Inside Asian Gaming

INSIDE ASIAN GAMING | Dec 2007 12 brands from around the world,and put them all under one roof in an integrated facility in a very unique way, including Ritz Carlton, Mar- riott, and David Tang building the first ever Tang boutique hotel. There really is nothing else like that anywhere else in the world. It’s the kind of thing that will get written about in travel magazines, and people from all over the world will want to come and see it. We’ll also have the only Playboy Mansion in Asia. All these things will attract a lot of people who have not otherwise thought about coming here.” Mr Friedman has a clear vision of where MSC will fit in the new Macau.“We’re trying to create something that is complimentary to what the Venetian is doing on the con- vention side by becoming what we believe will be the centre of entertainment and ex- citement in Macau,” he explains, adding “the things we are doing with Macao Studio City are revolutionary in their own way. Things I think will help reposition Macau.Things that will help people see Macau differently.” Dream team MSC is being developed by a dream team of partners, including New Cotai LLC, Hong Kong-based eSun Holdings and Sin- gapore’s CapitaLand. “There’s no group like ours anywhere,” says Mr Friedman. New Cotai owns 40% of the venture, and is a consortium of investors including Mr Friedman and “two of the most successful hedge funds in the world,” Silver Point Capi- tal and Oaktree Capital Management, which represent a combined US$60 billion in as- sets. “They have a tremendous amount of financial strength, but also tremendous ex- perience in the gaming and entertainment industries around the world.” eSun Holdings, one of Asia’s leading media and entertainment companies, also holds a 40% stake in the project. eSun has an 80% share of Hong Kong’s live concert market, and is one of Asia’s leading produc- ers of films and managers of live entertain- ment. According to Mr Friedman, eSun offers “a very unique perspective on what we think our audience is going to like and want to go and see.” eSun is an associate company of Lai Sun Development, a leading Hong Kong- listed hotel and property developer. While the Venetian will offer “more west- ern-style entertainment,” Mr Friedman feels MSC will feature more Asian-style offerings, and will “weave entertainment through all the experiences” at the property. CapitaLand, Asia’s largest property de- veloper, owns the remaining 20%. The retail portion of MSC will be developed by Taub- man Asia, “one of the most successful retail mall developers in the world for luxury retail, which we think is going to be very important in Macau to bring it to the next level,” adds Mr Friedman. Mr Friedman sees potential for retail in particular to grow dramatically in Macau over the coming years. “Look at level of suc- cess of retail in Hong Kong. Probably 40% of the mainland China visitors to Hong Kong are also visitors to Macau.They’re also the largest spending visitors per capita of all visitors to Hong Kong. Why would any of those people suddenly change when they get on the ferry to go toMacau fromHong Kong.Do they sud- denly not have any interest in retail? I don’t think so. I think it’s a lack of opportunity.” Good timing Although Mr Friedman agrees that Macau’s infrastructure and labour bottle- necks could hinder growth in the short term, he believes they are being addressed by the government, and by the time MSC opens in mid-2009, will have largely been resolved. “The Venetian is breaking a lot of ice for the properties that will follow,” he explains, and “by 2009 things will be a lot better, and even if not 100% complete, better than they are now.” The new ferry terminal serving Cotai that has just been opened, the government’s re- cent decision to grant more taxi licenses,and expansion of the currently under-utilized air- port will all help, he explains.“I think the light rail system that’s been announced will also be very helpful,” he says, pointing out that MSC sits “adjacent to one of the designated light rail stations,” scheduled for completion by 2011. “In terms of labour, it’s not that different either. When you have this much growth in this short a period of time, there’s bound to be a lot of displacement of resources,wheth- er it’s labour or anything else. Over time that will all work itself out. That’s just the nature of change. In many places around the world change happens at such a slow pace that it really is pretty much unnoticeable. In Macau it’s not that way. Everything is happening turbo-charged,” explains Mr Friedman. “We feel 2009 is a fantastic time to open a property, when a lot of the infrastructure projects will have been completed and The Venetian will have brought new customers to Macau. There will be a lot of maturity of market and a lot of growth of the mass mar- ket.That’s what we’re targeting.” Cover Story