David Mckee's Stiffs & Georges - Singapore

From the mailbag #8

Mon, 05 Oct 2009 15:08:00 -0700

"Doesn't the IOC realise it will be winter in Brazil in August, 2016?" -- comment Blackberried in by a reader, regarding the award of the '16 games to Rio de Janeiro. Y'know, I'd been wondering about that myself. The average August temperature in Rio hovers between 66 and 78 degrees. Not frigid but not exactly torrid, either. Meanwhile, the IOC promises to keep an eagle eye on the betting lines for the Vancouver games in 2010.

From Jeff in OKC, regarding the recent National Coming-Out Day promotions on the Strip: "Casino ads need a gambling reference in their marketing, I found it cute. If I want to offend easily, I would say that 'Two queens are more fun than a straight' suggests that straight people are inherently less enjoyable than gay people, and NY-NY doesn't want my money. I think we can always be offended, if we look hard enough."

From kerr_mudgeon, on the growing possibility that Las Vegas Mayor Oscar Goodman will tilt at the 2010 gubernatorial race: "I don't think he'll run because the odds are less than 50% in his favor as a non-partisan + he'd not want to disrupt his family by taking a job in Carson [City] - BUT if he runs and wins, he'll start pushing immediately to move the state capital to Las Vegas (maybe to take over one of the partly-built Strip complexes in/near bankruptcy)."

It's not the worst idea I've heard. Nor is this ...

Singapore is building an expansion of its ocean-liner terminal, enabling it to berth four cruisers at a time. The good news for Las Vegas Sands and Genting Bhd is, obviously, that this means more potential customers for their ultra-megaresorts. The not-so-good news is that the new berths won't be ready until late 2011, by which point both casino-based resort will have been open nearly two years.

Everybody's got a private equity fund these days, like the 21-year-old owner of a Persian resaturant in Maryland. Youthful Artin Afsharjavan claims he's got the scratch to buy Trump Entertainment Resorts, prompting Trump CEO Mark Juliano to reply, "Show me the money."

Hey, if some kid wants to throw as much as $500 million into acquiring five (mostly) bottom-of-the-barrel Atlantic City casinos, including Resorts Atlantic City and the A.C. Hilton, I'd like to see the color of his money, too. If it's for real, TER and the others ought to pluck the guy clean. You don't get a pigeon like this every day.

Robo-poker reprieved ...

Mon, 28 Sep 2009 18:08:00 -0700

... but maybe not long for long. A momentary uptick in the price of PokerTek stock temporarily rescued it from penny-stock status. But after decisive rejections of dealer-less poker in both Las Vegas and Atlantic City, the future of PokerTek as anything other than a marginal supplier looks bleak.

Vegas casino operators continue to learn that you can't export the Strip business model to Macao (our over-optimistic expectations to the contrary). Case in point: Wynn Macau, which is cannibalizing restaurants, kitchens and even a showroom to make room for more gambling positions. A sanguine-sounding Steve Wynn, meanwhile, yawns in the face of competition from Singapore and tries to spin his Macanese IPO as a philanthropic gesture.

Neil Bluhm's big break. Although $800 million Rivers Casino in Pittsburgh maybe up and running, the county assessor continues to tax the site as though it were empty land. As the bureaucrats let tens of millions of property-tax dollars slip through their fingers, casino owner Neil Bluhm has a chance to bank some serious coin here. That'll take a little of the sting out of Pennsylvania's 55% gross-revenues tax rate.

A Texas track that's now come into tribal hands may hold the key to the future (if any) of limited Vegas-style gambling in Texas. The Lone Star State's gubernatorial aspirants are all over the map. Sen. Kay Bailey Hutchison (R) has cozied up to the Stone Age anti-gambling crowd, making Gov. Rick Perry's (R) qualified pro-gambling position preferable ... even though Perry would still relegate Indian tribes to the back of the bus.

S&G likes candidate Kinky Friedman best on this issue (the Kinkster is pro-casino, period), while Tom Schieffer (D) is back in the Dark Ages somewhere with Hutchison. Hank Gilbert occupies a wussy, "let's take a poll" middle ground somewhere between Perry and his GOP rival.

Bad bulletins for Sands & Strickland

Tue, 22 Sep 2009 12:03:00 -0700

Last week, Audit Integrity identified the 20 companies most at risk of bankruptcy (minimum market capitalization: $1 billion) and the lone gambling operator on the list was Las Vegas Sands. On Friday, Business Insider piled on. Pruning Audit Integrity's list of any firms with market cap below $3 billion, that still left nine companies ... and Las Vegas Sands.

Quoth the Insider: "Conditions in Las Vegas are horrible, Asian expansion isn’t enough, and if this lasts too long then LVS will end up in bankruptcy court looking like it bit off more than it can chew."

Marina Bay Sands: a megaresort too far?

No shit. With an unfinished casino-hotel in Pennsylvania and the abortive St(ump) Regis condo on the Strip, Sheldon Adelson has too many fingers in too many pies. Plus, his $5 billion Singapore albatross will get beaten to the starting line by subsequent entrant Genting. And even with a sudden easing of access from mainland China to Macao, it's too soon to be going pedal to the metal on the remainder of the Cotai Strip™, as Adelson would clearly like to do.

(As though to twist the knife in the wound, retail developer Taubman Cos. made a point -- in the course of reiterating its interest in a rival project -- of saying it wasn't in the market for the two shopping malls Adelson is desperately trying to unload.)

Ohio's supreme court delivered a swift kick to the groin of Gov. Ted Strickland (D) -- and to the casino industry's hopes for imminent expansion into Ohio. By a 6-1 vote, the high court ruled that addition of seven racinos needs to go before a vote of the people, throwing as much as a 14-month hitch into the process.

If that weren't enough, Strickland has to cope with the continued meddling of Sen. George Voinovich (R-OH), who seems to believe he still occupies the governor's mansion, too. Governors hate it when the congressional delegation bigfoots them on intra-state affairs. Such a clash led to a permanent rift between fellow Republicans then-Gov. Kenny Guinn and then-Rep. Jim Gibbons.

Strickland, meanwhile, is poring over the court's ruling in search of loopholes that might allow Class II gaming to go on line in December. It's that or cut $852 million from the state budget. If he can insinuate VLTs into horse tracks by May, then voters have a few months to get habituated to them before the 2010 vote.

For Harrah's Entertainment, the good news is that the court's ruling temporarily shaves $47 million off the sale price of Thistledown Park (the full $89 million tab is contingent on racino conversion). For seller Magna Entertainment, the bad news is that the deal may fall through entirely if Harrah's doesn't want to gamble on the outcome of further legal challenges and the tender mercies of the electorate.

'Peepshow''s little Hitler problem

Tue, 08 Sep 2009 16:20:00 -0700

Congratulations (not!) to the producers of Peepshow, whose rent-a-headliner stratagem has finally blown up in their faces. They're replacing a Jew (Shoshana Bean) with a fan of the leadership abilities of -- I kid you not -- Adolf Hitler. Oh, and she's a googly-eyed admirer of Fidel Castro, who -- among other offenses against humanity -- ran the casino industry out of Cuba.

Of course, this town has a tycoon or two known for cozying up to the authoritarian regime of Singapore and the downright despotic one in Peking. So perhaps Ms. O'Day's pathetic excuse for a brain will just be a 48-hour story ... but that's what we thought about Sen. John Ensign's escapades, at least until Mike Ensign's role as payola daddy came into play.

(Thanks to Richard Abowitz for the heads-up on this one.)

