Macau casino concessionaire SJM Holdings must continue to pay 2,150 former staff members who worked at five satellite casinos previously operating under its license.
According to Inside Asian Gaming, to date the “redundant payroll” has cost the company more than HK$169 million (US$21.6 million) in “redundant payroll.”
The figures came to light during SJM’s second-quarter earnings call, when the company reported an adjusted EBITDA loss of HK$103 million (US$13 million) from the remaining satellite casinos, relatively unchanged from the HK$105 million loss reported in the prior quarter.
In 2022, five satellite casinos closed due to changes in Macau’s gaming law; Macau Secretary for Economy and Finance Lei Wai Nong announced that operators were obligated to employ former casino dealers “unconditionally” even if the workplaces close down. Nine satellites remain: the Casa Real, Landmark, Emperor Palace, Fortuna, Grandview, Kam Pek Paradise, L’Arc, Legend Palace and Ponte 16.
JP Morgan analyst DS Kim commented on the issue, writing that “the pace of rationalization of excess staff was much slower than expected” in the second quarter. He said the company wants to “fully rationalize its workforce by the end of 2025, so there still appears to be a long way to go.”
Some of the staff are likely to end up at SJM’s new Grand Lisboa Palace (GLP) resort, which will add almost 2,000 new hotel rooms to the city’s Cotai district. Meanwhile, Kim said SJM is the only operator in Macau with higher operating expenses than pre-Covid levels, “primarily due to the opening of GLP and the aforementioned excess staff,” he said, “but the numbers are the numbers and SJM would need to ramp up GLP much faster to enjoy a similar level of profit recovery as its peers.”
SJM is also planning a major renovation of its Grand Lisboa resort on the Macau peninsula. The Credit Suisse analyst team said the overhaul would “focus on rooms, and introducing more casual restaurants for mass and retail areas by taking out the junket rooms. The project should start in 2024 and complete by 2026.”
