Inside Asian Gaming

September 2013 | INSIDE ASIAN GAMING 9 Sheldon Adelson has built it and they have come in their millions. He has changed Las Vegas. He has changed Macau. He has changed Singapore. He will change Japan. As veteran hotelier Michael Leven, chief operating officer of Las Vegas Sands, has said of him—“At the end of the day, you’re looking at a person who is a historical character.” The casino empire Mr Adelson has built is arguably the most profitable in the world, certainly the most lucrative, with an enterprise value that pencils out as of 30th June at roughly US$50 billion. The $22 billion worth of assets that comprise it have no peer when you combine the scale of their offerings, their geographical diversity and the depth and potential of their markets. Three-quarters of that asset value is in Asia, 46% of it in Macau, where LVS will have invested more than $9 billion by 2015 and where its Hong Kong-listed Sands China subsidiary is the undisputed leader in a mass market that is growing at triple the rate of VIP. Its four resorts generate more than 60% of corporate net revenues and more than 56% of EBITDA. Those ratios would be even greater except that Marina Bay Sands in Singapore is so profitable. In all, LVS generated US$1.37 billion in profits in the first six months of this year on $6.86 billion in gross revenues. Its pre-tax earnings in 2013 will exceed an eye-watering $4 billion. Asia will drive close to 90% of that. Not that Mr Adelson has any intention of kicking back. He’s cast an investment eye on India. He’s already unveiled a prototype for a super-resort either in Ho Chi Minh City or Hanoi should Vietnam ever open its casinos to its citizens. He’ll change Spain if they let him. Plans for the $8 billion, 450-hectare EuroVegas complex he wants to build outside Madrid call for 12 resort- scale hotels and six casinos with 18,000 slot machines and 1,600 table games. LVS has consulted with stakeholders in Japan, where a legalization proposal is making the rounds in the Diet, and is believed to be on the short list to develop something iconic in Tokyo or Osaka. The 56 hectares the company controls on Cotai include two more developments 1 Sheldon Adelson Chairman and CEO Las Vegas Sands Corp. slated for completion over the next three years: a $450 million St. Regis-branded hotel at the Sands Cotai Central complex and a megaresortacrossthestreetthatwillconnect with The Venetian and Four Seasons—The Parisian, it’s called, a 3,000-room destination with plans for a freestanding replica of the Eiffel Tower and a price tag of $2.7 billion. Mr Leven, who has known Mr Adelson since the 1960s, remembers him even then as the “penultimate entrepreneur, incredibly creative and wide-thinking, and incredibly optimistic, which is what you have to be to be a successful entrepreneur.” His is the classic Horatio Alger story— born in the depths of the Great Depression, the child of immigrants, the cab driver’s son who has amassed a fortune valued by Forbes this year at $26.5 billion. It’s good for ninth on the list of wealthiest Americans. Only 14 people in the world are wealthier. He has owned 50 companies, by his count, since he first went into business for himself at the age of 12 selling newspapers. “Honestly,” as Macquarie gaming analyst Joel Simkins has said, “you can put him up there with any of the big dreamers we’ve had—Sam Walton, Ray Kroc—the individuals who thought the unthinkable.” Mr Simkins remembers rating Venetian Las Vegas’ bonds back in 1998 as a junior analyst at Moody’s. “They were telling us, ‘We’re going to get $125 midweek from the conventioneers.’ People laughed. But the guy has had a tremendous ability for unlocking opportunities in gaming that no one visualized.” As the man himself explains this, “It wasn’t what I saw, it was what I experienced. I was Las Vegas’ biggest convention customer with Comdex. And I had a couple other shows. This was my profession for a long time. So I saw it from a different viewpoint. People thought, the operators thought, that the purpose of Las Vegas was gambling. And I said to myself, the purpose of Las Vegas is the fungibility of money.” It seems so obvious now. Yet he saw Macau with similar clarity. “The only way you can stop the Chinese from gambling,” he once said,“is lock the door and don’t let them in.” That notion alone would have netted him a tidy fortune. Only he saw something more. He saw that in a place where 500,000 residents and several millions of tourists are crammed into 30 square kilometers on the doorstep of the most populous nation on Earth, the future belonged to those with land. He likes to joke now that he thought LVS was being exiled when the Macau government directed him to a patch of reclaimed marsh between the islands of Taipa and Coloane which it figured might be suitable for a fireworks factory. The story goes that SteveWynn passed when asked to join him in developing it. Of course, he went on to do what he’s done somany times when the odds were against him—he bet them. “He’s not a corporate CEO, he’s an entrepreneurial CEO,” Mr Leven said of him. “A very broad strategic thinker—‘We’re The Asian Gaming 50 – 2013