{"id":4018,"date":"2010-07-09T15:54:11","date_gmt":"2010-07-09T23:54:11","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=4018"},"modified":"2021-09-08T06:27:06","modified_gmt":"2021-09-08T14:27:06","slug":"its-sheldons-world-we-just-live-in-it","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/its-sheldons-world-we-just-live-in-it\/","title":{"rendered":"It’s Sheldon’s world, we just live in it"},"content":{"rendered":"

\"\"Oh, how I envy Sheldon Adelson<\/strong>. My own hair grows thinner and grayer while his becomes thicker and darker. (The photo at left, shows Classic Sheldon, circa<\/em> 1999.) But I digress …<\/p>\n

Adelson is one of the stars of an eleven-part (!) report on the gambling industry in The Economist<\/em>. However, the Las Vegas Sands<\/strong> CEO tries to have it both ways<\/a>, being somehow of and above the casino industry simultaneously. As he and $2 Million Man Michael A. Leven<\/strong> sniffily put it, they’re not in the lowly punter’s occupation of “gambling” but something loftier called “gaming.” Or, in a characteristic bit of Leven B.S., it’s “the difference between having a cocktail and going out drinking<\/em>.” So how much do I have to lay down on the felt if I merely want to “game,” not “gamble”?<\/p>\n

In fact, Adelson is ubiquitous at the moment, riding high on the strong early returns from $5.7 billion Marina Bay Sands<\/strong><\/a>. Miraculously, the project’s gone $2.2 billion over budget and still looks like the smash success its progenitor predicted, boosted by the appeal of its signature “Sky Deck” attraction. As “Wow!” factors go, this one is a doozy<\/a>. On the architectural-achievement front, this looks like Sands’ finest work yet and a decisive break from ever-larger, ever-clunkier clones of The Venetian<\/strong>.<\/p>\n

Sounding like a Sixties hippie<\/strong>, The Venetian’s doge said he’d “much rather make love than war\u201d with the Inter-Pacific Bar Association<\/strong> that he’s suing. To Adelson’s mind, a laundry list of complaints that include failed air conditioning, unfinished rooms and a FUBAR sound system (and Sands is<\/em> the company that opened Palazzo<\/strong> with hotel rooms that lacked toilets) merely constitute “one glitch.” Given Adelson’s breathtaking insensitivity to Marina Bay’s virgin conventioneers, expect this unpleasantness to drag onward. Adelson claims he wouldn’t have sued had the IPBA paid in full. But<\/em>: Had the aggrieved attorneys done so, what are the chances they would have seen any of their money again? Sands is not known for its magnanimity.<\/p>\n

\"\"The \u00fcber<\/em>-megaresort is doing better foot traffic<\/a> than even Sands expected, only one-third of it local. At least 22,000\/day have visited it so far (although Sands predicts that number will increase sevenfold<\/a>), compared to the 15,000\/day averaged by Venetian Macao<\/strong>. While one analyst exercises caution, J.P. Morgan<\/strong>‘s Joseph Greff<\/strong> says Marina Bay is pulling in $3.6 million a day. The article fails to make clear whether this is profit or (more likely) daily revenue, which would extrapolate into $1.3 billion\/year.<\/p>\n

The writer implies that Greff is predicting $1.3 billion in yearly profit<\/em> from Marina Bay Sands — 30% more<\/em> than even Adelson at his most bullish has projected and way beyond JPM’s best-case scenario of $1 billion in cash flow. (Take 12% in Singaporean taxes off the top, not to mention debt service, and profitability falls well shy of $1 billion.) Adelson himself is not shy about predicting a 20% ROI on Marina Bay — a rate we haven’t seen from a casino since a ways back into the last century — which will require him to get that cash flow up to $1.15 billion\/year, likely more.<\/p>\n

Macquarie Securities<\/strong> analyst Edward Ong<\/strong> suggests Marina Bay’s success could be further fueled by siphoning VIP play off from China. Ong doesn’t go into the implications for Macao<\/strong> (at least whales wouldn’t have to cope with Chinese limitation on how much currency they can bring) and Adelson dismisses the notion.<\/p>\n

\"\"Even with Marina Bay at least five months shy<\/strong> of completion, Adelson is already looking to crack open<\/a> the Japan<\/strong> market — administering a smackdown to Sands China<\/strong> CEO Steve Jacobs<\/strong> in the process. (What’s the over\/under on Jacobs’ sacking?) He predicts Sands will be the first casino developer in the Land of the Rising Sun.<\/p>\n