A reader informs me that the site LasVegasDowntownNews.com appears to be defunct. I couldn't get it to load either and blogger Jeff Burbank's output was sporadic at the best of times. Has this site gone the way of all flesh? If anybody has the skinny on this, please let S&G know.

"Oh shit!" headline of the day: Seen at Huffington Post, "Harry Reid to take the wheel on health care." That's like finding out the one family member who's certifiably incapable of navigating the driveway is going to pilot the family car up Mount Charleston.

Colony Capital strikes (out) again; Big Bleauh

Mon, 17 Aug 2009 17:02:00 -0700

Despite taking a 22% gouge out of expenses, Colony Capital and its Goldman Sachs sidekicks managed to convert a 2Q08 profit to a $10.5 million 2Q09 loss. Revenues were down $30 million (or 40%), half of that from diminished room bookings. Could the service cuts be driving the revenue plunge? It wouldn't be the first time we've seen "death spiral" management be a company's undoing.

It's certainly interesting to see the bracing effect the recession has had on Vegas casino execs. They, who once took convention business for granted and looked upon conventioneers as less desirable than gamblers, have had a salutary wake-up call ... hopefully not too late.

Colony also threw in the towel on Resorts Atlantic City, although it left CEO Nicholas Ribis behind to run the place. That means he will serve two Boardwalk masters: The Resorts mortgage holders and Colony, with whom he co-owns the Atlantic City Hilton and which Ribis has also been running (into the ground, some charge). What happens if it's in Resorts' best interest to steal business from the A.C. Hilton?

It's difficult to decide who was more foolish here: Colony, for borrowing 2.5X the value of a casino whose best days were behind it, or the bankers who secured $360 million in loans with a $140 million casino. Let the floggings commence!

Speaking of death spirals, when you can get an Imperial Palace room for $18 (as an acquaintance recently did), who'd stay in Mesquite? That exurb's travails continue drag Randy Black's oligopoly down with them. Scant competition appears to have bred slackness and complacency in the Mesquite and Primm markets. It may be mere coincidence that the competition-rich Laughlin market has suffered to a much lesser degree ... but I don't think so.

Defaulted interest payments, renegotiated loan covenants, drawn-out cash reserves ... these are some of the unappealing alternatives facing Planet Hollywood. No property's struggle is fun to watch but this one is sadder than most because there's been considerable reinvestment (and some stunning redesign) made to turn the ex-Aladdin into something viable. However, all Robert Earl's horses and all Robert Earl's men have come up a bit short.

Plummeting ADRs have precipitated this crisis and, although losses at Planet Ho have consistently narrowed (and continue to do so), this isn't the first time we've heard that Earl's place was really struggling. And, no matter what Earl does, his casino-hotel has intractable, customer-hostile design flaws that cannot be solved by any means short of implosion.

I've been given reason to believe that whoever ends up owning the physically and fiscally bloated ($4.4 billion, at latest count) Fontainebleau, it won't be Penn National Gaming (at least not unless it's free and clear, and presumably cheap -- a tall order). If Steve Wynn has indeed already spurned F'bleau that'd leave Apollo Management, which never saw a bad casino investment it didn't like, and this one's nearly $1.8 billion underwater.

F'bleau would also give Master of the Universe Leon Black a de facto Harrah's Entertainment property on the north Strip, although Harrah's needs to fill thousands more hotel rooms like it needs a gaping hole in the noggin. Considering that it costs Boyd Gaming $3 million a month to keep Echelon on ice, preserving the F'bleau monstrosity until such time as new rooms can be absorbed seems a better use of capital than trying to finish the accursed thing.

Shakeup at Sands. Geez, you don't think executives on the chopping block could have anything to do with Genting Bhd's rival project getting ahead of slow-moving Marina Bay Sands, do you? Naaaaah! After all, the executive situation at Las Vegas Sands has been so very tranquil this past year. Just ask William Weidner ... or Bradley Stone or ...

McKee vs. Lerner

Mon, 03 Aug 2009 20:01:00 -0700

Actually, the headline misstates what was a very collegial -- if occasionally dissenting -- exchange of views between Union Gaming Group's Bill Lerner and Yr. Humble Blogger on Jon Ralston's Face to Face show. It was only my second-ever gig as a talking head -- and it shows. (Note to self: Consider Botox injections to paralyze overactive facial muscles.)

The ostensible subject of discussion was newly bankrupt Station Casinos, but it ranged as far afield as Singapore and Macao. Actually, we probably could have taped an entire week's worth of shows without exhausting the topic(s).

Lerner was a perfect gentleman, despite all the snarky things I've written about him in S&G (assuming he even reads it, which I doubt). I could certainly learn a thing or two from his poised on-air demeanor. I also found that, if you're in the middle seat on Face to Face, you need to "cheat" a little to your right and downstage or else you'll be masked in all the wide shots. And, as Ira David Sternberg taught me, don't ever look at the camera.

My ex cathedra pronouncements were, however, overshadowed by my alarmingly jowly appearance. When the video is posted, you will see that I look every one of my 200 lbs. -- and quite a few more! Since the episode isn't available on the Las Vegas Sun Web site yet, here's a preview:

Oh, my brain and mouth parted company on at least one occasion. I thought I said MGM Mirage would probably offload The Mirage for "one and a half billion to two billion dollars." What emerged, though, was "a half-billion to two billion dollars." So Jim Murren, wherever you are, I do not think you'd part with The Mirage for a (comparatively) measly $500 million ... just so we're good on that.

At least the high-angle shot at the end missed my bald spot. Thank God for small favors. The rebroadcast is starting; time to find out if I still know how to operate a VCR.

Adelson's newest problem

Sun, 02 Aug 2009 16:31:00 -0700

If you're hiring for a Las Vegas (hell, any U.S.) casino right now, you're apt to face an embarrassment of riches. In Singapore, it's the other way around ... as Las Vegas Sands is finding out.

The most expensive casino resort ever? Train-able labor in desperately short supply? Prohibitive entrance fees for Singaporeans? An untested market? A(nother) soft opening? A weak global economy? Naaaaah, I don't see how this can be anything other than a slam dunk.

Aztar deal the worst ever: it's quantifiable

Tue, 28 Jul 2009 12:39:00 -0700

When he acquired Aztar Corp., back in 2006, Columbia Sussex CEO William J. Yung III also became one of the company's debtors. So what's his $36 million worth today? According to the Wall Street Journal, 100 grand or less. If that weren't enough to make the ColSux/Aztar deal the all-time biggest casino-sector wipeout of the last 15 years, consider that Carl Icahn's "$200 million" credit bid (i.e., no money down) was placed with debt acquired at 27 cents on the dollar. So Icahn has himself a new casino for a tidy $54 million outlay.

In a less-reported development, Icahn also gained a controlling position in Tropicana Entertainment. Without either its Atlantic City or Las Vegas Trops, it'd be a car without an engine, a gaggle of riverboats and motels. Exactly where this leaves CEO Scott Butera and what role he'll play remains an open question. Hopefully, either his or Icahn's first move in Atlantic City will be to replace floundering Trop General Manager Mark Giannantonio (a Yung crony) with someone more up to the job.

Movement at Cosmo: The GM of Caesars Palace, John Unwin, has resigned. He'll become CEO of the stalled Cosmopolitan in October. While it's still unclear under whose aegis the casino will be run, Unwin's hiring is the first concrete move to get some gaming expertise on board since Deutsche Bank seized the property.

Whining in Macao: Those two "integrated resorts" in Singapore haven't even opened yet and won't for another half a year, but Stanley Ho (whose venerable Hotel Lisboa is seen above) already has his panties in a bunch. According to Bloomberg News, the ancient casino oligarch has been wringing his hands about the burdensome, "serious issue" posed by Macao's 39% tax rate.

