CEO Matt Maddox steadies Wynn Resorts, analysts say

Updated February 6, 2019 - 6:00 pm

Just one year ago, the future of Wynn Resorts Ltd. seemed dire.

Charismatic Founder, Chairman and CEO Steve Wynn stepped down Feb. 6, 2018 amid allegations that he sexually harassed female employees over decades, raising concerns about the company’s gambling licenses.

His ex-wife Elaine Wynn, positioned to become the largest activist shareholder, battled new CEO Matt Maddox and directors for control. Meanwhile, former Wynn Resorts owner Universal Entertainment was in court seeking to recover its stake worth more than $2 billion.

Nevada, Massachusetts and Macau gaming regulators soon opened investigations into the company over the sexual misconduct allegations, threatening its gaming license in Nevada and its ability to open a new resort outside Boston. Gaming analysts began to speculate which Strip or Macau operators could potentially take over the troubled company.

But twelve months to the day since being tapped to lead Wynn Resorts, Maddox — the company’s former chief financial officer and Steve Wynn protege — has helped stabilize the casino operator through quick decisive steps and compromises, analysts said.

“If you look at what he had done to steady the ship, they have been the right decisions,” said Harry Curtis, gaming analyst at Instinet in New York. “He has been a very good protector of the value embedded in the company.”


The gravity of the allegations against Steve Wynn, who vehemently denies them, forced Maddox to push out colleagues and directors and launch new company policies, including training, to save the gaming licenses.

All executives who were aware of the sexual harassment allegations but failed to act have left.

General Counsel Kim Sinatra, who worked closely with Maddox, left in July after Elaine Wynn told a court Sinatra was aware of the allegations. Wynn Las Vegas President Maurice Wooden departed in January before a Nevada investigation was released claiming he knew of the allegations. Wynn Resorts last week said it could neither confirm nor deny Wooden knew.

Seven directors, including Steve Wynn, who had served on the board, have stepped down in the past year, replaced by a more diverse group without personal ties to company executives.

The extent of the changes seems to have satisfied the Nevada Gaming Control Board. The regulator said last week it will fine the company but would not seek to revoke or limit Wynn Resorts’ gaming licenses.

J.P.Morgan analyst Joseph Greff said he expects Massachusetts regulators to reach a similar deal with Wynn Resorts next month, effectively bringing the tumultuous saga to a close.

That will pave the way for Wynn Resorts to open its $2.6 billion resort outside Boston in June, a project that is expected to help drive revenue growth in the coming years.

Last year “was a year of transition for our company and that transition is now over,” Maddox confidently told Wall Street analysts as he began his fourth-quarter earnings call last week.

Wynn shareholders have now largely put the investigations behind them, said Jefferies analyst David Katz.

“It is not much of a discussion anymore. I don’t think the market is all that concerned about it,” he said.

Shares of Wynn Resorts fell from a high of $203 on Jan. 25, the day before the accusations surfaced to an interday low of $156 in March. They recovered to $202 by May in part as the company quickly distanced itself from Steve Wynn.

However, analysts question whether Maddox, known for his strong financial skills, can continue Steve Wynn’s tradition of building new, visionary casinos.

“There is concern the company is not going to be able to grow in the same way and do the same kinds of things without Steve,” said Katz.

That could chip away at the premium valuation investors give to Wynn Resorts shares compared with Strip competitors MGM Resorts International and Caesars Entertainment Corp.

Quick reaction

Maddox, who owns nearly $62 million of Wynn Resorts stock, did not take long to address the corporate fires upon becoming CEO.

Within weeks, the 43-year old flew to Hawaii to reach a $2.4 billion settlement with Universal to end the six-year lawsuit.

Maddox then reached out to Galaxy Entertainment Group, the Hong Kong-based casino operator, selling them nearly 5 percent of Wynn Resorts for $930 million.

The deal fortified the company’s balance sheet while also attracting an influential partner that could potentially help Wynn Resorts renew its Macau licenses and co-invest with the company in Japan.

Maddox also played a role in revamping the disgraced board, which was seen as too close to Steve Wynn. The six new directors include three women: former White House press secretary Dee Dee Myers, three-time CEO Betsy Atkins and Kestrel Advisors CEO Winifred Webb.

