Japan, South East Asia, Australia, South America - there is a great deal of dynamism elsewhere in the world – why is Europe your market of choice right now?
It is easy to get caught up in massive gaming projects, but what moves the needle for a giant such as Las Vegas Sands? What moves the needle for MGM? If you look at market cap/share price, their business model consists of huge hotels, enormous casinos – and for Sands, a massive conventions business. Te only place for them is somewhere like Japan, because they are willing to spend US$10bn to move the needle for their shareholders. Sands had a great property in Pennsylvania, a large one that was very successful – but when Singapore is generating 400 million EBITDA per quarter, you need a major project to move the needle. 100 million EBITDA in Pennsylvania just isn’t an interesting long-term proposition. Japan is in the crosshairs, but it’s a long haul process of lobbying, studying, planning, designing, investing and building. When you finally open your US$10bn resort in Okinawa prefecture, that’s an incredibly long process over many years, which is hard work in a different way. I’m building in Europe today because I see how the pieces fit together.
There are major resort projects either being built or under-planning right now in Europe – Melco in Cyprus and Hard Rock in Spain. Are they your direct competitors?
I think the difference is that Olympic Entertainment Group is already successful in the European market with a range of operational models that we continue to expand upon. We operate in markets in which we have a multitude of locations in the right areas that are
P44 NEWSWIRE / INTERACTIVE / MARKET DATA
“Olympic Entertainment Group is already successful in the European market with a range of operational models that we continue to expand upon. We operate in markets in which we have a multitude of locations in the right areas that are especially good at servicing local clientele. It’s a service model that’s very successful and we know it works in multiple geographies.” Corey Plummer, CEO, Olympic Entertainment Group
especially good at servicing local clientele. It’s a service model that’s very successful and we know it works in multiple geographies.
Melco is entering Europe for the first time. Tey know how to build a resort and have been successful in South East Asia – but the operating model from Macau and the Philippines is very different to Europe, and even more complicated in certain parts of Europe. It’s an especially steep learning curve for operators like Melco, which means I don’t see them as competition. I don’t think they have the same kind of ambition. Tey have a project – they may have another one – but I don’t think their goal is to build multiple resorts all across Europe. In terms of Hard Rock, it is a great brand that also has restaurants and hotels. I think that if Hard Rock expands seriously into European gaming the market will benefit as a whole. I think that we need to educate the consumer as to what’s possible and Hard Rock could play a part in achieving that goal.
When are we going to see the next step in terms of Olympic expansion into Europe?
You’ll see the next step in the near-term. We have analytically mapped all of Europe and know where value adding targets are located and what appears to be actionable. One of the challenges we face early on is that many of the local operators see publicly listed digital companies with extremely high valuations and believe their local retail business should be valued in the same way.
While we have been able to educate some, others need to understand it’s unrealistic to expect those multiples for their businesses. In fact, many of the digital acquisitions were over priced and we’re starting to see those multiples falling. I think this is part of the game.
I was able to work with the capital investors to acquire the company because I saw the value of the Olympic model, both now and into the future. I outlined the strategy for the business and the value creation plan – it is my vision. It has been for many years. We all know that private equity tends to be short-term investors in their specific portfolio companies, but my vision for Europe is long-term. Te shareholders are supportive of that vision for Olympic and I am committed to that ambition for Europe.
Te company has been very successful for 25 years doing things a certain way, and to become much bigger we need to add new capabilities. Tere is a transformation process and an expansion and growth process to manage. It involves the same processes as many private equity deals, with agreements built upon establishing relationships over many years.
Integrity, commitment and focus are key parts to building quality relationships between management and private equity. Te same goes for entrepreneurs and management teams we want to work with and acquire businesses from. It’s all about timing, relationship building and validation, and it’s a process that I am very comfortable with.
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