Inside Asian Gaming

INSIDE ASIAN GAMING | August 2012 18 winpercentageof 2.42% in thequarter. InQ1, MBS had scored a whopping $472.5 million in adjusted property EBITDA—outstripping the $456.4 million adjusted property EBITDA recorded over all of LVS’ Macau properties in the same period. By comparison, the first phase of SCC, which began operations on 11th April, was open for 81 days during the second quarter, and generated $51.8 million adjusted property EBITDA in that time. Scoring a Singapore casino license was a coup for LVS. Many feared the Singapore market would be unable to generate sufficient returns to justify the high level of investment needed to develop one of the city’s two integrated resorts. LVS paid almost US$1 billion just for the land on which MBS sits, and the resort had to be of a grand scale by necessity to accommodate a decent- sized casino, owing to the requirement that gaming spaces occupy no more than 5% of the resorts’ total floor area. LVS was looking to achieve a 20% return on MBS, but has done much better. Spurred by his success in Macau and Singapore, and driven by his bullish temperament, Sheldon Adelson is keen to expand elsewhere in Asia. He has been lobbying in Japan, South Korea, Vietnam and Taiwan for the right to build integrated resorts in those countries. He has also expressed his desire to establish a presence in India, and outside Asia is currently working on EuroVegas, a US$20 billion integrated resort project in Spain. Odd One Out The one notable country not to make it onto Mr Adelson’s development wish list is thePhilippines, where four integrated resorts are being developed by separate consortia on 1 sq. km of prime reclaimed land at Manila Bay. Sands China President and CEO Edward Tracy was recently quoted by the Macau Daily Times as saying his company has “no intention of investing in a project in Manila.” The paper added that according to official sources, Manila Bay “does not fit the company investment profile.” Apparently, not all reclaimed land is created equal. Steve Wynn is similarly unwilling to get involved in the Philippines. Mr Wynn, of course, is currently in the midst of a bitter legal dispute with his longtime friend and business partner Kazuo Okada, with whom he had a falling out over Mr Okada’s decision to develop a casino resort in that country. Mr Okada and Mr Wynn had traveled to the Philippines together in 2010 to explore the possibility of making an investment there, but Mr Wynn decided against it. Apparently, Mr Wynn and his board— mindful of the company’s status as a Nevada gaming licence holder and a Macau gaming licence holder—wanted to avoid the Philippines because of its international reputation for corruption. Mr Okada decided to disregard objections from theWynn Resorts board and go it alone in the Philippines, resulting in him first being removed as the board’s vice chairman, and then ultimately having his US$2.77 billion stake in the company forcibly redeemed at a steep discount of $1.9 billion, payable in 10 years. Mr Okada is currently suing for that forced redemption to be reversed. Mr Okada first invested in the company that would become Wynn Resorts in 2000. He now clearly has a vision for Manila Bay. He recently told the Philippines media through an interpreter: “My dream is to create the best casino in the world here in the Philippines.” But was it worth his estrangement from Mr Wynn in both commercial and personal terms? After all, Mr Wynn had proclaimed in 2008: “I love Kazuo Okada as much as any man that I’ve ever met in my life. He’s my partner and my friend. And there is hardly anything that I won’t do for him.” The Manila Bay development, known as Entertainment City, occupies the southeastern portion of the bay in Parañaque City. Entertainment City was first envisioned almost a decade ago by Efraim C. Genuino, former chairman of the country’s gaming regulator-cum-operator, the Philippine Amusement and Gaming Corporation (PAGCOR). The vision to develop a multi-billion dollar entertainment center on the site was held back for years as PAGCOR struggled to find interested international investors. Entertainment City is now finally taking shape, with Mr Okada’s Universal Entertainment Corp., through local subsidiary Tiger Resorts, Leisure and Entertainment Inc., behind the biggest of the four projects being developed at the site. Mr Okada broke ground on the US$2 billion project on 26th January. The resort is scheduled for completion in late 2014 and will include three hotels, a convention hall, a glass-domed man-made beach, and villas on a 111-acre complex. On 16th July, Empire East Land Holdings Inc., a unit of Philippines property developer Megaworld Corp., announced it had signed a joint venture deal with Tiger Resorts to build a US$1.1 billion residential development, comprising 25 towers in several phases, on a 32-acre site within Tiger’s complex. Megaworld is owned by local tycoon Andrew Tan, who now has a presence at two Manila Bay projects. Earlier, Megaworld parent company Alliance Global Group Inc. partnered with Genting Hong Kong—a subsidiary of Malaysia’s Genting Group—to develop Resorts World Manila next to the city’s airport. The joint venture between Alliance and Genting, known as Travellers International Hotel Group, has also secured the rights to develop a project in Manila Bay, dubbed Resorts World Bayshore, which is still in the planning stage. Two other developments are scheduled to open in Manila Bay next year. The first is Belle Corp.’s US$1 billion Belle Grande Manila Bay, controlled by the Philippines’ richest man, Henry Sy. Belle Corp on 5th July entered into a memorandum of understanding with Macau casino operator Melco Crown Entertainment Ltd to form a new consortium that would own and operate Belle Grande. According to a statement fromMelco Crown, its “total investment over the course of the Stellar returns—Marina Bay Sands In Focus