Wynn Resorts Looks To The Future
-By Carol Miller
After a firestorm of sexual harassment allegations against its founder Steve Wynn, and long court battles, a period of calm appears to have settled over Wynn Resorts Ltd.
But, as residents of the Las Vegas Valley well know, calm can be replaced with hazardous wind storms in the blink of an eye. Wynn Resorts, however, seems to be recovering for the most turbulent period in its history.
For the last six years, the company had been locked in a grueling legal battle with the man who had been its largest shareholder at one point – Japanese gaming mogul Kazuo Okada. An early investor in Wynn Las Vegas, Okada had been ousted by the Wynn Resorts’ board of directors in 2012. The board cited, in part, business dealings with officials in the Philippines, which the board alleged smacked of corruption. On March 31 of this year, Wynn Resorts announced it had settled most claims brought by and Tokyo-based Universal Entertainment Corp., – and its subsidiary company Aruze – for $2.4 billion. (The two companies, Universal and Aruze, were always referred to in court as the “Okada entities”).
One last Wynn Resorts’ claim, involving alleged breach of fiduciary duty against Okada, was settled soon after the March 31st settlement announcement.
War of the Wynns
With the original lawsuit claimant, Okada, out of the legal picture, the courtroom fight came down to a battle between Steve Wynn and his ex-wife, Elaine Wynn. While the couple had divorced back in 2010, in a seemingly-amicable way, their after-divorce business relationship blew up in a very public way after Elaine entered the fight between her ex-husband and Okada. Elaine turned out to be an ally of Okada’s legal team. Elaine, in a late 2017 court hearing in Las Vegas, was also the one to bring up the sealed $7.5 million settlement from 2005. The settlement was between Steve Wynn and a former Wynn Resorts manicurist. The media frenzy to find out more details lead to a January 2018 Wall Street Journal article, which detailed a mountain of sexual harassments and sexual misconduct allegations against casino mogul Steve Wynn. Included was a claim that the Wynn Resorts’ manicurist on the receiving end of a $7.5 million settlement had claimed that Steve Wynn had pressured her into having sex with him.
A February 2nd Bloomberg News story added to the pressure on Steve Wynn with a report that a paternity claim was involved in the $7.5 million settlement with the manicurist. As the tsunami of bad publicity continued, Steve Wynn suddenly resigned from the company he had founded. That Feb. 6 resignation of Steve Wynn also came with it an offer by Steve Wynn to release control of Elaine Wynn’s Wynn Resorts’ share. Steve Wynn had maintained voting control of Elaine Wynn’s shares since their 2010 divorce, as the two had agreed upon at the time. But Elaine Wynn had sought to gain control of her shares back after the ouster of Okada from the Wynn Resorts’ board in 2012.
Elaine Wynn, who has served on the Wynn Resorts board, but lost her seat, decided to continue her legal fight over damages. Those damages, she claimed, were owed to her over the loss of her seat on the Wynn Resorts’ board. A contentious – and highly public – evidentiary hearing was held early this past April. Elaine took the witness stand and, in a jaw-dropping moment, testified that she had heard of allegations that Steve Wynn had “raped” a Wynn employee. The reference was made to the so-called “2005 incident,” which had resulted in the $7.5 million settlement.
Steve Wynn had issued a statement after the January Wall Street Journal article was published, denying the allegations.
“The idea that I ever assaulted any woman is preposterous,” the Wynn Resorts founder said in the statement.
“A Peace Treaty” in the Wynns’ War
Not long after the early April evidentiary hearing, Wynn Resorts announced a $25 million settlement with Elaine Wynn over her remaining claims, including the loss of her seat on the Wynn board.
Steve Wynn’s stake in the company had been valued at around $2.2 billion. But now that Steve Wynn had sold all his remaining shares of Wynn Resorts, Elaine Wynn was the company’s largest shareholder — with a 9 percent stake in the company. She would also prove to be a force to be reckoned with in reshaping the company.
Wynn Resorts also had a new chief executive in Matt Maddox, who was named when Steve Wynn resigned as chairman in February. Maddox had served as president of Wynn Resorts since 2013.
Elaine Wynn, fresh off her $25 million settlement – and now in control of her own Wynn shares – sought to infuse the Wynn board with fresh blood. Steve Wynn’s ex-wife started making the plans, publicly, in an April 17th regulatory filing. In that filing, Elaine Wynn said she wanted to remake the company board, with new members, Bloomberg reported. In the filing, Elaine Wynn also stated her desire to have board members “declassified.” The term “declassified,” in this context, refers to the practice of having board members run for election every year.
Elaine Wynn also wanted the option of nominating her own board members. Further, Elaine Wynn stated in the filing that she didn’t want to sell Wynn’s under-construction casino, near Boston, until Wynn saw major changes in the way Wynn Resorts was run, Bloomberg reported.
The powerful influence of Elaine Wynn was evident in mid-May when, just prior to Wynn Resorts’ annual meeting, Elaine was successful in pushing a longtime friend of her ex-husband off the board. That board member, John Hagenbuch, said he would not run for re-election, in a company announcement made just prior to Wynn’s May 16 annual meeting in Las Vegas.
Former Nevada Gov. Bob Miller, also a longtime Wynn Resorts’ board member, also resigned around the same time. These departures resulted in a 60 percent board-turnover percentage just since February, according to Bloomberg.
The Future of Wynn Resorts
While rumors had swirled since early April that MGM Resorts might be eyeing a takeover of Wynn Resorts, later moves by MGM Resorts seemed to throw cold water on the idea.
An early April New York Post article quoted an “unnamed source” stating, “I think if the Wynn CEO (Matt Maddox) gets his deal, he will sell.” That same source said, back in early April, that there was a 50 percent chance that MGM Resorts would buy Wynn Resorts in the “next several months.”
But as of mid-June, there were few indicators that such a deal was anywhere close to fruition. In fact, moves made by MGM Resorts indicated just the opposite was likely true, according to the investment business source, The Fool. In a May 22nd article, The Fool pointed to MGM’s then-just announced $2 billion stock repurchase authorization. That comes just after MGM completed a separate $1 billion share buyback program. MGM Resorts CEO Jim Murren has previously said that his focus now is on MGM Resorts “upgrading its facilities,” according to The Fool.
Another company, possibly interested in Wynn Resorts, is rumored to be Malaysian company Genting Group – owner of the Resorts World Casinos in Malaysia, Singapore and the Philippines, New York and soon, Las Vegas, according to the site Casinos.org. Steve Wynn’s longtime gaming rival, Sheldon Adelson, was also mentioned by Casinos.org. Adelson’s Sands has a market cap of more than $55 billion, according to Casinos.org.
Regardless of future takeover possibilities, Wynn Resorts’ stabilization is welcome news for Southern Nevada’s economy.