Caesars Entertainment and Mohegan Gaming & Entertainment (MGE) are both grappling with financing issues for integrated resort projects in the Incheon region of South Korea. The coronavirus pandemic is viewed as the culprit behind the problems.
Over the course of the health crisis, gaming companies easily accessed cash via debt and equity sales. The primary uses of that capital are refinancing liabilities and bolstering balance sheets. Financing for new projects, however, is a different matter. Particularly as global travel is proving slow to resume amid the pandemic.
Caesars Korea is part of a broader development dubbed Midan City Yeongjong Island. The island is located west of Incheon. The project carries a price tag of $700 million with expectations that the rest will be procured from external financing. The US gaming company has committed $140 million,
MGE’s “Inspire Entertainment Resort” is a multi-billion won effort to be located near Incheon International Airport. Despite setbacks caused by COVID-19, the operator says the venue is on course to open in the second half of 2022.
Specific to Caesars Korea, there’s speculation that the project is taking a backseat at the company because of the recent regime change.
Soon after Eldorado Resorts unveiled its $17.3 billion takeover offer for Caesars in June 2019, Tom Reeg, then chief executive officer of Eldorado, said international expansion plans have to be “stupendous for us to be running in that direction.” Reeg is now at the helm of “new Caesars.”
In the wake of Eldorado’s offer, Caesars withdrew from integrated resort bidding competitions in Australia, Greece, and Japan, indicating that new management is intent on focusing on the US gaming market. All of Caesars’ international overtures, including the Incheon plan, commenced under previous leadership.
Putting Caesars’ priorities into context, the operator smoothly procured $2.03 billion from lenders for its $3.69 billion purchase of William Hill but is balking at coughing up more than $140 million for the South Korea project. Emphasizing its US focus, the Nevada-based company almost certainly will divest William Hill’s European operations when that deal closes.
While MGE is facing pandemic-related financing issues in Korea, the operator is keen on international expansion.
Phase 1 of “Inspire” will cost $1.6 billion and features 1,250 guest rooms, 700 slot machines, 150 table games, and 19,000 square feet of business and meeting space. Integral to the success of any new South Korean integrated resort are rebounds in the global economy and the international travel industry because locals aren’t allowed to enter gaming properties in the country. The exception is Kangwon Land, a government-controlled venue in Gangwon Province.
In addition to its South Korea plans, MGE recently won a license to develop an integrated resort at an abandoned airport site in Athens following a contentious bidding process against rival Hard Rock International.
In an interview with Casino.org earlier this year, MGE CEO Mario Kontomerkos said expansion in markets outside the US is vital, and that the pandemic highlights the importance of diversification.