Boy, Singapore must be a more serious threat than I'd given it credit, if it's got a Communist Party suck-up like Dr. Ho all a-twitter and taking issue with the government. He's still in better shape than his American rivals; the attempt to graft Vegas-style megaresorts onto Macao has left them badly exposed to anemic market conditions. Ho's gambling-centric strategy gives him less cause for worry.

Today Singapore, tomorrow the U.S.? Even while lender's remorse has paralyzed American banks and stalled any hopes of "unbundling" the U.S. casino industry, diversification may be coming from an unlikely corner. Malaysia's Genting Bhd, riding a sustained runup in its stock, has $2 billion in the kitty, is raising more and could pump $7 billion into casino acquisitions.

That isn't to say there aren't a lot of "ifs" and "buts." Still, Genting's fundamentals appear far more sound than those of say, Las Vegas Sands. It's also in a position to deal a serious blow to Sands in Singapore. Not only will its Sentosa Island casino-resort open before Marina Bay Sands, but customers who "subscribe" to a $1,388/year entrance fee to one casino or another must play exclusively at that casino for the year. Once again, Sheldon Adelson's inability to finish a megaresort on schedule threatens to bite him in the butt.

$5 billion in two minutes

Tue, 21 Jul 2009 17:29:00 -0700

Construction of Marina Bay Sands in Singapore, as experienced when you've had too much caffeine.

Michael Jackson, casino baron?

Fri, 26 Jun 2009 17:16:00 -0700

As the media rages down Memory Lane, here's one from the Strange But True file: Michael Jackson partnered with Detroit entrepreneur Don Barden in a scheme to gerrymander a Motown casino into Barden's hands. I covered the story for Casino Executive at the time but have no recollection of the Jackson angle.

Allah stands on soft 17: These guys are so busted. Eighteen Muslims got nailed for gambling in Java. Guess they couldn't wait for those Singapore casinos to open.

What does a bankrupt casino look like? Sort of like this. If you watch the full video, you'll see that Twin River Casino is literally going to the dogs.

Slots soaked. Heavy storms claimed 75 one-armed bandits at Rivers Casino, in Pittsburgh, a trouble-plagued project from Day One. A four-day delay of the opening is the result. I hope they've got a rainy-day fund.

Bad news for Sands and Genting: Potential Singaporean high rollers are fewer in number these days. The island-state is also in a tourism slump of unpredictable duration. Not only are Marina Bay Sands and Resorts World Sentosa hoped to turn that around, they'll have to. So, no pressure there.

The Trop heist that wasn't

Fri, 26 Jun 2009 14:49:00 -0700

"An improvident indictment." That's what New Jersey officials are calling a case that was quietly quashed in May. Sacked Borgata veep John Conklin and two other men had been charged with plundering the Tropicana Atlantic City's database when they were in the Trop's employ (and when the Trop was still owned by Aztar Corp.).

Closer examination revealed that nothing had been purloined and the data in question was not particularly sensitive, either. All three indictees have been exonerated ... but where does John Conklin go to get his career back?

Phantom redux: Defying the odds, the Venetian's production of Phantom of the Opera celebrated its third anniversary Wednesday night. I jotted down a few observations for CityLife. (Tina Walsh fans, take note.) Having seen the Broadway production -- albeit many years ago -- I'll be the first to allow that it actually improves on the original in a respect or two. Oh, and my CityBlog entry misspells choreographer Gillian Lynne's last name. My apologies.

Two titans of American popular music "played Vegas" last weekend. Actually, Loretta Lynn was in North Las Vegas and Aretha Franklin all the way out in Primm ... not remotely near the Strip. What's wrong with this picture? Or this one ...

Midnight Jim: taking down Big Oil

It's summer and gas prices are -- like, duh! -- on the increase. Gov. Jim Gibbons doth suspect that dark, foul, untoward schemes are afoot. But Midnight Jim assures us he is on the case. I feel safer already.

Gay cowboys. They're queer, they're here and they're at The Rio specifically. A straight-gay coalition turned out in force last night to celebrate its victory over Midnight Jim's benighted opposition to domestic partnerships. (Because that's not how he rolls, y'see.) Speakers included Harrah's Entertainment Vice President Jan Jones, who led the charge on Carson City.

For all the failings of CEO Gary Loveman's stewardship of Harrah's, on his watch the company has expanded its already-enlightened attitude on social issues. It's not just a question of being gay-friendly; it's good business.

Worth -$23 million?

Isle of Blight. Is the woebegone Greek Isles casino-hotel worth less than nothing? In a sense, yes, since it owes $67 million on a book value of $44 million. Even a resale price at book value seems wishful thinking, considering the Isles' chequered history.

Asserts the Las Vegas Sun, "With its strategic location near the Las Vegas Strip and the Las Vegas Convention Center, the Greek Isles and its associated real estate are seen as having long-term value after the recession ends."

Yeah, but it's had that "strategic location" for as long as it's been in existence and the Isles' progress has been a steady one from Bad to Worse. I wouldn't give a plug nickel for the place -- not with Strip land prices in freefall and vast acreage there lying fallow.

Miracles are possible. Work on Marina Bay Sands is, believe or night, a fortnight ahead of schedule. Next step: Hold the line on that (already swollen) $5.4 billion budget.

The waiting continues in the great state of Kansas. Its lottery commission wants another two months to review applications for the Wichita and Kansas City markets. Considering the recent flurry of dropouts (including Vegas' own Golden Gaming), you'd think this would expedite the process. Instead, the coronation is six months away.

Squeeze play. No time is being wasted as Pennsylvania rushes toward expanding into Class III casinos. Two rival proposals to add table games are presently on the table. Casino lobbyist Steve Rittvo is forwarding a plan that would tax new games at 12%. This is projected to generate $165 million for the Keystone State (assuming that slot play concurrently increases sufficiently to generate a $61 million impost).

House Whip William DeWeese (D) counters with a 21% tax, combined with a one-time $10 million/casino fee, for a potential Year One windfall in excess of $300 million. I wish Rittvo luck but fear that solons will -- as they so often do -- gravitate toward the bigger dollar sign. It's an institutional failing.

Neil Bluhm, Philadelphia's Sugar[House] daddy

On a happier note, Neil Bluhm's revised design for his Sugarhouse Casino, on the Philadelphia waterfront, has received the green light from the City of Brotherly Love. Barring further legal mischief by sore loser Donald Trump, this means the project can finally move ahead, with a temporary, 1,700-slot casino slated for a Spring 2010 opening. Hallelujah!

Case Bets: California, Packer pickle, Macao pix, Holy Cow!, Singapore, RoboPoker, etc.

Thu, 25 Jun 2009 16:24:00 -0700

Editor's note: An item involving Crown Ltd. contained factual errors, which have been corrected (as you'll see). I apologize for the misinformation. My thanks to the reader who pulled my head out of my @$$.

California gamblers stay and play ... at home. While the recession has made some inroads on tribal-casino revenue in the Golden State, it's losing less ground than Las Vegas. Some of those Vegas losses will eventually be recouped, but this day of reckoning was bound to come.

Unlike Las Vegas, which is arguably suffering from having too many competing profit centers within each resort, California casino bosses interviewed still view entertainment as either a loss leader or a one-off. I never thought I'd say this but Las Vegas could use a little more "old school" thinking right now.

