Wynn Macau Trademark Payments to Parent Limited to $140M

Posted on: January 2, 2024, 04:39h. 

Last updated on: January 2, 2024, 05:36h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Wynn Macau’s 2024 intellectual property payments to parent company Wynn Resorts (NASDAQ: WYNN) will be limited to $140 million.

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The Wynn Macau integrated resort. The operator’s 2024 trademark payments to parent Wynn Resorts are capped at $140 million. (Image: YouTube)

That’s according to a recent regulatory filing with the Hong Kong Stock Exchange (HKSE), which is the listing venue for shares of Wynn Macau. The $140 million cap exceeds the $115.1 million limit imposed last year. In 2021 and 2022, the Macau concessionaire paid its Las Vegas-based parent a combined $74.8 million for the use of its brands and trademarks.

Such arrangements are common among large U.S.-based gaming operators with international subsidiaries. For example, MGM China announced in June 2023 that it struck a deal with MGM Resorts International (NYSE: MGM) to continue using one of the gaming industry’s most recognizable brands. The U.S.-based company owns about 56% of the Macau entity.

As for Wynn and its Macau entity, the agreement pertains to the Macau operator’s rights to use Wynn’s intellectual property, including logos, trademarks, and related fare. In the world’s largest casino hub, Wynn Macau runs its eponymous venue and Wynn Palace. The limit on intellectual property costs is being set by Wynn to comply with Hong Kong listing rules.

Wynn Licensing Agreement Small, but Important

For gaming operators with strong brand recognition, of which Wynn is one, licensing agreements are common. That’s particularly true in Macau, where Wynn is synonymous with plush integrated resorts and for luring VIP bettors.

Wynn Macau and Wynn Resorts Macau will also pay $14.9 million this year to Wynn International Marketing, which is a unit of the parent company, according to HKSE filing. The document indicates that the 2025 and 2026 payments to Wynn International Marketing are limited to $17.9 million and $21.5 million, respectively. Those figures include benefits and compensation for Wynn International Marketing employees.

There are also new caps on design services provided by Wynn Design & Development LLC to the Macau entities. This year, the Wynn Macau companies will pay no more than $10.9 million to the design unit. That limit increases to $12.3 million next year and $13.6 million in 2026.

Good Timing

Capping the intellectual property fees Wynn Macau pays to its parent company comes as Macau concessionaires posted a stellar 2023 in which gross gaming revenue (GGR) more than quadrupled.

Operators, including Wynn Macau, notched combined 2023 GGR of $22.7 billion. But that was still well off the 2019 high of $36.3 billion, indicating there’s plenty of runway for continued recovery this year in the special administrative region (SAR).

The level of GGR posted last year triggered an increased level of nongaming capital commitments from the concessionaires, indicating it’s prudent of Wynn Resorts to cap trademark payments from its Macau unit.