Last week the Macau Government surprised citizens when it announced it was extending the concession of the Macau Jockey Club for the not so negligible period of more than 24 years.
The decision is baffling for several reasons.
First, the length of the contract proper, since previous renewals of the Jockey Club’s contract were agreed to on a much shorter basis, five years, ten years at most.
Twenty-four years from now, we will be just a few years away from the return of Macau to China (due to take place in 2049). It is very unlikely, political and economic scenarios considered, that anyone could know what Macau’s position and situation will look like by then.
The second, and perhaps even more baffling aspect to this unexplained decision, is the fact, which is also public knowledge, that the company has continuously registered losses since at least 2005, amounting to some MOP4 billion last year.
Truth be told, in a ‘normal’ economy, a company with such a depressing performance would have been out of business a long time ago. But Macau is not a normal economy.
After a couple of declarations by the Secretary of Economy and Finance, Lionel Leong, and the company’s executive and legislator, Angela Leong, who very calmly stepped out to claim the company was going to invest some MOP1.5 billion in non-gaming elements – as if that alone could justify the 24 years granted – the Secretary stated further that the decision was a bet on the company’s recovery.
As if that were not perplexing enough, Mr. Leong added that if the Jockey Club manages to get out of the red, it might even pay the taxes it owes to the public coffers.
Ultimately, the man responsible for the city’s economy is betting on luck. With luck, we would all be rich, Mr. Secretary.
While it is unlikely that a decent explanation can be extracted from of the city’s political minds any time soon, or ever, for that fact, what is more disconcerting here is that the government is giving the best example of poor management: rewarding a company that does not generate capital, does not create jobs and has been reportedly known for poor treatment of the horses – which are supposed to be its main assets.
If the government is so keen to grant a 24-year contract to an unhealthy company, how much time will it be willing to award casino operators that are recording two-digit growth and creating jobs and wealth – although distribution of this wealth is another matter – one might ask?
On such grounds, we might see gaming concessions renewed for another 100 years. Not that they would mind.