James Packer, the guy who can't catch a break, is finds his casino company in even more hot water, in a case of the sins of the father being visited upon the son. The plot surrounding Crown Ltd.'s courtship of a self-banned high roller (and convicted felon) is thickening considerably. Seems paterfamilias Kerry Packer may have been pressuring crony John Williams to get pathological gambler Harry Kakavas back to the tables.

Williams, for his part, rolled on the late Mr. Packer, ~~who's now got some 'splainin' to do~~. ~~No wonder the young Packer's pursuit of Cannery Casino Resorts collapsed like a pup tent.~~ The money quote, if you will, is: "[Williams] said it was common for patrons to rip up [self-exclusion] cards and that, in his view, Mr Kakavas's loss of $2.3 million in 28 minutes was recreational gambling."

If you lose $82,000 per minute, it's not recreation. It's degenerate gambling.

Globe-trotting Ian Sutton is back from Macao and G2E Asia. The sights! The sounds! The smog!

(Update: Ian says it's not smog but mist, as forthcoming videos will show.)

Holy Cow II: GlobeSt.com, normally a continent source of business news, is shocked -- shocked! -- that Steve Johnson's proposed casino on the former Holy Cow site will include a Walgreens. Smelling salts, stat!

But there are some interesting revelations, For one, the reason that Palazzo's flagship retailer is also a Walgreens is that it was a compromise Sheldon Adelson effected with the landowner ... Steve Johnson. (The mere fact of Adelson compromising is newsworthy enough.)

Turns out, that purchase may set the record for an on-Strip acquisition, at an alleged $50 million per acre -- Phil Ruffin, eat your heart out! Johnson also paid through the nose for the Holy Cow site. The price? $23.5 million/acre for land north of Sahara Avenue. Egad!

Columbia Sussex's casino portfolio continues to crumble. Tropicana Entertainment parent Tropicana Casinos & Resorts is selling its Amelia Belle riverboat (thereby forfeiting the New Orleans market) barely two years after the ship was acquired. Amelia Belle is former Harrah's Entertainment vessel, having been Bally's Belle of Orleans.

It's a canny strategic move for new owner Peninsula Gaming, which now has a Louisiana riverboat as well as a racino and four OTBs, not to mention a small flotilla of Midwest riverboats. TropEnt CEO Scott Butera, meanwhile, has less and less over which to preside. At the moment, his ambit consists of four riverboats, mostly in tertiary markets, two casinos in Laughlin and one on Lake Tahoe. Is this TropEnt's future: A succession of piecemeal asset sales? Sure looks that way.

Bad news for Sheldon Adelson. Over in Singapore, rival Genting's mega-budget Resorts World at Sentosa is letting news outlets like Bloomberg know that 60% of the project will ready for a soft opening in early 2010 (i.e., February-March). Projected attendance figures have been revised 20% downward.

In a rapier thrust at Marina Bay Sands, a Genting exec said the company was having regular meetings to make sure it came in on its $4.5 billion budget. Full completion of Sentosa is projected for 2012. Sands is going to have a sufficiently tough time making its nut without Genting crashing the party so soon ... to say nothing of the fact that Genting enjoys much higher brand equity in that corner of the world.

RoboPoker has risen from the grave. Electronic table games have been OK'd for eight New York State racinos. Though the Lege hasn't signed off, the Empire State's lottery board is confident it has the authority to make this move unilaterally. Poor Atlantic City is dying the death of a thousand cuts.

Congratulations to Penn National. It's scheduled to inaugurate a new pavilion for Empress Joliet today. A March 20 fire resulted in a three-month closure of the boat and substantial fiscal hardship for Penn National. In a noble gesture, CEO Peter Carlino kept employees on the payroll even though his ship was hors de combat. Capt. Carlino, S&G salutes you.

Macao: Genting in, MGM out?

Fri, 29 May 2009 13:22:00 -0700

I've speculated elsewhere -- I believe it was on the TwoWayHardThree forum -- that Genting Bhd might be a logical, even inevitable successor, should MGM Mirage bail out of Macao. Seems that while I was laid up, news surfaced that Genting insiders are selling shares and rolling up a $425 million nest egg. They've also snapped up $100 million in secured MGM Mirage notes.

MGM Grand Macao co-owner Pansy Ho's dad, Stanley Ho, has played footsie with Genting in the past -- something the Singaporean government frowned upon fiercely. Hence the delicate footwork that key Genting players will have to execute if they're to convince Singapore (where Genting is building a multi-billion-dollar resort) that there's more than an arm's length between any potential dealings with the Ho family and Genting's investments on Sentosa Island.

That'll be a difficult minuet to dance but for what's been called "the golden ticket" -- entry to Macao -- Malaysian investors would surely find it worth twirling an ankle or two. Unless Boyd Gaming has waived its right of first refusal on Borgata, this sudden accumulation of Malaysian cash can have one purpose only.

Adelson in the details

Fri, 03 Apr 2009 12:39:00 -0700

Nearly lost amidst a flurry of news stories about Las Vegas Sands hoping to jump-start construction on its stalled Cotai Strip™ (with the help of new equity partners) was this snippet from Sands' president of Asian affairs, Stephen Weaver. Rents at the Marina Bay Sands shopping mall, still under construction in Singapore, are being “pulled down to adjust to the market.”

Lower projected rents? Just one more reason to curb the irrational exuberance with which some Wall Street analysts view this $5.4 billion project.

Under the radar: Remember how Columbia Sussex told the New Jersey Casino Control Commission, in effect, "put it on our tab," when hit with a $750,000 fine? ColSux's original plan was to just have the NJCCC skim the 750 large off the top of whatever it got from selling the Tropicana Atlantic City.

However, the NJCCC informs me that ColSux affiliate Adamar settled up with the state a ways back. Bravo to them. Besides, if Carl Icahn wins the Trop with a credit bid, the casino will change hands but no money will. So much for the windfall everyone was anticipating a year ago.

Las Vegas Sands: Abandon ship!

Tue, 24 Mar 2009 18:18:00 -0700

"Another mutineer dispatched, Admiral Adelson sailed forth to do battle with the hydrofoil fleet of Stanley Ho."

As the gilded galley that is Las Vegas Sands slowly settled deeper and deeper into an ocean of red ink, Wall Street analysts held out a slim lifeline or two. Surely, they noted, LVS' overseas construction supremo, Brad Stone, and Venetian President Rob Goldstein were still with the ship. And then there was one.

There is also only one way that Stone's March 18 departure (disclosed today) will play on Wall Street. In a word, badly. Perhaps his leap overboard was inevitable, given his long ties to outsted Sands prez William Weidner. Or maybe he didn't cotton to answering to an overcompensated newbie gaming exec (Weidner successor Michael A. Leven, aka The $2 Million Man). Either way, Stone leaves asset sales in Macao hanging fire and Marina Bay Sands in Singapore well short of the finish line.

We are presumably meant to be reassured that Sands is pondering buying back $800 million in debt, bringing its leverage down to a mere $9.7 billion (or slightly less than 14X earnings). This sort of bucket-brigade move still might save the ship but Admiral Adelson's waited until the bilge water was lapping at his ankles.

Hey, Sanford Bernstein! Aren't you glad you rated this stock a "buy"? Construction at a standstill in both Macao and on the Strip ... unimaginable debt-to-earnings ratios ... a $5.4 billion megaresort coming online in an untested market ... what's not to love?

Wall Street swoons for Sands

Wed, 04 Mar 2009 18:32:00 -0700

That must have been some mighty tasty Kool-Aid that Las Vegas Sands CEO Sheldon Adelson was ladling out at the Reuters Travel & Leisure Summit yesterday. Had we not been hearing it from other news sources, one wouldn't put much credence in Adelson's prediction of wider access to Macao from mainland China, mainly because his recent forecasts of what Peking would and wouldn't do have tended to be dead wrong.

