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Tuesday, May 05, 1998
Baccarat play decline hurts Mirage
Lower table winnings from Asian high rollers send down the gaming company's first quarter profits.
By Dave Berns
Review-Journal
A decline in international baccarat play that coincided with Asia's financial crisis contributed to a 27 percent decrease in earnings for Mirage Resorts Inc. during the first three months of the year, when compared with the same period in 1997, according to figures released Monday.
The Las Vegas-based gaming company reported first-quarter earnings before extraordinary items of $41.6 million, or 22 cents a share.
That compared to first-quarter 1997 earnings of $56.7 million, or 30 cents a share.
In addition to the baccarat decline, Mirage Resorts' 1998 first quarter was affected by a slightly lower table games win percentage, a charge on debt redemption and costs incurred for the scheduled fall opening of Bellagio on the Strip and the early 1999 opening of Beau Rivage in Biloxi, Miss.
"They really took it in baccarat due to weakness in Asia," said Jason Ader, a Bear, Stearns & Co. Inc. gaming industry analyst.
A Mirage spokesman was unavailable for comment Monday afternoon.
MGM Grand Inc. reported Thursday that its first-quarter profit fell 46 percent as reduced table winnings from Asian high rollers hurt its Strip resort and some of the novelty wore off the New York-New York hotel and casino. MGM is a 50-50 partner with Primadonna Resorts Inc. in New York-New York.
One industry analyst said the Mirage and MGM numbers are demonstrative of fewer Asian high rollers wagering less money at Las Vegas casinos.
"The (casinos) are just not getting as many shots at these guys as they used to," said Danny Davila, a Southcoast Capital gaming and leisure analyst. "It's what they're wagering, and how they're wagering."
Meanwhile, several of the Strip's largest casinos are cutting credit levels to potentially risky Asian customers, Davila said.
"You just have a certain region of the world that's economically more depressed than other areas," Davila said. "Their creditors look at them with more discrimination."
Baccarat tends to be the game of choice among Asian high rollers who carry credits lines of as much as $5 million, and wager as much as $250,000 a hand. An estimated 10 percent of the Mirage Resorts' 1997 gross revenues were from baccarat, according to Mirage Resorts figures.
Overall, Mirage Resorts reported net income of $38 million for the most recent quarter completed March 31, on gross revenues of $377.9 million. That compared with net income of $54.4 million on gross revenues of $394.3 million for the first quarter of 1997.
Operating cash flow -- which is earnings before depreciation, interest and taxes -- fell to $89.5 million from $113.2 million.
The company's promotional allowances and operating expenses increased during the past year, as competition heated up among Strip operators.
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