08 January 2016
by Perry Williams
James Packer's Studio City boosts Melco Crown's Macau share
James Packer's $4 billion gamble on growth returning to Macau's embattled casino sector has been rewarded with Studio City helping to boost its market share.
James Packer's $4 billion gamble on growth returning to Macau's embattled casino sector has paid its first dividends with Melco Crown Entertainment boosting its market share above 16 per cent from about 13 per cent in October following the opening of its Studio City resort.
Macau, the world's biggest gambling hub, has been hit in the last 18 months by a China government-led crackdown on corruption and the flow of illicit capital which has dramatically slowed gaming revenues from the city.
Mr Packer's Crown Resorts, which holds a 34 per cent stake in Melco Crown, has placed a bet that its pricey Hollywood-themed Studio City complex, which opened in October, would help to reverse the stagnating fortunes of the territory with a greater emphasis on mass market gambling and family-friendly entertainment.
James Packer, co-chairman of Melco Crown Entertainment and singer Mariah Carey at the opening of the Studio City casino resort.
After just over two months of trading, the casino has gained market share according to investment bank Bernstein Research.
"Since Studio City opened in late October, Melco Crown has grown its market share to above 16 per cent level versus historically around 13 to 14 per cent," said Bernstein analyst Vitaly Umansky.
While the December figure of 16.2 per cent represented a slight fall on the previous month's 16.6 per cent, Bernstein said that was due to VIP weakness in its existing City of Dreams casino.
It estimates Studio City generated 343 million patacas ($60 million) from mass table gross gaming revenue in December, giving it a 4.1 per cent share of the market compared with 3.6 per cent in November.
The complex's average daily revenue increased by 19 per cent to 11.1 million patacas ($2 million) in December, Bernstein said.
Studio City only received an allocation of 250 gaming tables compared with its initial request of 400 falling short of a key part of the debt deal covering the casino.
Bernstein said 200 tables were in place by December with the remaining 50 tables to be allocated in January.
The Studio City casino is 60 per cent owned by Melco, with the balance held by hedge funds Silver Point Capital and Oaktree Capital Management through a group called New Cotai.
The figures are a slight boost for Crown after enduring a tough 2015 in the former Portuguese colony.
Macau casino operators saw more than $130 billion wiped off their market value in the last two years with gambling revenues tumbling by a third in 2015.
Melco Crown lost 59 per cent of its value since the start of 2014.
The five largest Macau casino stocks listed in New York lost a combined market value of $US94.8 billion ($132 billion) in the 24 months ended December 31, analysis by Fairfax Media has shown.
Gaming revenue in Macau, the only region in China where its citizens can legally gamble, fell 34 per cent in 2015 to 230 billion patacas ($39.9 billion) marking the second consecutive year of falls and snapping a decade-long winning streak.
While the figures capped a torrid year for some of the world's biggest casino players, there was some consolation, with the December revenue fall of 21.2 per cent the smallest monthly decline since January 2015.
Macau has been a rich hunting ground for the world's biggest gaming gurus since a monopoly controlled by long-time gambling king Stanley Ho was eased in 2002.