Marina Bay Sands: A 28% return on investment? Sheldon says that's a lowball figure.

But what really staggered the imagination were the ROI projections Wall Street's making for Marina Bay Sands, in Singapore. Putting cash flow anywhere between a half-billion and $900 million is a scattershot figure, to say the least. But even those seemingly giddy estimates are "somewhat low," according to Sands' grand vizier. Depending on which of three reported Marina Bay budgets is the correct one, here's how the ROI range would shake out ...

$3.2 billion (original): 16%-28%

$4.5 billion (interim): 11%-20%

$5.4 budget (alleged final budget): 9%-17%

Those are some extraordinarily optimistic projections for the most expensive casino megaresort in history (unless you count CityCenter as one property). But it gets better. The $743 million Sands Bethlehem project, in Pennsylvania, is going to do a 17% return on investment, according to Adelson.

Let's hope he's right, because that'll mean we're busting out of this recession something fierce. Of course, Sands saved itself a pile of money in Pennsylvania by simply deferring its contracted retail mall and hotel until an unspecified future date. But if $743 million represents not the total cost of the project but what Sands has spent on the casino alone, that $800 million Don Barden/Neil Bluhm behemoth in Pittsburgh may start to look like a paragon of frugality.

Wall Street Hearts WYNN

Mon, 02 Mar 2009 14:05:00 -0700

"Buy Wynn!" is the bottom line of James Dobosz's unqualified endorsement of the stock. He especially likes the recent volte-face that saw Steve Wynn abandon an occupany-driven strategy in favor of high ADRs, on the theory that customers who can afford top-dollar hotel rooms can spring for like-priced spa treatments and restaurant offerings.

Putting a "buy" rating on a casino stock is akin to placing one's head on the chopping block these days. Consider Bernstein Research, which initiated ratings of Wynn Resorts and -- get this -- Las Vegas Sands at "outperform." Bernstein's rationale for the Wynn rating is persuasive, but anybody who writes blithely that Sheldon Adelson's company will "find its way out of its liquidity bind and emerge with a stellar portfolio of assets centered in Asia and including a crown jewel in Singapore," hath quaffed a dram too many of the LVS Kool-Aid, methinks.

The next day brought this "Oh shit!" bulletin from Singapore. A 13% drop in tourism is nothing to downplay, considering that both Marina Bay Sands and Genting's Sentosa Island megaresort will live and die on international business.

Bernstein's $8-a-share bullishness on Sands drew a withering blast from CNBC's James Cramer that began, "All right, you just rolled a seven in craps. That is, if you own the crap known as Las Vegas Sands!" His volcanic tirade is not for the faint of heart ... but Cramer was prescient when he frog-marched gaming stocks off to his "Sell Block" 14 months ago. Read the latest LVS financials and see what you think.

And even if LVS has held the Marina Bay Sands budget down to its $3.2 billion starting point, $300 million in cash flow is but a 9% ROI. We're looking at 5.5% if the worst-case scenarios are accurate. The $1 billion-plus megaresort epoch that kicked off with Bellagio and Mandalay Bay may someday be known as The Era of Diminishing Returns. If you want to buy casino stock, God bless you. Just don't expect the double-digit returns of yore.

"Sin City Express"

Fri, 27 Feb 2009 13:37:00 -0700

Expect to be hearing that catchy new canard a lot, not to mention the "Las Vegas to Disneyland" little white lie that Gov. Opie Jindal (R-LA) trotted out in his Tuesday-night audition for the 2012 presidential nomination. "Vegas to Disneyland" is, of course, a linguistic formation sure to stoke the ire of the "family values" crowd far more than the fiscal-restraint one. A jab that might possess some heft were it coming from Vegas-friendly Sen. John McCain (R-AZ) rings hollow when spouted by politicians who are anti-gambling cranks opportunistically masquerading as fiscal conservatives.

Then there was the Tennessee congresswoman whose official Web site informed constituents that the train would run from "Los [sic] Vegas to Las [sic] Angeles." Your tax dollers [sic] at work, folks. Perhaps federally funded literacy programs should start with remedial classes at the Capitol.

As for "Sin City Express," if the feasibility study goes well and if the Anaheim-to-LV route is approved and if it can be financed (a whole lotta "ifs"), we ought to call the mag-lev train precisely that, just to make its detractors suck on it. For that matter, why is the need for high-speed rail of any sort open to debate? Do we pride ourselves on taking a back seat to other industrialized nations?

In the meantime, deficit hawks and pietists bicker amongst themselves. And Howard Stutz makes a trenchant observation: The fortunes of Lousiana -- where Harrah's Entertainment and Boyd Gaming are major employers -- are tied to those of Las Vegas. Maybe Jindal would like to take a long, slow ride on Amtrak and think it over.

"Singapore City Express": No cost overruns at Sands Marina Bay, quoth Sheldon Adelson. Unfortunately, his "no significant changes" comment begs the question of whether the $5.4 billion figure represents the actual budget or whether the tab is still in the neighborhood of $3.2 billion. If it's the latter, perhaps Sands still can make this mega-gambit pencil out.

An anonymous Harrah's bondholder

No harm, no foul: At first blush, Harrah's Entertainment has lined up strong arguments for dismissal of a bondholder lawsuit. The only non-starter would be appear to be Argument #1 -- the assertion that bondholders have suffered no harm -- which, at minimum, "assumes facts not in evidence," as the saying goes. When debt is being swapped out at a 40% writeoff, somebody's taking an uncomfortably close shave, to say the least.

Shipwreck for Sheldon Adelson

Sat, 21 Feb 2009 17:22:00 -0700

Another dagger blow was dealt this week to the staggering Pacific Rim fortunes of Las Vegas Sands. Its Cotai Waterjets ferry service in Macao has had its contract voided, although the Macanese courts will allow the hydrofoils to remain in operation until the appeals process has run its course.

If Sheldon Adelson's ferry fleet is beached, that leaves water-borne transportation to Macao in the hands of archnemesis Stanley Ho. That ancient casino vizier doubtless supped upon a cold dish of revenge upon hearing the news of Adelson's latest reversal of fortune. As for Adelson, about the only comfort he can salvage is that Secretary of State Hillary Clinton is singing psalmody from his "let's appease the nice ChiComms" hymnal now.

Speaking of carrying water, Ho's Astroturf "grass roots" ally, Concerned Macau Residents Group, continues to push the line that Adelson's asset sales in Macao must be stopped lest they destabilize the local real estate market. (Which sounds like an odd bugaboo for an allegedly ad hoc group of citizens to have at the forefront of its agenda ... but it sure would be a logical concern for a rival magnate like one S. Ho.)

In making its case, CMRG read right off the Stanley Ho script. So word-for-word was its delivery, in fact, that group leaders had to concede they "shared the same view with Stanley Ho who also made comments recently in response to the sale of the Four Seasons apartment hotel." Boy, I haven't seen such poor ventriloquism since those old Edgar Bergen/Charlie McCarthy movies.

Adelson is also encountering headwinds in the construction of Marina Bay Sands, which has shot $2.2 billion over budget. (Yes, that's "billion" with a "B.") You could build a pretty awesome Vegas megaresort from the cost overrun alone. Either Sands seriously "misunderestimated" this project or let it get completely away from them. Either way, with a $5.4 billion tab it simply beggars credulity that is going to be the world's most profitable casino, as has been claimed.

