One of Japan’s largest entertainment conglomerates and earliest bidders for an Integrated Resort, Sega Sammy, has cautioned that the realization of the project may now be more difficult due to potential shifts in commitments from overseas partners.
Sega Sammy Gives Update on Feasibility of IR
Japanese entertainment giant Sega Sammy Holdings Inc has said that any company looking to invest into the upcoming Japanese Integrated Resort (IR) project will need to exercise “sound cash management” to meet targets and successfully see the investment through.
The conglomerate confirmed that both the government and investors are now looking at a worst-case scenario and how to avoid any development with the COVID-19 outbreak affecting the government’s plans to see the first IR open doors by 2025.
Sega Sammy confirmed that the company would carry out sound cash management itself. The company has already lined up a number of partners, looking to secure an IR bid from Yokohama, a prefecture that has seen political pushback for hosting a casino resort but which has nevertheless pushed forward.
In January, Sega Sammy named Foster and Partners Ltd, an architecture firm, and marketing company Katana Inc as two of the partners that will join the company in bidding for an upcoming resort.
Despite the enthusiasm, Sega has been treading cautiously. Both the company’s Chief Financial Officer (CFO) Koichi Fukazawa and Chief Operating Officer (COO) Haruki Satomi spoke at a recent briefing about the company’s results for the end of the fiscal year that ended on March 31.
The executives commented that many overseas brands, some of the most prospective investors, had already suffered significant hits to their bottom line, making it difficult to expect an unequivocal commitment on their part. Sega’s brass said that there was a possibility for overseas investors to completely give up on trying to enter the Japanese integrated resort under these specific conditions.
The Challenges Ahead of the Integrated Resort Project
There has been a string of withdrawals, but not all came as a direct result of the pandemic. Las Vegas Sands Corp (LVS), the hospitality and casino brand owned by casino mogul Sheldon Adelson, decided to withdraw recently, but others dropped before that.
One clear downside from the COVID-19 outbreak has been a more strenuous timeline, as the timetables may now shift due to limitations. However, the central government will only award bids next year, which still gives prefectures and their partners sufficient time to try and prepare the necessary paperwork.
Sega Sammy is also trying to safeguard its investments. Instead of dropping any existing partnerships, the company said it would seek to utilize them elsewhere if need be. Sega is currently involved in gaming and non-gaming resorts in South Korea.
Meanwhile, the timeline for the realization of the IR seems to remain unchanged. Lawmakers have been reluctant to toy around with the deadlines so as not to signal a lack of confidence. Not even a bribery scandal could cast a shadow of doubt on the success of the Integrated Resort future which the government of Japanese Prime Minister Shinzo Abe had to fight several years for.