue generated by satellite casinos operating under its gaming license due to increased operating costs during the pandemic and its participation in the re-tender of Macau gaming concessions.
Some Chinese language media reported last week that SJM and its satellite casino operators had discussed adjusting their revenue share agreements, with SJM looking to increase from 45% to 50%.
In an interview with Hong Kong media outlet Ming Pao, Dr So confirmed such discussions had taken place with 10 satellite operators having agreed to new terms until the end of their current agreements on 31 December 2022.
“As a result of the reduction in business due to the pandemic, it is not easy to bear the cost and we have to participate in the re-tender of gambling concessions too, so we have [had to] to discuss with satellite casinos to adjust the [revenue] share to support operations.”
Of Macau’s 18 satellite casinos, 14 have operated under the concession of SJM. Under Macau’s new Gaming Law there will be a three-year transition period for satellite casinos, starting on 1 January 2023, after which time satellite operators will no longer be allowed to engage in revenue share agreements. Instead, they will only be permitted to a management fee.
However, many of these satellite casinos in Macau have decided to return the operation of the casino to their associated concessionaires before 26 June, with SJM having already assumed operational control of three casinos previously run by Golden Dragon Group.
Dr So admitted the lack of cash flow due to low tourist numbers had presented additional challenges to SJM – thus the need to maximize revenue.
“In the past, the lending banks would refer to the EBITDA of the casino, but now the casino has lost money and can no longer borrow with the banks,” he said. “Cash flow now is far from what it was in the past and the casino is looking for the banks to change the terms.”
Despite such challenges, Dr So said he looked forward to SJM maintaining its Macau presence with the company finalizing its tender documents ahead of the 14 September submission deadline.
“SJM has invested a lot [of money into Macau] in the past and if we exit now, we take more risk,” he said.
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