Yes, Singapore's population base far outnumbers of that of Macao. Big deal. When the guvmint is planning to charge citizens and permanent residents $65 a day to get into a casino -- and isn't backing down -- that's a near-insuperable obstacle to overcome. I heard quite a bit of skepticism when Singapore's "integrated resort" concept was rolled out and there seems to be little reason to change that outlook as runaway costs for both Marina Bay Sands and the rival Genting megaresort begin to suggest this could be the Heaven's Gate of gaming markets.

On the subject of movies, with illegal immigration being a hotter-button issue than ever, you'd think Gregory Nava's 1983 El Norte would own ever greater relevance today. Think again.

Stanley Ho's comeback

Mon, 02 Feb 2009 12:48:00 -0700

Citing the Lusa news agency, J.P. Morgan says that Macao casino revenues for January came in higher than expected, at $1.1 billion. The shocker, though, is the revision of market-share figures, which previously had shown Stanley Ho and Sheldon Adelson each holding a quarter of the market. Lusa's revised numbers show Ho thrusting Adelson firmly into second place -- 28% to 22%. This is a sobering setback for Las Vegas Sands, whose CEO had forecast the demise, at least a dramatic downsizing, of Ho's casino empire.

Let this also be a lesson to those us (present company included) who thought Vegas swankiness would trump customer loyalty to Ho's older -- some would say seedier -- product. The "B" plotline is that Wynn Macau's market share is 17%, only five points behind Sands Macao and Venetian Macao despite far less capacity. Galaxy Entertainment (13%), Melco Crown Entertainment (11%) and MGM Mirage (9%) divvy up the remainder, with the latter paying the price for being last into the market and a reportedly disadvantageous location. This is one race where those who bet on the tortoise over the hare will be chagrined.

Speaking of Stanley Ho, he and an associate have dropped $284,000 into the coffers of the New South Wales branch of Australian Liberal Party. This is significant because Ho made a run at a New South Wales casino years ago but was deemed "unsuitable." Don't be surprised if the Liberals suddenly discover him to be cleaner than a hound's tooth.

Shakeup at Sands. With its Macao and Singapore projects lagging badly, Las Vegas Sands has tasked a new executive team for its Asian portfolio. Senior Vice President Leonard DeAngelo comes by way of Penn National and, before that, a different kind of Sands -- the vanished Sands Hotel & Casino in Atlantic City. Former Langham Hotels & Resorts executive Nigel Roberts has been named president of behind-schedule Marina Bay Sands.

Executive VP Brad Stone has been promoted to the newly created role of president of global operations and construction, which puts him in charge of design and building for all Sands projects worldwide. It's a thankless task but expectations for Sands have fallen so low that if Stone effects even a modest improvement it will seem a triumph.

Adelson ambushed?

Thu, 22 Jan 2009 17:46:00 -0700

That ostensibly grassroots movement to run Las Vegas Sands out of Macao looks suspicious-er and suspicious-er. So far Macau Residents has been fortunate to find journalists who are either downright gullible or at least credulous.

Any claim to be shocked -- shocked! -- by Sheldon Adelson's Singapore project, Marina Bay Sands, indicates either disingenuousness or remarkable incuriosity, seeing as how Marina Bay has been in train for nearly three years (longer, if you count the courtship process). Nor has Sands proposed to "abandon" its Cotai Strip™ projects but rather to indefinitely suspend them ... although if you're an unemployed Macanese or a expat construction worker, that's probably a distinction without a difference.

Saying that LVS "recovered its capital investment within the first year of operation of the Sands Casino in Macau" is true only insofar as it applies to Sands Macao. When it comes to Venetian Macao and everything else, Sands is nowhere near being out of the woods. (I've seen much worse business plans than rolling the proceeds from Casino A into the construction of Casino B, which in turn bankrolls Casino C, but I doubt this one will be emulated anytime soon.)

As for the contention, "there was no significant incremental foreign tourism as originally represented and no substantial increase in convention business," what's Chinese for "bullshit"? To cite but one of innumerable tourism metrics, Macanese officialdom recently announced that it was seeing double-digit increases in visitation from Great Britain. It may not be a stampede yet, but you've got to start somewhere. Nor are Venetian Macao's convention and meeting statistics anything at which to sneeze -- not even remotely.

Sheldon Adelson may have a remarkable facility for making enemies but that doesn't mean this isn't a put-up job. Irate guest workers might want to redirect some of their wrath toward Peking, which is conducting a purge of non-Macanese labor (and if there's one thing Communist China is exceptionally good at, by golly, it's purging).

Oh, where did Macau Residents stage its press conference? At the Grand Emperor Hotel. And who holds the Grand Emperor's casino concession?

Why, it's good old Stanley Ho, of course.

The plot thickens ...

Macao: Shooting dice with death

Tue, 20 Jan 2009 17:40:00 -0700

There's a bigger worry for casinos in Macao than whether the Chinese government eases visa restrictions: Some of the high-roller trade is dying -- literally. Macau Polytechnic Institute traced the fate of 99 VIP players who got into trouble with Chinese authorities. Not only were 15 facing death sentences, another seven had either killed themselves or been murdered. Two more had their death sentences commuted. And that's not counting an additional 20 in the hoosegow on lesser sentences. See what happens when you play too much Super Happy Fortune Cat?

Of course, it's easy to live the high-roller lifestyle when you're wagering with stolen money. Given that Chinese companies and governmental agencies were being sucked dry by kleptocrats with a gambling jones, Peking is understandably wont to tighten the screws on Macao. VIP-oriented operators like Melco Crown Entertainment and Wynn Resorts are most likely to feel the pinch, as we know is happening with Crown.

Ironically, for all its overreach in Macao, Las Vegas Sands made at least one sound decision when it targeted mass-market play. Too bad they proceeded to go and drink their own milkshake, as Venetian Macao sucks Sands Macao dry. (It's by now abundantly clear that it's no skin off the central government's nose if its effort to keep a close grip on where China's capital is flowing happens to throttle a few casino operators in the process.)

If Macao Chief Executive Edmund Ho (pictured) didn't have enough to worry about, a distant relative is wanted by Interpol. (Ian Sutton found the arrest warrant.) Even in American politics, the alleged misdeeds of your brother's brother-in-law might not arouse too much fuss and bother. But Chan Lin-ian and his missus are tied to the mega-scandal surrounding graft-meister Ao Man-long, who's currently doing 27 years' worth of hard time. If Sinologists are right that Peking wants to exert more direct control over Macao, this latest imbroglio would be useful leverage for pushing Edmund Ho out of office ahead of schedule, were it to suit the central government's motives.

The fine hand of Peking may be behind a newly organized and very umbrageous citizens group, Macau Residents, which has a Cotai Strip™-sized beef with Sheldon Adelson and his Las Vegas Sands.

Just for starters, the trademarking of "Cotai" (a conflation of Taipa and Coloane, Macao's two principal islands) sticks in the organizers' collective craw. Furthermore, the inevitable collision between the casino interests of Macao and Singapore has finally occurred. "We are hurt and angry that Sands Casino after making big monies from Macau had openly declared it will focus on Singapore instead of completing its unfinished works in Macau," rages the online petition. Taking as its pretext recent and massive layoffs at Sands' Macao properties, the group calls for the government to repatriate Adelson's land and casino concessions, and re-sell them to the highest bidder. (Oh, if only Gary Loveman could still borrow money!)

Macau Residents meet(s) the press, Jan. 19, 2009.

If I'm skeptical that this grassroots effort might be more like Astroturf, there are a few reasons. First, the group seems to be acting with a great deal of impunity, especially in deeply authoritarian China -- though the fine points of the Macanese/Mainland interrelationship may provide some wiggle room for those who want to take it to the streets of Macao.

