Las Vegas casinos owners may have just five months to stay afloat as they burn through $14.4million a day following orders to close down operations for a month.
On Tuesday March 17 Nevada Governor Steve Sisolak ordered a statewide closure of all nonessential businesses for 30 days, including casinos, bars and restaurants, to prevent the spread of COVID-19, turning Sin City into a ghost town.
Casinos are now facing the dilemma of keeping workers employed, while grappling with zero income.
Some operators have as little as five months before they run out of money, according to Macquarie Research.
MGM Resorts International, which runs 13 luxury casinos in Las Vegas and dozens of others across the country, is burning $14.4 million daily with nine months before it runs out of cash, according to the report.
Las Vegas casinos may just have months to stay afloat as they burn through millions of dollars today and grapple with no income due to ordered shut downs. The tourist hot spot the Las Vegas Strip pictured eerily desolate on Wednesday
MGM Resorts International, which runs 13 luxury casinos in Las Vegas and dozens of others across the country, is burning $14.4 million daily with nine months before it runs out of cash, according to the report. The Park MGM hotel pictured avoid devoid of guests Wednesday
Closed for business: A boarded up entrance at a business on the Las Vegas Strip pictured above Wednesday
This chart shows the cash burn projection of US casino operators in Las Vegas. Red Rock Resorts is burning $1.7 million daily and has enough cash to last 13.8 months, outlasting its competitors. Meanwhile, Penn National is burning $6.4 million daily with 5.2 months before it exceeds cash burn
‘U.S. gaming has been one of the hardest hit sectors in the consumer space since the beginning of the crisis,’ Macquarie Securities gaming analyst Chad Beynon said in the report as per the Las Vegas Journal-Review.
How long can Las Vegas casinos last in COVID-19 shutdown?
MGM Resorts International – Burns $14.4 million daily with nine months before it runs out of cash
Las Vegas-based Boyd Gaming Corp. – Spends $3.2 million daily with 9.4 months to last
Penn National – Loses $6.4 million daily with 5.2 months before it exceeds cash burn
Red Rock Resorts – Spends $1.7 million daily and can last 13.8 months
Golden Entertainment – Burns $1 million daily, with 10.4 months to last
‘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.
The closure of the casinos could mean a major hit to Las Vegas economy and job market which relies heavily on tourists and the entertainment and gaming industry.
Las Vegas-based Boyd Gaming Corp. is burning about $3.2 million daily during the shutdown. It has about 9.4 months to burn its cash.
Penn National is burning $6.4 million daily with 5.2 months before it exceeds cash burn.
Red Rock Resorts is burning $1.7 million daily and has enough cash to last 13.8 months.
Golden Entertainment is burning $1 million daily, with 10.4 months to last with its assets.
On Tuesday March 17 Nevada Governor Steve Sisolak ordered a statewide closure of all nonessential businesses for 30 days – including casinos, bars and restaurants to prevent the spread of COVID-19. The empty Las Vegas strip pictured above on Wednesday
The closure of the casinos could mean a major hit to Las Vegas economy and job market which relies heavily on tourists and the entertainment and gaming industry. The exterior of a Las Vegas shopping center pictured above Wednesday
The Paris Las Vegas hotel and casino pictured about on Wednesday. Usually this casino is teeming with tourists and guests, but this week it’s completely empty due to the nonessential business shutdown that will last 30 days
MGM has already started to lay off some employees while other companies promise one or two weeks of pay to employees
Across the country 465 commercial casinos in the US have closed down amid the coronavirus breakout that has seen over 69,000 people across the country become infected.
As of Wednesday evening there are 405 cases of COVID-19 in the state of Nevada and there have been 10 deaths.
In light of the business shutdowns and coronavirus crisis some companies have begun to lay off employees.
MGM has already started to lay off some employees while others promise one or two weeks of pay to employees.
As of Wednesday evening there are 405 cases of COVID-19 in the state of Nevada and there have been 10 deaths. Medical experts at a coronavirus testing site pictured Tuesday in Las Vegas
City of Las Vegas operations and maintenance staff worker Denis Connelly pressure washes playground equipment at Centennial Hills Park as part of an effort to keep the city’s 70 parks open for the public during the coronavirus pandemic on Wednesday
Part-time and full-time furloughed employees at MGM will receive two weeks of pay and benefits, and eligible employees will be enrolled in the company’s health plans through June 30.
Boyd Gaming Corp. employees say the company promised to pay one week’s worth of pay to hourly employees, while managers will receive two weeks’ worth of pay. But it’s not clear what will happen past that two-week period.
Caesars Entertainment Corp. will continue to pay full-time, part-time and regularly scheduled employees for up to two weeks.
Employees effected by unpaid leave or furlough will be paid a biweekly payroll contribution until they return to work or through the end of June, the company said.
Golden Entertainment promised to pay all full-time hourly and salaried staff for one week from their last day worked. Those on the company’s health insurance plan will maintain benefits during the temporary layoff period.
While operational changes and cost reductions will mitigate some losses, the casinos could face a rocky path forward if they’re not allowed to open up soon.
As of Thursday there are over 69,000 cases of the virus in the US and over 1,000 deaths
This chart shows how the number of coronavirus cases has escalated int he US over the past month
However, some experts say banks will work with casino companies and amend credit lines as they did with the 2008 economic crash.
‘Gaming is a little bit different than a lot of other businesses. It’s harder for a bank…to take over the building, take over the operations (if they run out of cash),’ Jefferies gaming analyst David Katz said to the Las Vegas Review-Journal.
In Nevada 25 percent of the state’s total labor market works in leisure and hospitality, according to seasonally adjusted January data from the Nevada Department of Employment, Training, and Rehabilitation.
While casino representatives are yet to talk about how the crisis could affect them, MGM noted that that outgoing CEO and chairman Jim Murren said the company’s recent real estate transactions helped it achieve (its) strongest balance sheet in the last decade.’
Source: dailymail US