A curious item popped up on the Manila Web site MB.com last week. Remember how Macao was “Asia’s Las Vegas”? The new meme is “More Than Just the New Vegas” (emphasis added). The lengthy puff piece rather strenuously posited Macao as a fun-for-the-whole-family destination. Selling points included historic architecture, bungee-jumping, luxury retail and the observation at — Venetian Macao — “you don’t have to eat at a posh restaurant if you don’t want to; after all, there’s a McDonald’s just around the corner.” Golden Arches, you say? Damn! Where’s my passport?
I know a PR agency’s pitch when I see one and it’s all over this article. The tenor of the story betrays a certain civic frustration with a lack of evolution in Macao’s image. The city’s casinos are raking in money at unprecedented rates … but nudging the market past its gambling-centric, daytripper’s-paradise identity has proven a slow process measured in modest increments. (Governmental pressure to ramp up all remaining casin0-hotel projects ASAP, despite a lack of consumer demand for more rooms or shows, isn’t likely to prove more hindrance than help.)
One need only look to the south to see why Macanese officials might be anxious. It’s taken Singapore little more than six months to run right up Macao’s back. It obviously helps that Singapore is far more readily accessible to long-haul air carriers, is an established hub of international commerce and already highly regarded as a tourist draw. Also, the Singaporean government’s very prescriptive mandate for what it wanted its two casino megaresorts to represent has resulted in a brace of clearly differentiated properties. In the case of Marina Bay Sands, it inspired Sheldon Adelson to build something architecturally ambitious, even daring — this from a company that seemed content to replicate the same basic formula ad infinitum.
While gambling was supposed to represent a smallish part of the Singapore formula, Sands and Resorts World Sentosa (left) are on pace to generate $6 billion in revenue in their first four quarters and could grow that by 65% in two years. Which means that Adelson may b behind schedule for making his projected $1 billion annual profit but will get there sooner rather than later. You have to tip your cap to the old wheeler-dealer for having confidence in Singapore when others (Steve Wynn, James Packer, Lawrence Ho) faltered. He also shown great acuity toward what the city-state’s government wanted.
Harrah’s Entertainment, by contrast, had a dazzling proposal — those exciting I’ve ever seen — but it was a tourist-oriented one suitable for Sentosa Island, not Marina Bay, which was targeted for increased convention business. When he lost out on Round One, CEO Gary Loveman simply took his ball and went home. While many believed that Genting Bhd was juiced into the Sentosa Island contract, Harrah’s unwillingness to even make a run at it spoke volumes about the company’s Long-Term Business Plan of the Week mentality.
On the subject of long-term plans, the math supports Adelson’s vision of a Venetian in every port. Barron‘s compares a U.S. 250 customers/1 slot machine ratio to Asia’s (conservatively measured) 1,500-to-1 ratio. Pretty staggering, huh? Throw in higher per capita gambling spend and an intense concentration of potential high rollers, and it looks as though we’ve barely begun to mine the Pacific Rim market or that of the Indian subcontinent. Even the potential opening of Japan to casinos is unlikely to dampen Macao or Singapore. Genting could even do a reverse-Sands, and apply the cash flow from its Malaysian and Singaporean casinos toward a bankroll sufficient to challenge Adelson on his own Strip turf.
Against this triumphant backdrop one must set a potentially unpleasant legal dispute involving Adelson and former Sands China CEO Steve Jacobs. The latter got the chop last summer after making some incautious pronouncements about the future of Sands China that Adelson clearly took as a challenge to his authority. Not to mince words, Jacobs’ lawsuit accuses Adelson of engaging in blackmail. That’s just the tip of the iceberg and Jacobs implies that his firing was done to shave a few million dollars off the corporate payroll. Various Sands representatives have characterized Jacobs’ J’accuse as “baseless and inflammatory” or outright dishonesty.
These are certainly the most lurid charges ever leveled against Adelson, although it would behoove casino regulators in Nevada and Pennsylvania to take the CYA route of deposing the principal players. Sands’ retention of a Macanese official as on-site counsel certainly raises some thorny questions. If l’affaire Jacobs comes to trial, it’s got the potential to inflict considerable PR damage, even should Adelson prevail. His tendency to not simply hang executives out to dry (unusual in itself) but publicly badmouth them, sometimes over and over again, practically guaranteed that someone would eventually choose to repay him in kind.