Sands may the first one to get a shovel in the ground but, as we’ve seen in Singapore<\/strong>, even with a big running start, Adelson can be counted on to bring up the rear. He’s also still making noises about non-core asset sales (i.e., malls and condos). None have materialized in a dog’s age — nor show any likelihood of doing so, although Leven recently hung a “For Sale” sign on troubled Sands Bethlehem<\/strong>, albeit with the caveat that it wouldn’t happen for “a few years.” Maybe it’s time to put the “imminent asset sales” meme to bed for awhile.<\/p>\n

Despite the crawling progress of Sands Bethlehem and Adelson’s recce of the Massachusetts<\/strong> casino market, the mogul envisioned a role for his U.S. casinos so marginal that they eventually count for no more than 10% of overall LVS revenues by 2020, down from 27%. This is predicated more on Singapore’s impact and further Asian expansion, not a suggestion of a drawdown in American operations. The CEO predicts Las Vegas<\/strong> will be back to “pre-crisis levels” (read: 2007) the year after next. The question of whether 2007-like amounts of business can sustain a capacity-bloated (post-CityCenter<\/strong>, post-Cosmopolitan<\/strong>) Vegas of 2012 is simply begged.<\/p>\n

Reversing an old company saw<\/strong> that Macao<\/strong>‘s appeal stretched as far as the Antipodes<\/strong>, Leven now concedes<\/a> that 90% of its business derives from the Chinese-speaking world. He also allows, in essence, that Sands has failed so far to turn Macao into a convention destination. But Leven maintains that it’s a market segment that’s ramping up something fierce in China<\/strong> and that a MICE-centric strategy will prevail in the long term over his competitors’ casino-driven models.<\/p>\n

\"\"While that obviously remains to be seen, Sands can take comfort in The Economist<\/em>‘s observation that Stanley Ho<\/strong>‘s attempt to reinvent his casinos in the Vegas image at fugly Grand Lisboa<\/strong> (left<\/em>, during its construction) looks like a flop<\/a>. Even with the dramatic escalation in casino revenues this year, you have to wonder if the market can absorb at least<\/em> eight more hotel-casinos in the Cotai Strip™<\/strong> alone. All Macao casino operators except Sands are charting more circumspect courses.<\/p>\n

Perhaps one can’t blame<\/strong> Sands for taking the damn-the-torpedoes route, not only because of the prospect of having land repossessed by the Macanese government (and perhaps — horror of horrors! — handed over to Stanley Ho) but because of the mixed signals coming from Macao strongman Fernando Chui<\/strong>. While his “election” was meant as a rebuke to predecessor Edmund Ho<\/strong>, seen as too friendly to those capitalist running dogs<\/a>, his posture vis-a-vis<\/em> the casino industry is beset by internal contradictions. And a mooted limit on table games could be averted by a “cap-and-trade” regime whereby an Adelson removes tables from, say, Sands Macao<\/strong> and re-installs them someplace else. If Chui looks like a paper tiger, why not put him to the test? It might even validate those Wall Street<\/strong> analysts who deride his tough talk as “political posturing.”<\/p>\n

Never one to rest on his laurels<\/strong>, Adelson’s wish list for new casino territories includes not just Nippon but India<\/strong>, South Korea<\/strong>, Italy<\/strong>, Spain<\/strong> and Greece<\/strong> (and that’s probably just for starters). Nor let us forget his desire for casinos in Texas<\/strong> and Florida<\/strong>. When Adelson sets his mind to something, it tends to happen, but given Sands’ tendency to overspend, overbuild and finish projects at a snail’s pace, he might have to live at least another 70 years to bring all those hopes into fruition.<\/p>\n","protected":false},"excerpt":{"rendered":"

Oh, how I envy Sheldon Adelson. My own hair grows thinner and grayer while his becomes thicker and darker. (The photo at left, shows Classic Sheldon, circa 1999.) But I digress … Adelson is one of the stars of an … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[65,56,66,28,14,36,22,62,95,12,108,61,31,114,9,19,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/4018"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=4018"}],"version-history":[{"count":7,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/4018\/revisions"}],"predecessor-version":[{"id":30032,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/4018\/revisions\/30032"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=4018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=4018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=4018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}