Ka-ching! The price tag on Marina Bay Sands has just gone up again. According to a Singapore Press Club and Asia Journalism Fellowship panel discussion, the über-megaresort has now hit the $6 billion mark. One participant pegged Sands’ 12-month gambling revenues at $1.8 billion (or $5 million per day) and, given the cost overruns on this behemoth, Las Vegas Sands shareholders have got to be saying, “Preach it, brother!”
Marina Bay’s downtown location and speedy ramp-up of convention business are also cited as factors that might propel it past Resorts World Sentosa (cost: $5 billion). What should worry both casinos is a labor shortage. This is no Macao-like situation where one can simply open a border gate and have hundreds of thousands of potential employees on tap (and even that’s been a source of great friction in Macao).
For all the peril to Sands’ balance sheet posed by Marina Bay, it also promises to provide some much needed diversification of Sheldon Adelson‘s revenue stream. When Macao represents 77% of your cash flow, it not only means that business is very good there but also that you’re incredibly vulnerable to fluctuations in the Macanese economy, usually brought on by a micromanaging Chinese government, one that regularly freaks out over the volatility of the casino business.
The booming Macanese sector shields Sands from a dismal 4Q09 in Vegas (-19% from the previous year) and a grossly underperforming casino in Pennsylvania. Actually, it’s not so much that Sands Bethlehem is underachieving but that Adelson so overspent on the place that profitability appears all but unachievable. That Macao money machine needs to keep churning because it’s having to carry several Adelsonian white elephants on its back right now.
They’re serious about revamping the image of the Tropicana Las Vegas. Owner Onex Corp. is even going to the trouble of ordering up three-quarters of a ton of new casino chips. Some operators may be coasting through the recession but Trop CEO Alex Yemenidjian is not one of them.
