IAG September 2014 - page 7

September2014
inside
asiangaming
7
Back inFebruary
inaconference roomat aplushhotel inTokyo’s
upscale Roppongi district, a couple hundred dark-suited Japanese
business types had turned out for a weeklong investment forum
sponsored by CLSA. The ink was barely dry on a bill in theNational
Diet to legalize casinos in theworld’s third-largest economy and they
were there to sizeup theopportunities.
Asia’s US Big Three—Las Vegas Sands, Wynn Resorts, MGM
Resorts International—werepresenting.
And then it happened: the inevitableAdelsonmoment.
Addressingamediabriefingon the forum’sfirstday, thechairman
and chief executive of Las Vegas Sands scoredhis headline. “Wewill
spendwhatever it takes,” he said. “Would I put in$10billion? Yes.”
Thecabdriver’ssonwhoat lastglanceoccupied 14thplaceon the
Forbes
“World’s Billionaires” list had stood the week’s proceedings
on their ear.
He wasn’t finished either. “We could pay all cash,” he said. “We
don’t have to, but we will borrowmoney in a typical mortgage-to-
value ratio.”
The point, he said, is that “We can spend $10 billion without
borrowingmoney,” andhe didn’t forget tomentionhis competition,
which happens to include just about every heavyweight casino
corporationon theplanet, addingwith aplomb—“They can’t.”
“Whatever it takes”
—it became the phrase that would dominate
the news coverage of that conference for the rest of the week, and
that of a simultaneous gathering at another Tokyohotel of the Japan
Academy of IntegratedResort andGamingStudies.
As for the “$10 billion,” much of the latest analyses of Japan’s
potential suggest an investment of evenhalf that isn’t likely to return
the 20% that is theoft-stated litmus for LVS in anymarket that looks
good to it. You have to think Sheldon Adelson is familiar with those
studies. But what he wanted his audience to know (and to believe,
better yet) is that he’s theman tobeat in Japan.
Which isdebatable, of course.He’sgot abrilliant lineupof rivals,
A-list all the way, and what they’ll also offer to win a license in a
market that isconservatively forecast tobeworth$7billiona year out
of the gate in gaming alone (some say as high as $15 billion) will be
exciting, and as the bankswill be eager tobuy into such a promising
market, capital isn’t going topose amajor obstacle for any of them.
What cannot be disputed, though, what the Japanese will not
fail to consider, is that Sheldon Adelson has created the greatest
money-makingmachine thegaming industryhasever seen, bigger in
terms ofmarket capitalization than the rest of theUS-listed industry
combined, four times bigger in US dollar terms than Genting
Singapore, five timesbigger thanCrownResorts. If you’dbought LVS
at its recession-erabottom in the springof 2009—whenMr Adelson
SheldonAdelson
ChairmanandCEO
LasVegas SandsCorp.
anted up $1 billion from his own pocket to keep the bondholders at
bay—as of this writing you’d havemade back your money 46 times
over. Last year, hewalkedaway fromhis$30billionEuroVegasplan in
Madrid andWall Street didn’t bat an eye.
LVS is also the Asian industry’s pre-eminent money-making
machine. The company generated US$13.77 billion in revenue in
2013, andmore than 86% of it wasmade inMacau and Singapore,
together with 89.8% of its world-leading EBITDA of $4.76 billion.
This was accomplished principally by virtue of its dominance in
Macau, the largest casino revenuemarket in theworld—andwe can
quibble all wewant over VIP share—it dominates. It dominateswith
more hotel rooms, more gaming floor space, more retail shops and
restaurants and entertainment and MICE facilities than everybody
else. In The VenetianMacao it operates the city’s most recognized
andmost visited destination. Macau as it exists today is largely an
outgrowthof the vision thatwent into its creation.Nowall theothers
are pouring everything they’ve got into Cotai, the reclaimed swamp
they once shunned, to try to replicate its success.
But it’s about more than earnings statements. It’s the hold
SheldonAdelson exerts on the Asian imagination in the form of The
Venetian and in Singapore withMarina Bay Sands, icons that have
set the standard against which anyone desiring to play in his game
must measure up. His $2.7 billion, 3,000-room ParisianMacao will
feature a half-scale replica of the Eiffel Tower. The copy on the Las
Vegas Strip will pale in comparison. And the vision continues to
range far andwide. He still likes the prospects in some of Europe’s
capitals. Vietnamappeals tohimaswell, he’svisited thecountry, and
given the chance, he’ll do something fabulous inHo Chi Minh City
if the government rescinds its longstanding ban on domestic play,
a prospect that’s looking increasingly likely. Seoul beckons, too, if a
localsmarket therewere similarly allowed.
Inhishomecountryheparticularly likesMiami.He’sbeenbattling
theDisneyempire inFlorida for three yearsover it andhe’snotgiving
up. TheUS Internet gambling lobby took heart earlier this year when
reports surfaced that at 80 hemight consider retiring. They’ve been
reeling from the multimillion-dollar lobbying and public relations
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