Money-loser won lengthy contract
The Macau Jockey Club will undergo a major expansion and upgrade that will add smart stables, a horse theme park and a riding school, according to Macau legislator Ellen Lei Cheng.
According to the Macau News Agency, the overhaul planned by the Macau Horse Racing Company Ltd. will take place in three phases at a cost of more than MOP1.5 billion (US$185.5 million).
The MJC reportedly has not turned a profit since 2004; moreover, it has a long history of debt, which reached some MOP4 billion (US$495 million) at the end of 2016. Despite that history and the plummeting interest in horse racing as a spectator sport, some analysts said the government’s decision to re-up the club’s concession by more than 24 years makes sense.
“In order to keep a variety of choices of gambling products as well as developing more non-gaming facilities, it is justifiable to have a long term contract,” legislator Davis Ka Chio Fong said in February. He pointed out that the government made its decision based on a promise by legislator and MJC owners Angela Leong to invest in non-gaming attractions at the facility. Leong is also an executive director of SJM.
“Running horse racing for profit-taking in Macau is not easy because of the competition among different gambling products, especially the Hong Kong Jockey Club and land-based casinos in Macau,” said Fong, an associate professor in International Integrated Resort Management at the University of Macau.
“Subject to the unfavorable business performance of the MJC in the past decade and its business potential in the coming decade, an extension of its concession of 20 years could convey more positive incentive for the firm’s continuous investment and encourage it to attempt to improve its business organization, more so than a 10-year extension,” he said.
But Wang Changbin, professor and director of the Gaming Teaching & Research Center of the Macao Polytechnic Institute, said the lengthy extension came as a surprise since “the renewal period is usually five years (even less) or 10 years at most.”
The concession renewal is dependent on the promised investments and the payment of MOP150 million (US$18.5 million) in debt within three years.