“The new board is much more independent and diverse and not just in gender, but in terms of thinking,” said Chad Beynon, an analyst at Macquarie.

The CEO also settled the company’s public fight with Elaine Wynn, agreeing to her choice for chairman — former Harrah’s Entertainment CEO Phil Satre — in exchange for her taking a passive role in company affairs. Elaine Wynn owns nearly 9 percent of the company.

“I think the company jumped on a lot of things quickly and they should get credit for that,” Katz said.

Elaine Wynn declined to comment.

Vegas spending slashed

Maddox’s influence on the company in his first year goes beyond settling lawsuits, revamping the board and mending the company’s image.

He has also had a major impact on the company’s growth strategy, most notably slashing his predecessor’s $3 billion in planned Las Vegas investments.

The multi-billion-dollar Paradise Park project much touted by Steve Wynn on conference calls has been reduced to a $360 million convention center. Maddox pulled the plugs on the hotel tower and lagoon featuring nightly shows. It will be replaced with a new golf course.

Wynn West, another billion-dollar resort project planned on the Alon site across the street, has been shelved for the time being. Maddox told Wall Street analysts last week that developing another casino with retail, slots and rooms “is not going to cut it.”

Gaming analysts have largely welcomed Maddox’s scaled-back Las Vegas investment plans.

Resorts World and The Drew will open near Wynn Resorts’ Strip properties in the coming years, adding 7,500 rooms to the market. Steve Wynn’s projects would have added at least 3,000 more, raising concerns about oversupply.

With Strip visitation having fallen the last two years and concerns growing about a slowdown — or even recession — in coming years, it makes little economic sense to pour billions into the ground now, analysts said.

Pausing development “was not only wise, but it was necessary. Why do you really want to challenge yourself at the end of an economic cycle with opening thousands of rooms?’’ said Curtis.

Maddox has focused future investment on Macau, the Chinese gaming enclave, where the gaming and visitation growth outlook over the next several years is greater than in Las Vegas. The company is expanding Wynn Palace with plans to add 1,300 rooms and is renovating Wynn Macau.

Wynn Resorts is now preparing to compete for a license in Japan, which could become a $26 billion market by 2026, according to Morningstar Research.

The research firm said in a report last year Las Vegas Sands and MGM Resorts have better chances in Japan.

Maddox told Wall Street analysts the company is well positioned to win in Japan, boasting last week to analysts the company will have the “most innovative and creative project.”

Roger Thomas and DeRuyter Butler, the designer and architect that helped Steve Wynn create his iconic casinos, are developing that project.

Nonetheless, the departure of Steve Wynn — highly regarded for his creativity — could impact how the project is perceived by potential partners and decision makers, analysts said.

“You might question if you are losing some creativity on the development side,” Curtis said.

Contact Todd Prince at 702-383-0386 or Follow @toddprincetv on Twitter.

