The boss of MGM Resorts International says he “won’t let the budget change” for the group’s Osaka, Japan casino project – the country’s first – from the US$10 billion already mentioned.
But Bill Hornbuckle, chief executive and president of the United States-based casino operator, did say the “scope has changed” for the MGM Osaka scheme (pictured in a file rendering), currently slated to launch in autumn 2030.
“We have spent an extensive amount of time rescoping the project,” he said. “The original project – compared to [now] – is about 20 to 25 percent less GFA [gross floor area],” he added.
Though Mr Hornbuckle stated: “We refused to move the budget. I refused to reduce the size of the casino, so it’s complicated, but we got there.”
The CEO was speaking on Thursday at the 2023 Bank of America Gaming and Lodging Conference.
He added he was due to fly to Japan at the end of the month, to sign an implementation agreement for the project, and a lease for the site at Yumeshima island, a land-reclamation zone in Osaka Bay.
“September 29 I’m supposed to get on an airplane and go to Japan and sign the final two agreements: an implementation agreement, and a lease for the property. That means we can start in earnest, and to the extent we are able to do that, this will open in 2030.”
That is a year later than the Osaka authorities had previously hoped.
“It’s been a journey,” observed Mr Hornbuckle. That was an apparent reference to the processes required to advance the scheme.
MGM Resorts has consistently been referring to MGM Osaka as a “US$10 billion” project.
The Osaka authorities had disclosed on Tuesday – when releasing the latest draft of their implementation agreement with MGM Resorts, Japan’s Orix Corp, and a number of smaller private-sector partners – that the initial development cost will be 17.6 percent higher than a prior estimate, at JPY1.27 trillion (US$8.6 billion).
The revised draft investment plan still needs to be approved by Japan’s national government.
The MGM Resorts CEO acknowledged in his Thursday remarks the company had benefited from the depreciation of the Japanese yen against the U.S. dollar in terms of the project’s overall cost increase.
“Why you’re seeing an escalation is it’s in yen, particularly for our [Japanese] partner. The yen is trading at 145 [to the U.S. dollar] or 147… some silly number right now.”
Though Mr Hornbuckle stated that the “earning potential has not changed” for MGM Osaka.
“If you think about the marketplace, we are probably going to be the only casino for a very long time in Japan.”
He added: “You’ve got 100 million people [in Japan], you’ve got 19 million in Osaka alone.”
The CEO stated: “I’m extremely excited about the potential of this, and the kicker is it is closer to Shanghai, Beijing and the northern China cities than Macau.”
MGM Resorts is majority owner of Macau casino operator MGM China Holdings Ltd.
He referred to the parent group’s experience of serving customers in multiple markets. “If you think about our database, what we know, who we know, how we do it… we are pretty excited by that [Japan] opportunity,” he stated.
Mr Hornbuckle referred in his remarks to MGM Resorts’ stake in the scheme equating to about US$4 billion.
He added that the cash portion of investment would be put in before bank debt came in.
“You will see our money in late 24, 25, 26… going out the door. The way it funds there, we go first,” ahead of the banks.
On Tuesday, the Osaka authorities had mentioned that MGM Resorts and Orix would respectively increase their share in the project to 42.5 percent from 40 percent, and that the smaller investors would collectively be reduced to 15 percent.
Mr Hornbuckle said in his Thursday remarks: “We think by next spring we can begin pylons. We are going down to 70 metres [230 feet] for most of this project,” in order to reach bedrock.
“And so we’ll be drilling piles for the better part of 2024, early 2025, and then you’ll begin to see hard construction going up.”
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