Operator News
US – Burning $14m a day, how long can Las Vegas’ casinos last for?
By Phil - 30 March 2020
Macquarie research has analysed the cash reserves of Las Vegas’ casino operators and pitched how long each could survive the COVID-19 closures.
It believes MGM Resorts would be able to last nine months before it runs out of cash, Wynn Resorts and Las Vegas Sands would have 15 to 20 months, while Penn National would last less than six months. Macquarie believes the pandemic is costing some operators $14.4m a day.
Macquarie research analyst Chad Beynon said of the survival timeline: “It ranges from five months to a year and a half because of obligations they have to the banks, to their employees and to projects. US gaming has been one of the hardest hit sectors in the consumer space since the beginning of the crisis. The casino shutdown domestically coupled with high debt loads is pushing investors to ask, how long can these balance sheets last in this current environment?”
Reno-based Monarch Casino and Resort would last just over 14 months with the closures costing $300,000 a day. Red Rock Resorts would last 13 months, going through $1.7m a day. Golden Entertainment would last ten months, burning $1m a day. Boyd Gaming would last nine months with the cost pitched at $3.2m a day.
“The daily burn will remain the same,” Mr. Beynon said. “The only thing that could change by the day is if you’re laying off employees, but you can only cut so much. I don’t think the daily burn changes. Only the amount of time they have left changes.”
Jefferies gaming analyst David Katz is hopeful the country’s banks will work with casino companies and change credit lines where required.
“Gaming is a little bit different than a lot of other businesses,” he said. “It’s harder for a bank to take over the building or to take over the operations. All fixed costs are variable. In this industry, [those fixed costs are] largely people. It really depends how long the closures last and what we come out like on the other side. The shorter it is, the easier it is to bring back people who are furloughed. Once it’s past 60 days, people really have to find something else to do, and the re-onboarding is not so smooth.”
