Main menu
Financial
Wynn’s Bold Bet: New York Casino Investment Set to Surpass $6B
Posted on: March 19, 2024, 05:42h.
Last updated on: March 20, 2024, 09:41h.
Related Companies recently unveiled plans for a $12 billion expansion of Hudson Yards on Manhattan’s West Side. Of that sum, Wynn Resorts’ (NASDAQ: WYNN) proposed casino hotel would carry a price tag of $5.7 billion.
That’s assuming the operator is successful in procuring one of the three downstate casino licenses New York regulators have yet to award. The $12 billion price tag is well in excess of the $10 billion previously believed to be the potential tab for the project at Hudson Yards. Privately held Related has said it probably won’t move forward with the project without a gaming license.
Although the total development cost for the Western Hudson Rail Yards complex may be as high as $12 billion, as recently reported, the development cost for the Wynn New York City gaming resort is approximately $5.7 billion, excluding licensing fees and financing costs,” according to a statement issued to Casino.org by Michael Weaver, chief communications and brand officer at Wynn.
While the casino would be the centerpiece of the Hudson Yards expansion, the property would include 1,500 apartments, a public school, a daycare center, and two million square feet of office space.
How Wynn New York Casino Costs Could Exceed $6 Billion
As Weaver noted, the estimated $5.7 billion cost of a Wynn casino in New York City doesn’t include financing and licensing.
Regarding the latter issue, it was originally believed that New York would require winning bidders to fork over upfront payments of $500 million apiece for licenses. But with the state needing cash, there’s speculation swirling that the permit fees could jump to $1 billion per winning operator.
In theory, before financing costs, Wynn could face expenditures of $6.7 billion in New York if it wins a casino permit. That’s a hefty percentage of the operator’s market capitalization of $10.98 billion as of the close of U.S. markets on Tuesday.
Within the gaming industry, there’s some belief that owing to New York City being perhaps the best untapped domestic casino opportunity, the state has the leverage to increase licensing fees.
Financing Costs Could Be Steep
The statement issued by Weaver didn’t mention plans by Wynn to issue debt to build in New York, should it garner one of the three casino permits. Should the operator need to go down that road, it could be expensive.
While credit ratings agencies are increasingly bullish on the gaming company, they still rate Wynn with junk grades. Combine that with increasing speculation that interest rates could be higher for longer, and it becomes clear that any noninvestment-grade issuer would be forced to attach high coupon payments to newly issued bonds to move that paper.
At the end of last year, Wynn had $2.88 billion in cash on hand, as well as access to $736.5 million on a revolving credit facility held by Wynn Resorts Finance.
Most Read
Another Shooting Near Las Vegas Strip Casino Injures Man
966,081 views
Vintners Oppose Napa Valley Casino
553,064 views
Conversation (0)
Be the first to comment on this article.