Second, if the rift between Adelson and Chinese authorities is wide as has been speculated, what's the harm of ginning up an ersatz "people's revolution" to discomfit some capitalist running dogs (whose money just happens to have run out)? Perhaps you can even use it as a pretext to banish them in favor of somebody with greater solvency.

Third, the job cuts that "Macao Residents" is ostensibly protesting fell with greatest predominance upon guest workers, not Macanese citizens. Though, to be fair, a management-imposed workweek reduction hits very close to home indeed.

Sheldon Adelson™

Fourth, the threat from Singapore is not as severe as it's made out, seeing how the government down there has acceded to yet another Adelson-style soft opening, starting with the casino of course, with the rest of Marina Bay Sands' convention-oriented features eventually limping onto the scene. (Sound familiar?) It's an embarrassing climbdown for a government that had set as one of its goals making a high-impact splash in the international convention trade, not a dribbly "plop."

So these activists could be front men for Peking or they could be a bunch of Davids taking on Goliath. Either way -- and especially if some of the more attention-getting scuttlebutt proves to be true -- Sands' Macanese empire, its attempt to create Instant Vegas -- whoops, sorry, Asia's Las Vegas™ -- is presently being picked at like a beached whale during low tide.

The prodigal son

Mon, 19 Jan 2009 18:03:00 -0700

Poor Kerry Packer; the late Australian mogul and famous high roller must be doing all his rolling in the grave now. Reputed for being daring at baccarat and cautious in business, the media baron is at least spared the indignity of seeing son James Packer blow through his patrimony at a record pace.

Going is the $33 million yacht; on hold is the $40 million corporate jet. Even work on the $2.5 million backyard swimming pool has been suspended. (Don't you hate it when that happens?) At least the pin placements on Packer's Greg Norman-designed golf course are still "changed every day at massive expense," reports Rupert Murdoch's News.com.au.

More seriously, Packer is reported to be suffering from depression, though other media reports dispute this. Given the debilitating, even paralyzing nature of the disease (something for which I can vouch firsthand), it puts a potentially very different cast upon Packer's December no-show for a Nevada Gaming Control Board hearing.

When Packer did turn up, Chairman Dennis Neilander admitted to being somewhat foxed by Packer's acquisition of Cannery Casino Resorts (for $1.8 billion). "You and me both," I thought. As Packer seemingly played Pin the Tail on the Donkey, buying not only Cannery but positions in Fontainebleau, Station Casinos, Harrah's Entertainment and the flaccid Crown Las Vegas 'failsino'-tower, I tried to convince myself that an overarching strategy was at work. In retrospect -- especially after the writedown of the Station and Harrah's investments -- what we were witnessing was James Packer, Shopaholic. (How did he manage to miss out on the Cosmopolitan?) One begins to see why Steve Wynn steered clear of Packer, back when the talk of a Wynn-Packer joint venture was the buzz du jour on the Strip.

Even the Crown Macau cash spigot has been sputtering, although Melco Crown CEO Lawrence Ho keeps insisting that Chinese access to Macao will improve in time for the City of Dreams opening. (Either he's whistling past the graveyard or he knows something for which others would pay a very great number of patacas.) Market share is down at Crown Macau and the Macanese government is predicting a serious diminution of gaming revenue for for the overall market in 2009, placing it somewhere near $10.7 billion.

Plus, the ripple effect doesn't stop there. Aristocrat Leisure, which could really stand to have some good news, had been hoping for a fivefold increase in its installed slot base in Macao over the next two years. Not only is that unlikely, operators are trimming their existing slot inventory.

Underscoring their pessimism regarding reduced visa restrictions, Macanese tourism officials are turning their gaze at least partly away from China. Among the newly coveted markets are Singapore's presumed feeder markets -- India, Indonesia, Malaysia, the Philippines, Thailand, and even Australia and New Zealand -- to say nothing of Singapore itself. It's long been presumed that Singapore's got a tough row to hoe when its casino megaresorts come on line and it just keeps getting tougher.

Weidner kowtows in Macao

Thu, 15 Jan 2009 16:46:00 -0700

A large serving of humble pie for Las Vegas Sands President William Weidner was on the menu as he handed over the keys to the University of Macau's new Adelson Advanced Education Center. No, he said, he didn't blame his company's financial problems on the Chinese government, as had been reported. Sands would be "less American" in its approach to developing Henquin Island. If people had misinterpreted Sands' confidence as an "over-direct, overpowering American attitude," it had been "humbled" now. (Topic for U of Macau students: "Las Vegas Sands as Metaphor for U.S. Foreign Policy, 2001-09." Discuss.)

Quoth Weidner, "all our earnings in Macao have stayed in Macao and were matched five times over by additional investments in Macao.” Ah, so they were cannibalizing Macanese revenue, rolling it into Cotai Strip™ expansion, after all.

Small wonder that Sands is resented within Macao if, as The Independent reports, it's been sweating employees' tips. Then again, the paper's report of $953 million in Macao casino profit last quarter is clearly out of wack. (The reporter himself seems unsure whether it's revenue or profit, though it's clearly the latter.)

As for the newly available Taiwan market, Weidner demurred. Finishing projects in Singapore (where the projections look inauspicious) and Macao are his priorities, he said. Given Sands' parlous financial state, it's now a moot point ... but did CEO Sheldon Adelson's comrades in Peking warn him away from Taiwanese expansion? Adelson had been sussing out casino prospects there.

Perhaps. After all, Melco Crown Entertainment CEO Lawrence Ho was quick to temper his own Taiwanese ambitions with the caveat, "we wouldn't want to do anything to piss [the Chinese government] off." Unfortunately for Melco Int'l and other Macao-centric gaming stocks, the market isn't buying the younger Ho's contention that visa expansion is just a few months away -- especially in light of recent gambling scandals that have led to, among other things, 15 executions [registration req'd]. Play too much Super Happy Fortune Cat and you might wind up in front of a firing squad, too, or at least doing a couple of dimes in the slammer.

Back home, the latest busted LBO play for the Golden Nuggets, combined with parent Landry's issuance of more debt, has knocked 48% off the stock price in less than a week. Considering that the last two tender offers for LNY shares went out at $21 and $13.50, respectively, that $7/share buyout offer should be coming along any day now.

Analyst drinks the Kool-Aid

Mon, 12 Jan 2009 19:07:00 -0700

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.

Sanguine in Singapore

Fri, 07 Nov 2008 11:34:00 -0700

Marina Bay Sands: proceeding on schedule.

Las Vegas Sands executives huddled with Singapore officials yesterday earlier this week to, as JP Morgan puts it, "discuss topics ... including the pace of construction." In other words, they were bracing Singaporean leaders for yesterday's SEC bombshell.

As far as discussing "the pace of construction," normally I'd take that to mean that a delay in the schedule was about to be announced. But the tea leaves indicate the message was that Marina Bay Sands is still Project Numero Uno for the company.

It's unclear whether Venetian doge Sheldon Adelson was at the aforesaid meeting (the wording is fuzzy but implies he wasn't there). However, he did release a statement in which he characterized work on MBS as "rapid." He also heard the good news that Singaporean regulators have deemed the MBS slot floor up to snuff. Already Sands is talking about going from 600 to 1,000 slot machines, so they must be pretty sanguine about their prospects along the Johore Strait.

At least Boyd Gaming execs can take some solace from Adelson's plight. Sands has raised the prospect of putting its unfinished "St. Reggie's" condo literally and figuratively under wraps for the time being. That'd be a broken front tooth on the Strip possibly even harder to ignore than the partial skeleton that is Echelon.

