According to Macquarie report, it is believed that 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?” he added.
Reno-based Monarch Casino and Resort would last just over 14 months with the closures costing US$300,000 a day. Red Rock Resorts would last 13 months, going through US$1.7m a day. Golden Entertainment would last ten months, burning US$1m a day. Boyd Gaming would last nine months with the cost pitched at US$3.2m a day.
“The daily burn will remain the same,” 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.”
Source: GMB
