Steve Wynn's latest rant was probably misdirected

During his company's third-quarter investor call on Wednesday billionaire casino mogul Steve Wynn went on one of his infamous rants. This time it was about the construction around his new Macau casino, the Wynn Palace.

He blamed that construction for lower-than-expected foot traffic to the $4 billion property, which opened in August.

"...what we have is an anomalous situation where all four sides of our property are currently being enclosed by either barricades or construction blockades of one kind or another. It has tended to isolate our property on all four sides and it's made access to the Palace temporarily highly encumbered," he said (full rant at the end of the post).

Wynn, if he is indeed correct, has a right to be upset. That lack of traffic contributed to a Wynn third quarter earnings miss, with EBITDA coming 5% below consensus.

"Bottom line, the newly opened Wynn Palace is off to a slower-than-expected start. WYNN's market share didn't increase with the Palace opening, and operating expenses and promotions were higher than we'd expected. 2017 consensus is likely to come down, given a pretty hefty ramp built into Street estimates," wrote Wells Fargo analyst Cameron McKnight in a note after the earnings release.

But here's the thing with all of that information - it might not just be the construction hampering the Wynn Palace. It may be something that we've been watching in Macau for months, which is the problem of entirely too much supply coming online in an already crippled market.

Just when things were getting back to ok....

Back in 2014 the Chinese government came down on Macau and the high rollers there really hard. It made it harder for people to spend money on the territory, it put cameras in VIP rooms, and limited traffic from the mainland to Macau. A bunch of big time casino heists didn't help matters either.

This put a big chill on travel from mainland China to Macau, and led to a year or so of utter horror for casino operators. Things have started to stabilize (though they have not in any way returned to their former casino world capital glory) but it's unclear as yet whether or not the market can support all the casinos coming online.

And there are a lot of them, some of which have already opened:

To try to figure out whether or not construction is really the problem, we turn to Las Vegas Sands (LVS), the casino empire controlled by Sheldon Adelson.

LVS reported earnings on Thursday, and it too saw major weakness in its Macau segment. Last year was a bad year. This year was supposed to be better because the market was "stabilizing" and it seemed the Chinese government was loosening the reigns.

But that's not what LVS's earnings told us. The highlighted properties, all in Macau, did not benefit from "stabilization" (via Deutsche Bank):

So maybe this isn't about construction. Maybe it's about the fact that there are too many tables for too few gamblers.

We'll find out soon enough.

In the meantime, here's the full Wynn construction rant for your enjoyment:

There is something about our property in Cotai that I want to frame this conversation today. We - our 52 or so acres there is surrounded on all four sides by streets. On the east is the staging yard for the light rail system that resembles monorail that seeks to bring people from the airport and the Cotai ferry terminal to the various hotels in Cotai. That project has been underway for several years, experienced some developmental complexities and problems and delays, and is now scheduled for completion in a few years. The staging area and the construction area for the light rail system covers our entire east side and is across the street from our property, the entire parcel, on the east side. Next to it is the airport.

The light rail system, it goes from the ferry terminal and the airport along the entire north side of our property and then makes a 90-degree left-hand turn and goes down the west side of our property. Across the street from the west side of our property is the City of Dreams, the Melco development, on the right, and then as the light rail proceeds, it passes at the midpoint of our front of our property, a street going perpendicularly west to Venetian. On the other side, representing the other half of our western front is the construction job of MGM. And then on our south side, we have the construction job of SJM's hotel that's scheduled to open in the future. MGM is scheduled to open this spring at the end of May or the beginning of June, at last check.

So what we have is an anomalous situation where all four sides of our property are currently being enclosed by either barricades or construction blockades of one kind or another. It has tended to isolate our property on all four sides and it's made access to the Palace temporarily highly encumbered. Crossing the street or getting through these barricades that have been erected by MGM and by the folks who are building the light rail system, and it comes to a - its first stop with escalators and bridges right in the midpoint of our front yard where our gondola station is.

And of course, in the short-term, it's turned out to be a disadvantage having all the barricades and the construction on all four sides, but in the long-term of course, it's very advantageous to us. But in that context, it's represented a handicap in the access that the public has, both in buses, in cars or taxicabs. And we have worked in the last month or so in conjunction with the government on trying to mitigate these substantial barricades that enclose our property, and the government has been understanding and sympathetic to our situation and has promised to ameliorate the the situation in the next several months. But it is at the moment a handicap for us, and one we're forced to deal with.