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Posted At : January 12, 2009 05:07 PM | Posted By : D McKee
Related Categories:
Macau,Sheldon Adelson,Singapore,Wall Street
Marina Bay Sands: Most profitable casino EVER?
Perhaps your eyebrows were raised when you saw this very roseate Las Vegas Sands story Monday morning. Mine sure went up when I got to the part where Jefferies & Co. analyst Larry Klatzkin predicts that Marina Bay Sands, a behind-schedule $2.7 billion Singapore project, "will result in the opening of the most profitable casino in the world."
"Larry's drunk the Sheldon Adelson Kool-Aid once too often," was my immediate reaction. Then I thought I was perhaps too harsh.
Apparently not. The Las Vegas Review-Journal's John L. Smith saw the Panglossian forecast and wrote, "like a weatherman in Los Angeles, its friend in the analyst business, Lawrence Klatzkin of Jefferies & Co., always sees plenty of sunshine."
Mincing even fewer words, Howard Stutz reported that Klatzkin "is thought of as a lapdog of ... Sheldon Adelson." Ouch! And he doesn't stop there. A brave man, that Stutz, as his next conversation with Klatzkin -- a prickly fellow at the best of times -- is likely to be quite unpleasant. It certainly makes up for Stutz's soft-soap J. Terrence Lanni tribute in the Sunday R-J.
If I had to guess where Klatzin got his prediction, I wouldn't have to go very far out on a limb. Klatzkin was one of the listeners on Sands' 3Q08 earnings call, held Nov. 10, wherein LVS execs predicted a $1.26 billion 2012 cash flow in Singapore, based on what used to be termed "fuzzy math."
In essence, they attribute Macao-level business to Marina Bay and throw in a bunch of other assumptions to fudge the vast tourism disparity between Macao (27 billion) and Singapore (10.3 million). Some of my Vegas Gang colleagues heard the conference call and they weren't buying Sands Senior VP Brad Stone's line of argument but it was clearly music to Klatkzin's ears. (Singapore's population dwarfs Macao's but its paternalistic government has been actively discouraging casino patronage by Singaporeans.)
More power to Adelson if he can pull those projections off. You might even say it would be a business miracle.
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