Trying to weave one’s way through the convoluted maze in Macau is not easy – so work with me on this one as we wander into three totally separate stories which in my mind can be grouped into the category of trying to please the central government in China.  First off and after several delays, Wynn has finally announced August 22nd as the opening date for his $4.2 billion Wynn Palace in Macau.  But, the company did not announce the most important bit of information for investors, competitors and analysts, the number of table games the government of Macau is permitting.  The Palace was designed for a very different environment than exists today.  Wynn Palace was conceived when gambling in Macau was defined by VIP gamblers from China.  Until 2014, the billions of dollars they wagered that shaped the gambling in Macau, but no longer.  Now under pressure from China, the casinos are trying to reinvent themselves and their business model as destination resorts.

Macau’s latest casino resort, Wynn Palace, is to open on August 22…speaking of its US$4.2-billion new Cotai venue… Monday’s announcement added that the Wynn Palace hotel – a 1,700-room facility – is now accepting room reservations. Gross Gaming Revenue Asia, 6-27-16

Recently Nomura the Japanese brokerage firm said the timing was unfortunate as it will be three years before the light rail will start delivering customers.  According to Nomura, the walk is too long and hot for the average tourist.  Of course, when Steve planned his palace walk-up traffic was not exactly important; those VIP gamblers were delivered right to the front and not expected to walk anywhere, least of all to another casino.

Attracting foot traffic to the soon to be opened Wynn Palace is likely to be “challenging” until a light rail system serving Cotai is completed, said a note issued by Japanese brokerage Nomura. “Attracting walk-in customers could be challenging,” said the brokerage. Gross Gaming Revenue Asia, 6-21-16

But today those walkabout tourists are becoming more important.  A recent press release said: “The company expects that the opening of Wynn Palace will help launch a new era of prosperity for Macau, attracting more international tourists to the city and further supporting its development as a world centre of tourism and leisure.”  Wynn has changed his strategic plan and now is seemingly in lock-step with the governments of China and Macau; in their plan, the future Macau will be a universal tourist destination and leave its ugly, corrupt, but highly profitable high rolling gambling days behind.

That brings me to part two, the panda.  Twin baby pandas were born in Macau.  Everyone knows that China and pandas are synonymous; pandas grow like weeds in China both in captivity and in the wild, but refuse to breed elsewhere.  Since China took possession of Macau in 1999, China has been slowly but surely reining in the cowboy economy and culture in Macau and making it more Chinese.  President Xi wants to see Chinese ways and Chinese culture everywhere he looks, on television, in the casinos and in the zoo.  No one has said anything, but I suspect the officials in Macau were overjoyed that their panda was acting like a Chinese panda and not a foreign one; it proves everyone in Macau is doing his part in the grand effort to be more authentically Chinese.

For the first time a giant panda gave birth in Macau – and it was double happiness on Sunday as not just one cub but twins were born – and both were locally conceived. The “lovely giant panda twins” were born to Sam Sam and her mate Hoi Hoi. Macau News, 6-27-16

And that brings me to the third piece of the story, the five-year plan.  Recently Macau released its first official five-year plan.  The process reminds me of the early days of the Comstock Hotel in Reno.  The management team had never done a budget and did not understand the process or how to use one.  Bob Cashell was an owner of the Comstock at the time and he owned the Boomtown Casino.  The management team of Boomtown used budgets and understood them.  So Bob suggested we bring our team to Boomtown for a week and learn about budgets and that’s what we did.  It was not an instant success, but over time we learned how to make and use a budget.  The officials in Macau did their version of that before issuing a five-year plan; they went to China to have the communist party officials teach them about planning.

“In China, the 5-year plan is a real plan expressing what they propose to do in the 5-years’ time period. They plan, draft and they announce and when the time is up the plan must be finished,” the lawmaker said. “In Macau it is different. This plan is only a promotion booklet because the Macau government sent officials to Central Government to learn about their 5-year plan and once they got back they wanted immediately to show that they did their ‘homework’ to please the Central Government,” he concluded. Renato Marques, Macau Daily Times, 6-27-16

The government’s Policy Research Centre Director Lao Pun Lap said that some urban planning proposed in the government’s first ever Five-Year Development Plan would have to be carried out even if it may clash with the urban planning law. Macau Post Daily, 6-21-16

Now in 1981 when we did our first budget at the Comstock we did want to please Bob Cashell; but Bob only owned a small percentage of the Comstock and was not a dictator.  We did not have to please him, but we did want what he wanted for us, we wanted to make money and be successful.  It wasn’t about pleasing anyone, it was about understanding how to manage a business.  In time that may become true in Macau, but it isn’t yet.

Just as Wynn said the company was excited about attracting international tourists and the zoo was excited about the twin pandas, the government in Macau wants to please Beijing.  Beijing is not like Bob Cashell in its management style and it is not a minority stockholder.  President Xi and his government own a controlling interest; he is the boss and a dictator.  Macau and its casinos are part of his grand plan for China in the 21st century.  It is best for everyone concerned to follow Xi’s directions and try as hard as possible to please him.  Spending four billion dollars on a resort, breeding pandas and writing five year plans all fit into the category of trying to please Beijing and President Xi.


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