Inside Asian Gaming

May 2009 | INSIDE ASIAN GAMING 31 come knocking on Macau’s door and the VIP trade is increasingly in the hands of publicly listed junket aggregators, Dr Ho’s market contacts and knowledge are seen as a virtue by the financial markets. And VIP play remains the lifeblood of the Macau market. Dr Ho also has stakes in key bits of Macau’s infrastructure. They include a shareholding in Macau International Airport and in Macau Maritime Terminal, via his investment vehicle STDM. He also has the means of moving customers to and from his properties via the ferries and buses operated by his shipping and property conglomerate Shun Tak Holdings Ltd. Urgent need By implication, Dr Ho also has the wherewithal to discourage wherever possible those same visitors from going to his rivals’ casinos. The one place in Macau where Dr Ho’s market coverage is currently weak (by virtue of being non-existent) is Cotai. That weakness will seem more glaring once Cotai’s entertainment offer grows with the opening of Melco Crown Entertainment’s US$2.1 billion City of Dreams in June. Dr Ho was supposed to have had a casino presence on Cotai at a rock bottomprice following a land swap deal in 2006. In the deal, the Macau government indicated it would allow Shun Tak Holdings—a company that Dr Ho chairs—to exchange a 1.1 million square feet piece of land it acquired in Taipa in 2002 for HK$500 million, for a plot on Cotai. Following the arrest, trial and imprisonment for corruption of Ao Man-long, a former Macau secretary for transport and public works, land swap deals went out of fashion in Macau, and public tender for land sales at going market rates became all the rage. SJM was pretty vague in its IPO prospectus last year regarding its plans for Cotai, referring only to “preliminary plans for two mixed-use developments”. Talks So thenews that Dr Hohas beenhaving face to facemeetingswith Las Vegas Sands Corp.’s chairman Sheldon Adelson about possible direct investment and/or cooperation on LVS’s Cotai operation could be good news for both parties and for Macau generally. The scenarios suggested so far—SJM or a related company taking an equity stake in the operation of The Venetian Macao and/or Dr Ho buying out LVS’s interest in Cotai plots five and six (the putative home of a Sheraton Hotel and a Shangri-La property) would help LVS out of a tight spot, give SJM an instant or near instant market presence on Cotai, and help The Cotai Strip™ toward the kind of critical mass of facilities that would make it worth the 20-minute shuttle coach trip or 65-pataca (US$8) taxi ride from downtown Macau. The story that Dr Ho has offered to buy LVS out of Cotai plots five and six at 40 US cents on the US dollar is doing the rounds in the financial world’s rumour mill. At the time IAG went to press, those reports had not been confirmed or denied. But the possibility of SJM taking an equity stake in The Venetian Macao was voiced publicly at the beginning of April by Dr Ambrose So, a director of SJM. Dr So is an executive generally considered close to Dr Ho. The idea that the Ho family fortunes are waning rather than waxing in Macau is further undermined by other developments or potential developments in the market. Cover Story Family Values Is the Ho clan on the rise again? N ot only is there a possibility of Dr Ho getting into bed with LVS, but Dr Ho’s daughter Pansy could be well placed to grab a bargain if a struggling MGM MIRAGE decides it must ditch its interest in the chic but under-performing US$1.3 billion MGM Grand Macau. MGM MIRAGE has never looked as comfortable out of its natural North American habitat as Wynn or LVS. Selling its 50% stake in MGM Grand Macau could be judged by MGM MIRAGE as a price worth paying in order to save its coveted CityCenter project in Las Vegas. That scenario looks more possible now that a subsidiary of Dubai’s sovereign wealth fund has kissed and made up with MGM MIRAGE regarding its continued bankrolling of the CityCenter scheme. MGM Grand Macau has not yet reached operational break even, so Ms Ho is unlikely to be in any rush to make MGM MIRAGE an offer on its Macau investment. She can probably afford to sit and wait. Sons and heirs The ‘Ho Factor’ in Macau also includes a significant contribution from one of Dr Ho’s sons Lawrence Ho, the Co- Chairman and Chief Executive of Melco Crown Entertainment (Nasdaq: MPEL). This joint venture with Australian casino developer and operator Crown Ltd is seeking via its new integrated resort property City of Dreams on Cotai to build further MPEL’s VIP market share from the already healthy foothold created by Altira (formerly Crown Macau). Family ties shouldn’t however be overstated in modern business. Dr Ho did after all give his personal blessing to his son when MPEL decided to pay Steve Wynn US$900 million for a Macau gaming sub licence in March 2006 rather than ‘keeping it in the family’ and seeking a sub licence