MGM Resorts’ plans for Osaka resort delayed by coronavirus pandemic
While the timeline has been altered, experts remain confident Osaka — and other Japanese regions — will see integrated resorts in the near future.
Updated March 30, 2020 - 3:27 pm
MGM Resorts International’s plans to develop an integrated resort in Osaka, Japan, have been pushed back amid the global coronavirus pandemic.
Osaka officials announced the city had given up on plans to open an integrated resort in time for the 2025 World Expo — which runs from April through October — according to local media reports. This comes as travel is severely restricted with more than 766,000 coronavirus cases confirmed globally, according to Johns Hopkins University.
While the timeline has been altered, experts remain confident that Osaka — and other Japanese regions — will see integrated resorts in the coming years.
“I don’t think (this news) diminished the opportunity to build an integrated resort in Japan,” said Brendan Bussmann, a partner at Global Market Advisors. “I think everyone knows Japan will be a good integrated resort market.”
‘Time on their side’
Ed Bowers, CEO of MGM Resorts Japan LLC, said the schedule shift doesn’t deter MGM’s plans to build in Osaka.
“MGM will continue to proceed with our efforts to create a proposal that will be appreciated by the entire Osaka community, taking into account the schedule announced by the government,” he said.
MGM is the sole casino company left looking to develop a resort in Osaka, but its plans have yet to be approved by Japanese officials.
Japan is set to issue three gaming licenses this year, but the government has not said which cities will get those integrated resorts. Analysts are convinced that Osaka will be the site for one, with Tokyo, Yokohama and Nagasaki vying for another.
MGM is partnering with Japanese financial services company Orix for its bid. Two other Las Vegas-based casino operators — Wynn Resorts Ltd. and Las Vegas Sands Corp. — are also interested in Japan.
Bussmann said Osaka is so far the only region to push back its timeline, and he said its original plans to open the resort in time for the World Expo already were a stretch.
But he has “no doubt” the city will have an integrated resort up by 2026.
“Osaka still has time on their side,” Bussmann said.
Sands, which is looking to develop an integrated resort in Yokohama or Tokyo, “remains interested” in the sites, according to spokesman Ron Reese.
“I think this is specific to Osaka, which we have already said we are were not pursuing,” Reese said.
A spokesman for Wynn did not immediately respond to a request for comment.
UNLV professor and gaming historian David Schwartz said Osaka’s delay is a realistic response to the current crisis, but he doesn’t view the delay as “a positive” for MGM or any other companies looking to build in Japan.
“I don’t think anyone can forecast what the global hospitality landscape will look like on the other side of the pandemic,” he said.
But SunTrust Robinson Humphrey analyst Barry Jonas said the delay could actually be useful to MGM.
“Any delays will be helpful given the main investor focus right now is liquidity and how many months companies can survive with no, or very limited, revenues,” he said.
A March 27 note from Deutsche Bank Research estimated MGM’s total liquidity was $3.9 billion, meaning it can withstand about 10 months of domestic property closures before it runs out of cash.
Bussmann said the delay could help MGM sort through challenges in other markets — like Las Vegas and Massachusetts — as casinos shut down across the U.S. According to the American Gaming Association, every commercial casino in the U.S. has been temporarily shut down as of Wednesday.
“MGM has a lot of challenges right now on their plate,” Bussmann said. “It’s one of those (situations) where if I could take a breather off one element while I figure out others, I’d gladly take a pause.”
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. Las Vegas Sands operates six resorts in Macao and one in Singapore.
Contact Bailey Schulz at email@example.com or 702-383-0233. Follow @bailey_schulz on Twitter.