Scientific Game

At Solaire, a New Ace in a Reshuffled Deck

Once, Tom Arasi was Sheldon Adelson’s man in Singapore. Now, he’s back in Asia as Enrique Razon’s man in Manila

Saturday, 14 December 2013 16:37
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Bloomberry Resorts has found a new chief operating officer with Asian credentials to take the helm at Solaire Resort & Casino after last month’s surprise firing of its management partner and 8% equity holder. 

Thomas Arasi, who got the $5 billion Marina Bay Sands open in 2010 and quit the following year after 18 months as president and CEO, is replacing Michael French at the $750 million gaming and hotel complex in Manila, which just opened in March as the first of four resorts planned for a government-sponsored tract of reclaimed land on Manila Bay called Entertainment City.

Mr French, whom Bloomberry described in a 12th September filing with the Philippine Stock Exchange as the “official representative” of William Weidner’s Global Gaming Asset Management, was let go when Bloomberry terminated its management services agreement with GGAM, claiming in the same filing that the firm “has not spent any material time in attending to the management of Solaire and has failed to perform its obligations and deliverables under the MSA.”

Las Vegas-based GGAM, founded by Mr Weidner and Brad Stone, both former top executives at Las Vegas Sands, is contesting the termination via arbitration in Singapore, saying Bloomberry’s assertions “have no factual or legal validity” and charging the PSX-listed company with having “materially breached” the MSA.

Mr French served under Messrs Weidner and Stone at The Venetian in Las Vegas and held senior positions with Melco Crown Entertainment’s Altira and City of Dreams resorts in Macau before coming to Solaire.

 

Tom Arasi in his final days at Marina Bay Sands with Bollywood superstar Hritik Roshan

 

Mr Arasi, who also will hold the title of president with a seat on Bloomberry’s board, is returning to Asia fresh off a brief stint as president of Hospitality for Caesars Entertainment. A career hotelier, he’s best known for his role in setting Marina Bay Sands on a course to become arguably the most profitable resort casino in the world before abruptly announcing his resignation in January 2011, less than a year after the massive property opened. In walking away from around $1.5 million in salary and bonuses, not counting stock options, he said, “I have decided to pause, take a breather and spend more time with my daughter and other family.” It was a time when Las Vegas Sands’ lucrative Asian operations seemed wracked by “management shuffles and hitches,” as The Wall Street Journal put it, headlined by the July 2010 firing of the chief executive of the company’s Macau casinos, Steven Jacobs, who is suing for wrongful termination, claiming that LVS and Sheldon Adelson personally engaged in a host of improper or potentially illegal activities in China, allegations currently under investigation by the US Justice Department and the US Securities and Exchange Commission. Reports at the time were that Mr Arasi likewise had fallen out with the big boss.

 

At Marina Bay Sands Arasi oversaw an operation that delivered pre-tax profit of S$315 million on $631 million in gross revenue in its first three months of operation, a maiden quarter that Sheldon Adelson himself called the best for any LVS resort ever.

 

“Mr Adelson is known in the industry to be a strong character,” said an industry source who spoke with The Straits Times just after Mr Arasi quit. “A lot of the business is decided by him in the US.” 

The same may well be true of Bloomberry majority shareholder, Chairman and CEO Enrique Razon Jr, the ports tycoon ranked by Forbes as the third-wealthiest person in the Philippines.

Bloomberry and GGAM concluded a five-year agreement on the management of Solaire in 2011 (with a five-year option to renew), and the breakup comes less than a year after GGAM exercised an option on 921.8 million Bloomberry shares, good for an 8.7% stake in the company, for PHP15 million and 10% of Solaire’s development costs. The firm’s departure was preceded in June by the resignation of Bloomberry’s Chief Financial Officer Xingyu Chen and was followed by the resignation of one of the company’s directors. 

Solaire, meanwhile, has appeared through all this to be ramping up nicely after a shaky start, leading Bloomberry to a small profit in the second quarter, its first, on PHP3.89 billion in gaming revenue (US$90 million) and steadily improving EBITDA margins. GGAM’s end was 2-6% of EBITDA plus incentives on foreign VIP play, and Mr Razon said at the time, “It is gratifying to know that Solaire has begun to generate profit after only a few months. I am confident that this trend will continue.” Bloomberry also acknowledged in the September filing that “many members of the existing management team”—which is to say those GGAM put in place—“are very capable and will continue to manage Solaire effectively without GGAM and its representative.”

Bloomberry terminated its management services agreement with GGAM, claiming the firm “has not spent any material time in attending to the management of Solaire and has failed to perform its obligations.”

GGAM says Bloomberry’s assertions “have no factual or legal validity” and they are charging the company with having “materially breached” the MSA.

 

This bodes well for Mr Arasi, who joins Solaire in the midst of a planned expansion of the resort slated for completion in the first half of 2014 and encompassing 300 more rooms and suites, more restaurants, a spa and pool, a 2,000-seat showroom and an outdoor promenade on Manila Bay.

“His expertise will be put to good use,” Bloomberry said.

At Marina Bay Sands he oversaw an operation that delivered pre-tax profit of S$315 million on $631 million in gross revenue in its first three months of operation, a maiden quarter that Mr Adelson himself called the best for any LVS resort ever. Before joining Caesars in May, he served in executive and high-level advisory capacities in hotel and property management, capital allocation, branding and franchising. He oversaw a number of businesses worldwide for InterContinental Hotels Group prior to entering the gaming industry. Before InterContinental he was president of Tishman Hotel Corp. and was a vice president of Salomon Brothers at one time. He also held positions with Sheraton, Westin ad HVS International.

“We believe his credentials and experience will be a key to achieving our expectations,” Mr Razon said.

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