Manila deal not that great for Melco Crown

Union Gaming is not bullish on the possible entry of Macau-based gaming operator Melco Crown Entertainment Ltd into the Filipino casino market. Melco Crown is reportedly in negotiations with Belle Corp to set up a Manila casino. Belle holds one of four licences to operate a casino resort in the new Manila Entertainment City. Union Gaming analysts Grant Govertsen and Felicity Chiang say the best deal for Melco Crown would be a capital-light agreement, namely a management services agreement. “Melco Crown can generate better returns on capital elsewhere, namely Macau (Macau Studio City and another hotel tower at City of Dreams), while we think better and lower risk greenfield opportunities exist in likely future markets such as Japan and Taiwan,” they wrote yesterday in an investors note. The two analysts are not shy about saying that they are not totally sold on the Manila Entertainment City project. “We are not sold on the concept of the Philippines (and Manila specifically) becoming the second Asian gaming market behind Macau, let alone being big enough to support an additional four major new integrated resorts.”