Sheldon Adelson’s Las Vegas Sands looking at NYC for expansion
Even after rejecting Boston as a potential expansion site, Las Vegas Sands Corp. remains interested in key markets outside Nevada, including New York City, Europe, Asia and Canada, executives said Thursday during the company's annual shareholders' meeting in New York City.
Chairman and Chief Executive Sheldon Adelson and President and Chief Operating Officer Michael Leven also said expansion plans were on track in Macau, despite recent concerns about a growth slowdown in the Chinese gambling district.
Shareholders asked about the company’s decision last month to forgo development opportunities in Boston, where both Adelson and Leven are from.
''It was a bitter pill for me to take to make the decision that Boston was too saturated, too diluted for casinos,'' Adelson said. ''Within 100 miles of Boston there are about 12 full-fledged casinos. There’s just not enough of a radius to capture what we need to justify a 20 percent return on the money we need to build the kind of integrated resort we’re specialists at."
But in New York, opportunities are still being studied, Leven said.
''We are investigating opportunities in the city as well as in Queens and other places,'' he said. ''That’s a long process. It requires legislation to be passed as well.''
Opportunities for a Sands-style resort, which typically includes gaming, hotel, shopping and convention facilities, may be opening up thanks to the collapse of talks between casino operator Genting Group and Gov. Andrew Cuomo last week.
They had been discussing a $4 billion resort development in Queens that would have included another casino, hotel and what had been billed as the world’s largest convention center next to Genting’s existing Resorts World Casino.
And while no decision has been made about developing in Spain what has been reported to be $35 billion in proposed gambling, shopping and convention space, Adelson said the opportunity remains attractive because Spain would attract customers from throughout Europe and Russia. The potential market is a five-and-a-half-hour radius by air –- the same amount of time it takes to fly from New York to Las Vegas. Excluding North Africa, which isn’t seen as a key market, the area includes 40 countries with up to 1 billion people, Adelson said.
''So this is not a Spanish project,'' Adelson said. ''This is a project for all of Europe. Traditional Western Europe and what’s known as what I call the former Warsaw Pact countries. We would go to the western countries of the former Soviet Union. We would even go to Moscow and St. Petersburg, where we could send our charter aircraft to bring people in.''\
The company also continues to look at opportunities in Japan, South Korea, Taiwan, Vietnam and Toronto, Adelson said.
Missing from the list were two states Adelson had been looking at in early 2011 -- Florida and Texas, where plans for major casino developments haven’t gotten off the ground.
Executives also were asked about the company’s June 1 announcement that it had dropped legal proceedings against the Macau government over the government’s decision in 2010 to not award subsidiary Sands China Ltd. a land concession for what are known as parcels 7 and 8 in the Cotai section of Macau. The company had spent $100 million planning to develop resorts on the parcels.
''The decision was made to give up the suit in order to better our relationship with the government of Macau," Leven said. "We have multiple other projects waiting in the wings in Macau.''
Adelson suggested the future profitability of those sites had been called into question because of the government’s decision to limit table game growth in the market to 3 percent over the next 10 years.
''We determined that fighting this and potentially embarrassing the government isn’t going to get us what we want because having 7 and 8 –- besides having to pay for it just to keep it up and maintain it –- would cost money when there’s little or no likelihood that they’re going to give us approval for additional tables,'' Adelson said. ''What are we holding on for? There doesn’t seem to be any logical reason or any rationale to push and alienate the government by embarrassing them by winning the appeal.''
Executives said the first phase of the newly-opened $4.4 billion Sands Cotai Central resort on parcels 5 and 6 is performing as anticipated after its April opening. Additional components of the development will open through the first quarter of 2013. When completed, it will include 6,400 hotel rooms and gaming, entertainment, restaurant and conference facilities.
This project is across the street from the company’s existing Venetian Macao and Four Seasons Macao projects. Elsewhere in Macau, the company owns the Sands Macao casino.
In all, Las Vegas Sands has $9 billion invested in Macau, the world’s largest gaming market. Adelson said today that Macau and Singapore are the most promising consumer markets.
Adelson said concerns that Macau's May gaming wins of $3.3 billion were disappointing and helped drive down the price of Las Vegas Sands stock 10.3 percent last week are ''terribly unfair.''
''I think it’s insanity to say everything is going to hell and a handbasket because we only had the second highest month on record and we only grew 7.3 percent,'' he said. ''Last year, there was $33 billion in gross gaming revenue (in Macau). We’re probably going to hit $40 billion this year. That sounds to me like a great growth market."
Adelson isn’t the only gaming executive confident about Macau. Competitors MGM Resorts International and Wynn Resorts Ltd. have expansion plans there, and Steve Wynn said this week his next Chinese resort likely will cost $4 billion.
As for Las Vegas, where Las Vegas Sands owns the Venetian and Palazzo resorts and the Sands Expo Center, Adelson mentioned it as one of the company’s key markets. He called the local properties ''a core asset'' in April and said he would never sell them.
Las Vegas Sands last year generated a record industry net revenue of $9.4 billion.