Parent company of Wynn Macau implements cap on IP payments for the year

Posted on: January 2, 2024, 04:39h.

Last updated on: January 2, 2024, 04:39h.

Wynn Macau’s 2024 intellectual property payments to parent company Wynn Resorts (NASDAQ: WYNN) will be capped at $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)

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

Transactions of this nature are common among large US-based gaming operators with international subsidiaries. MGM China, for example, announced in June 2023 a licensing agreement with MGM Resorts International (NYSE: MGM) to continue using one of the gaming industry’s most recognizable brands.

The agreement between Wynn and its Macau entity pertains to the Macau operator’s rights to use Wynn intellectual property, such as logos, trademarks, and related items. In the world’s largest casino hub, Wynn Macau operates 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, licensing agreements are common and are particularly important in Macau, where Wynn is synonymous with plush integrated resorts and luring VIP bettors.

Wynn Macau and Wynn Resorts Macau will pay $14.9 million this year to Wynn International Marketing, which is a unit of the parent company, according to an 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. These 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 a 2023 GGR of $22.7 billion, but that was still well below the $36.3 billion high seen in 2019, suggesting there’s a lot of room for continued recovery this year in the special administrative region (SAR).

The level of GGR posted last year prompted increased nongaming capital commitments from the concessionaires, making it prudent for Wynn Resorts to cap trademark payments from its Macau unit.

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