When bad things happen to Sheldon Adelson

Thu, 06 Nov 2008 18:17:00 -0700

Tucked away inconspicuously in Tuesday's Las Vegas Review-Journal was a story announcing that Sheldon Adelson was going to end his crusade against columnist and Vegas historian John L. Smith. Confronted with the prospect of having his Nevada Gaming Control Board file opened to Smith's attorneys, Adelson -- or at least his lawyers -- turned tail and ran. (Darn those cheese-eating surrender monkeys!)

The public will never learn what's in that file. But whatever it is, it must be pretty embarrassing, moreso than anything that emerged during the Richard Suen trial, from which which Adelson's lawyers tried to the media.

(In light of today's revelations from Adelson HQ, Judge Michelle Leavitt's blithe assumption that Sands was sufficiently liquid that it didn't need to put down a deposit to cover the jury award to Suen ... well, it looks downright reckless, your Honor, if not imbecilic. And to think I voted for you. D'oh!)

This is an issue where I'm trying to tread lightly, because it's one of two things about Adelson that make me seethe. The first is his unpatriotic, in my opinion, habit of singing sweet odes to the good life in Red China. If he approves so much, I suggest that he move there and experience it first-hand ... although he may be experiencing some involuntary "reeducation" after seeing Peking turn the burners of the Macao economy up and down and up and down like a gas oven.

The other Adelsonian bete noire is his tendency to evince intolerance of the Fourth Estate (and of free speech in general). Prior to his attack upon Smith, he sued the Las Vegas Sun's Jeff Simpson and got all but laughed out of court.

In the case of John L. Smith's book, Sharks in the Desert (not one of his best efforts, I'll give you that), the Bard of the Boulevard made a factual error, picked up from a previous book by another author. In Adelson's mind, this constituted libel and he took great umbrage. Much unpleasantness followed, to use understatement.

Adelson's also tried to claim public sidewalks as Las Vegas Sands property, lest people use them to exercise their First Amendment rights. Some might speculate that Sheldon's prickly attitude vis-a-vis free speech and a free press perhaps would explain his gravitation toward authoritarian societies in China and Singapore -- but that would be crazy talk. Wouldn't it? I've said it often before that Adelson is one of the three transformative Vegas figures of the past 15 years -- but there's no excusing his attempts to steamroll local print media.

One reader has been pretty steamed about the way Las Vegas print media seem to have buried the story about the collapse of the Smith litigation. (R-J Editor Thomas Mitchell took on Adelson with considerable and admirable feistiness a while back, though. A Mitchell fan I am not but this was his finest hour.) And that's right. So let me turn the forum over for some straight talk from Middle America. I've done some AP stylebook editing but otherwise this is word-for-word:

I saw a small mention in the Advisor yesterday that the $10 million libel suit that Sheldon Adelson had filed against John L. Smith is about to be dismissed, at the request of Mr. Adelson. Mr. Adelson will pay $11,000 of Mr. Smith's legal fees, and the suit will not be re-filed. Adelson took exception to a passage in a book Smith had written about how Adelson got funding for vending machines in his native Boston, when he was a youth. Smith offered to correct the passage with an errata insert in future editions of the book, but, as I recall, Adelson wanted Smith to write an apology in Smith's column in the R-J. Smith and R-J management would not agree, for reasons based in case law, and journalistic standards. Adelson continued to press the suit, and Smith, who was burdened by the emotional and financial cost of his young daughter's aggressive cancer, decided to file bankruptcy. As per the requirements of bankruptcy court, Smith listed the $10 million as a liability, as any potential liability is required to be listed, regardless of possible outcome. At which time an Adelson Lawyer said (paraphrased) "He must expect to lose, or he wouldn't list this debt."

Adelson has a lot of money. He is seen as aggressive about how he is represented in media reports. My opinion is the mention would have slipped quietly into the bargain bin if he had left it alone, and his suit has kept it alive long after its shelf life should have expired. I found his filing, and pursuing, this suit offensive, and decided not to spend money at his properties if not necessary (OK, maybe convenient). A couple weeks ago, I decided to buy casino stock. I don't have much to spend, so, it wasn't much. But, I knew I wouldn't buy LVS, even though it was the best bargain out there at the time, and had the most upside.

If a nobody like me is offended by Adelson's practices, I wonder how hard it is for him to find friends and allies in these hard times? This seems like a case where someone has reaped what they have sown. I'm not saying anyone wishes Adelson harm, but, I think it's possible many people are secretly saying "couldn't happen to a more deserving person"

So you see, Mr. Adelson? You've alienated both a customer and a potential investor, right at the very moment when your company could least afford it, sir. And then today comes the headline, "Las Vegas Sands signals it might not survive downturn." That's right. And you might have to dilute your ownership stake in order to make it through.

They have a word for such things in the wise and mysterious East. I believe it's called "karma."

Five years ago today ...

Thu, 06 Nov 2008 16:37:00 -0700

... Columbia Sussex came to town. Considering that CEO William J. Yung III purchased a dead, disreputable hotel-casino and put $90 million into reworking it into an attractive property (people whose judgment I trust swear by the comfiness of its beds), he got off on the right foot here. Later, he would venture out of his niche and try to be a Strip operator, and ... let's just say it didn't go so well. Turn the page in your textbooks to Chapter 11.

Speaking of ColSux, comes shocking news today that Las Vegas Sands is in danger of bankruptcy. The company's debt-to-earnings ratios are out of kilter (or, in proper financial parlance, gone all skeewumpus). That's an event which, like ColSux's loss of the Atlantic City Tropicana, will set in event a cascade of other defaults, should it come to pass.

In the short term, this means Sheldon Adelson needs to find some loose change in his sock drawer, pronto, and will have to apply the brakes to several developments. According to Liz Benston, both the Marina Bay megaresort in Singapore and what's left of Sands Bethlehem will be finished. Everything else ... not so much.

Adelson: Little about which to smile.

This is bad news for the Cotai Strip™, unless you're of the persuasion that Sands expanded in Macao far past what the market would bear. So a forced slowdown is a blessing in disguise. I should add that the Motley Fool warned of this very scenario last June, when it pegged Sands as a "deathbed stock.

Elsewhere in Adelsonia, the candidate for whom Freedom's Watch stumped the hardest, Sen. Gordon Smith (R-OR) waved the surrender flag.

All in all, this is one shitty day to Sheldon Adelson.

Headline of the Week

Fri, 31 Oct 2008 13:54:00 -0700

As spotted by our intrepid LVA research staff ...

"Police bust illegal gambling den at funeral wake"

Casino civic-mindedness

Tue, 28 Oct 2008 18:33:00 -0700

"Attaboys" are due for a couple of casino companies who are going above and beyond the call of civic duty.

MGM Mirage is underwriting the cost of a new fire station adjacent to CityCenter. True, MGM risked looking petty when it tried to nix the firemen's barbeque pit, for fear that the sight and smell of bratwurst over an open flame would offend delicate condo-owning nostrils next door. But the company ultimately stepped up and did the right thing.

Las Vegas Sands is genuinely creating jobs in Singapore by giving priority to senior citizens, housewives and people currently unemployed, as opposed to poaching staff from other companies. The only hitch? There may not be enough un- or underemployed Singaporeans to meet Sands' needs.

From the pits to the Senate. A pit boss from Foxwoods Casino Resort is challenging Sen. Jack Reed (D-R.I.) because no one else would. GOP candidate Bob Tingle and I would disagree about virtually everything, but he's performing a service for democracy and should especially be applauded for doing it on his own dime.