Four years ago, Steve Wynn had firm control over his company Wynn Resorts (NASDAQ:WYNN). But after his former money man, Kazuo Okada, had his shares redeemed by the board of directors Wynn lost a partner with about 20% of the company and now his ex-wife is trying to gain back the ability to sell her shares.
The fight between Steve and Elaine Wynn goes back to last year when she was kicked off the board of directors and her resulting desire to sell shares of the company stock, something she can't do because of an agreement in their divorce settlement. For Steve Wynn, Elaine is a key to keeping control of the company.
Control of Wynn Resorts is up in the air
When the drama between Steve Wynn, Kazuo Okada, and Elaine Wynn began, the three owned a combined 35.6% of the voting shares of the company. As long as they stuck together, it would be nearly impossible to unseat their power in Wynn Resorts. And that was a big concern for Steve Wynn, who was forced out of Mirage Resorts by a hostile bid from MGM in 2000.
Today, Steve Wynn owns 11.8% of the company and Elaine Wynn owns 9.8%. If Elaine is allowed to sell those shares it could leave Steve Wynn as the third largest shareholder behind two institutional investment firms.
That loss of control could eventually lead to a loss of control of the entire company. Steve Wynn is currently given the freedom to run the business as he sees fit, building projects he thinks will be profitable and add to the brand, adjusting its finances as necessary.
Case and point was his decision last year to cut the company's dividend from $1.50 per share per quarter to just $0.50. If he didn't have firm control of the company he may not have been given leeway to make such a move.
The $1.7 billion Wynn Everett resort just outside of Boston may also be a risk he wouldn't have been able to take without control. No one quite knows if a resort in the heart of the East Coast city will be successful, especially given the proliferation of gaming in the region.
The big reason Steve Wynn is fighting to keep his current arrangement with Elaine Wynn in place is that together they own 21.6% of the company and Wynn's jobs as CEO and chairman are safe. If Elaine sells out that might not be the case.
Founders matter in the gaming world
Gaming is an industry where the outsized personalities behind companies are extremely important. Steve Wynn and Las Vegas Sands' Sheldon Adelson have become icons and the dealmakers who made the Las Vegas Strip and Macau gaming market what it is today. Even MGM Resorts was quietly steered by Kirk Kerkorian before his death last year. Meanwhile, Caesars Entertainment teeters on the brink of bankruptcy under the leadership of private equity firms.
Adelson is the only one of the group with complete control of his company, owning 54% of the company's stock outstanding. That's the kind of power Steve Wynn wishes he had and the little control he does have may be slipping away.