Auto repair shortage affects Las Vegas
The auto repair industry is facing a national shortage of workers.
Franchising industry booming
Experts say Las Vegas is a hotbed for the franchise industry.
Africa Love owner talks about his store in Las Vegas
Mara Diakhate, owner of Africa Love, gift and decor store, talks about his store in Las Vegas. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Developer gets approval to build homes at Bonnie Springs
The Clark County Planning Commission has approved a plan to build 20 homes on the site of Bonnie Springs Ranch. (Michael Quine/Las Vegas Review-Journal)
Dig This opens new location In Las Vegas
Remember when you were a kid and played with construction toys in the sand box? Dig This Las Vegas has the same idea, except instead of toy bulldozers, you get to play with the real thing. (Mat Luschek/Review-Journal)
Town Square developer Jim Stuart building again in Las Vegas
Las Vegas’ real estate bubble took developers on a wild ride, something Jim Stuart knows all too well. (Las Vegas Review-Journal)
Salon opens at Veterans Village
T.H.E. Salon, owned by Nicole Christie, celebrated their opening at the Veterans Village with a ribbon cutting ceremony.
Southwest Airlines considering Las Vegas-Hawaii flights
Southwest Airlines CEO Gary Kelly says the airline is "very focused" on Hawaii. Hawaiians have a strong presence in Las Vegas.The city’s unofficial status is “Hawaii’s ninth island.” In 2018, at least 2,958 people from Hawaii moved to Nevada. Of those, 88.7 percent moved into Clark County, according to driver license surrender data. According to the Las Vegas Convention and Visitors Authority, 310,249 people came to Las Vegas from Hawaii in 2018.
Fewer Nevadans are celebrating Valentine's Day
Fewer Nevadans are celebrating Valentine's Day. About 1.2 million Nevadans are expected to celebrate this year, a 5 percent drop from 2018. A growing number of people consider Valentine’s Day over-commercialized. Others weren’t interested in the holiday or had nobody to celebrate with. But spending is expected to rise. Those who do celebrate are buying for more people. The average American is expected to spend about $162 this year for Valentine’s Day, a 57 percent jump from a decade prior. Katherine Cullen, director of industry and consumer insights at NRF
Foreclosures of mansions in Las Vegas
Las Vegas was ground zero for America's foreclosure crisis after the housing bubble burst. (Eli Segall/Las Vegas Review-Journal)
Rick Helfenbein talks about the impact of tariffs on the clothing industry
MAGIC fashion convention showcases men's clothing trends
The MAGIC fashion convention has come to Las Vegas at the Mandalay Bay Convention Center to showcase some of the hottest clothing trends for men. (Nathan Asselin/Las Vegas Review-Journal)
Allegiant Air flight attendants learn how to handle a water landing
Field instructor Ashleigh Markel talks about training prospective flight attendants for Allegiant Air getting live training with a raft for a water landing at the Heritage Park Aquatic Complex in Henderson on Monday. (John Hornberg/Las Vegas Review-Journal)
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery talks about Las Vegas return
Michael Feighery, CEO of Smith & Wollensky Restaurant Group, discusses the restaurant's upcoming return to the Las Vegas Strip.
Apartments to Come to Hughes Center
Developer Eric Cohen discusses his current building project at the Hughes Center office park in Las Vegas, Thursday, Jan. 31, 2019. Caroline Brehman/Las Vegas Review-Journal
Stratosphere to rebrand to The STRAT
The Stratosphere, a 1,150-foot-tall property in Las Vegas will be renamed The STRAT Hotel, Casino and Skypod.
Local designers’ picks for the Las Vegas Market
The trends that local interior designers are noticing at the Las Vegas Market this year. (Rachel Aston/Las Vegas Review-Journal)
Trends in bath products at Las Vegas Market
Camille Herd, the showroom manager for European Bath Kitchen Tile & Stone, talks about the popularity of free-standing bath tubs. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Kitchen trends at Las Vegas Winter Market
Las Vegas Winter Market displayed kitchen trends that mirror common dining accessories at Strip eateries. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Emerging trends in gifts at Las Vegas Market
Julie Smith Vincenti, curator for the First Look showroom tour on gifts and lifestyle, talks about the emerging trends in those categories for this season. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Las Vegas house prices are rising
Southern Nevada home prices were up 12 percent year-over-year in November.
Caesars Republic Scottsdale
Caesars Entertainment Corp. is building its first non-gaming hotel in the United States in Scottsdale, Arizona. (Caesars Entertainment Corp.)
Interior designer Mikel Welch talks about trends for Las Vegas Market
Interior designer Mikel Welch, who also is the on-camera designer for TLC’s Trading Spaces, discusses the trends he sees for the 2019 Las Vegas Winter Market. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
SHOT Show 2019: MEGGITT Virtual Training
MEGGIT showcases its virtual training system at SHOT Show 2019 in Las Vegas.
MGM delivers 700 meals to TSA workers at McCarran
Chefs at Garde Manger at Mandalay Bay provided 700 meals to federal employees who are affected by the government shutdown. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
SHOT Show 2019: A "nonsemi-automatic” weapon
Brandon Dunham of Nevada-based Franklin Armory show off the company’s new rifle prototype it calls a “nonsemi-automatic” weapon. The gun does not use a gas system to fire.
Las Vegas-based concrete repair company knows how to beat the heat
ART Concrete Solutions, a Las Vegas concrete-repair firm, addresses the challenges of construction in the extreme heat and sun of Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas based company brings color to concrete in the desert heat
Semco Modern Seamless Surface, a Las Vegas surface engineering company, knows how to put color in concrete construction in the Vegas heat. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
News Headlines
Home Front Page Footer Listing