There is an old saying that one should not discuss religion or politics in polite company. It appears the three U.S. casino operators in Macau do not ascribe to this adage, and one wonders if they miscalculated the risk profile of that behavior.
Gambling and operating casino resorts are all about risk management, and one would think the leaders of these U.S. companies would understand that reality. Within this context, it is interesting to note that all three of these company chairmen made strong and clear statements during the last U.S. presidential election as to their preferences.
Sheldon Adelson of Las Vegas Sands is well known for his appreciation of Republican Party members, and he often lavishly demonstrates this appreciation with his checkbook. Steve Wynn, of the company bearing his name, has also become known as a strong Republican supporter; has made this clear on what are becoming his legendary rants on earnings’ calls; and has joined Mr. Adelson in working to fund and plan the most grand of all inauguration celebrations for the President-elect. And the generally more reserved James Murren, of MGM Resorts, unequivocally made it clear he thought Hillary Clinton was the appropriate presidential choice, making a very distinct break with his company’s Republican roots established under the leadership of the late Terry Lanni. The question then becomes, were there risks to these actions that these men may have not have appreciated?
Hindsight has allowed Mr. Murren to understand he picked the loser, election-wise, and what are the potential risks of his behavior? One might guess he could be subjected to an early morning tweet storm orchestrated by the President-elect Donald Trump ranting and raving about him supporting Secretary Clinton, but Mr. Murren can take solace in the fact that the stage play Hamilton survived this fate. I suspect it could also be the case that the President-elect may accuse Mr. Murren of potentially being involved in abetting the millions of people Mr. Trump claims voted for Secretary Clinton illegally, especially since she carried Nevada. Possibly the President-elect could order an investigation of Mr. Murren, for during the “Lock Her Up” episodes on the campaign trail, it does appear Mr. Trump believes the president can order criminal charges be brought against people through presidential order. He could even, God forbid, work to mandate that the MGM serve Trump steaks and require that the company have a hiring preference for graduates of that noble institution Trump University. But all in all, I believe Mr. Murren’s main risk is probably the collateral damage of being associated with a country whose President-elect seems dead-set on dealing directly with Taiwan and castigating in public the behavior of the Chinese government—through Twitter.
Mr. Wynn and Mr. Adelson may have unique challenges, given their public bromance with The Donald, and who now serve as his designated party planners. Does this now imply they support their chosen one by assisting him to convince the world that global warming was a hoax perpetrated by the Chinese to destroy U.S. manufacturing, as the President-elect stated in a tweet on the November 6, 2012? Will they support Mr. Trump’s 45 percent import duty on Chinese goods that he will impose if the Chinese do not play by his trade and currency rules according to yet another Trump Twitter challenge? Will these two help scold the Chinese for building a military base in the South China Sea, as the President-elect did in a tweet on December 4 of this year? And will they openly support the President-elect’s efforts to directly communicate with Taiwan, and join in with Mr. Trump in any development efforts that he or his children might be planning on the island?
The whole point of this discussion is to suggest there are risks to taking a company into the political arena. This President-elect has the capacity to raise strong emotions in people, especially those who he attacks, and one can guess that the Chinese do not appreciate the shaming and humiliations that the President-elect has been tweeting out to them. This may prove terribly relevant, for both Mr. Wynn and Mr. Adelson have stated, at different times over the years, that they are Chinese companies. I truly do not know what these gentlemen believe is the benefit to their shareholders of their past political statements, but I would have a hard time accepting that it has appreciably benefited their share prices. I would suggest, however, that their embrace of this President-elect does have some future downside potential for the Chinese will not take kindly if their buddy is determined to make their country the target of his scorn and ridicule through his very public tweets.
I started this little article with somewhat of an adage, and I would like to end the same way, and this saying concerns eggs and baskets. Like it or not the U.S. gaming interests in China, while not having all of their eggs in one basket, do have a lot of them in the Chinese basket. They have now, for better or for worse, handed that basket to Donald Trump. What could possibly go wrong?
