Hotel king adds a jewel to his crown
LAS VEGAS -- The third-wealthiest man in America is days away from the Friday debut of his splashy Palazzo Resort-Hotel-Casino, the first new hotel on the Las Vegas Strip in three years. His company's stock has seen an epic slide, and a national economic slowdown may dent even this stalwart resort destination.
And yet, Sheldon Adelson moves around his expansive office saying he's unconcerned.
It's his competitors on The Strip who ought to be worried about the opening of the posh, 50-story Palazzo."We will cannibalize them," says Adelson, the 74-year-old CEO and majority shareholder of Las Vegas Sands. "We're going to take customers from other hotels."
A fragile, pale man who walks with a cane, Adelson is slowed by a rare nerve disorder in his legs known as plexitis. But in a two-hour interview here last week in connection with the Palazzo, Adelson exuded ambition and confidence.
You'd have to have plenty of both to see through the construction of the $1.9 billion, 3,000-room hotel-casino. With the attached 4,000-room Venetian and Sands Expo and Convention Center, the Palazzo will be part of a 19-million-square-foot edifice that Las Vegas Sands says is the largest hotel-convention complex under one roof in the world.
It's been a staggering effort from a man now known for staggering efforts. He is also behind an effort to construct a Las Vegas Strip-like stretch of seven hotel-casinos with 20,000 rooms in an area of the Chinese region of Macau where once there was nothing but swamp. He's building casino-resorts in Singapore and Bethlehem, Pa., and has applications pending for casino licenses in Massachusetts and Kansas. In the process, the son of a Boston cabbie has blossomed into a multibillionaire, trailing only Bill Gates msft and Warren Buffett brka in the most recent Forbes magazine list of wealthiest Americans, with an estimated net worth of $28 billion.
That estimate, however, predates a steep slide in the value of Las Vegas Sands lvs stock that began last October when Wall Street turned bearish on the value of investments in Macau. Shares on Tuesday closed at $78.67, or 47% below the 52-week high of $148.76.
Outspoken from the start
Adelson has been a well-known and controversial figure in Las Vegas. In the 1980s, he owned the nation's biggest computer trade show, Comdex, bringing thousands of conventioneers to flood the city's rooms and casinos during an otherwise dead pre-Thanksgiving week in November. City leaders were grateful, but Adelson was the one cleaning up. He would rent space from the city convention center for the equivalent of $100 a cubicle and then lease it to exhibitors for sometimes 50 times that.
"I was Las Vegas' biggest customer, and I used to laugh at Las Vegas," he recalled, scooping off and swallowing the foam of a cappuccino. "I would say, 'Why are you charging so little?' I told them, 'You can charge me more.' "
With no background in hospitality or gaming, Adelson decided to revolutionize Las Vegas by first buying the old Rat Pack haunt of the Sands Hotel in 1989, and then attaching it to the largest privately owned convention center in the nation.
Many in Las Vegas scratched their heads over what seemed like folly. But Adelson filled the Sands Expo routinely. In the mid-1990s he demolished its iconic, namesake hotel and sold Comdex for $862 million to help finance the all-suite, $1.5 billion Venetian, which opened in 1999.
The integration of a casino mega-resort and the convention facility was complete and immediately proved to competitors and the world that there's more to Vegas than just vacations.
"He has been consistently somebody whose proven people wrong," said Celeste Brown, a gaming analyst for Morgan Stanley. Along with Mirage and Bellagio developer Steve Wynn, wynn Adelson has "really changed … the face of Las Vegas," Brown says.
Robert Forbuss, a consultant for Harrah's Entertainment het and a former chairman of the Las Vegas Chamber of Commerce, credits Adelson with "a spirit to get things done." But, says Forbuss, Adelson doesn't make many friends in the process. "He's just very aggressive. And sometimes that style of aggression rubs people wrong."
The Venetian and Palazzo are the only Strip properties without unions, a fact that irks folks like D. Taylor, the secretary-treasurer of the Culinary Workers Union Local 226. The union building's hallways are lined with dozens of photos of labor protests at the Venetian.
Taylor accused Adelson of intimidating his workers and pointed to lawsuits Adelson has filed against two Las Vegas journalists, as well as others who have criticized him. Adelson's workers "know he hates unions," Taylor says. "They know he's the third-richest guy in the country, and they know if you stand up for the union, you are not going to be around for very long."
Adelson disputes that, insisting his workers don't unionize because he treats them well. His company provides free car washes and on-site day care to employees, among other amenities, he notes.
A bold move into Macau
Adelson and Wynn were the only Las Vegas gamers to win licenses to build casinos in the former Portuguese colony of Macau when Beijing decided in 2001 to end the crime-riddled gambling monopoly of Hong Kong tycoon Stanley Ho. But the Adelson and Wynn approaches couldn't be more different, with Adelson racing to open the casino-only Sands Macaoby 2004 to start cashing in on the Asian appetite for gambling. Wynn has trodden more carefully. The Sands Macao exceeded expectations, making it easier for Adelson to finance a string of nearby resort-casinos known as the Cotai Strip, reclaimed land where Adelson envisions what he's trademarked as "Asia's Las Vegas."
Cotai's anchor is the massive, 5-month-old Venetian Macao, a $1.8 billion, 3,000-room resort with more than 200 stores, a 1.2-million-square-foot convention center and the world's largest casino. Wynn, meanwhile, opened the exclusive 600-room Wynn Macau resort in 2006, and has said in published interviews that he believes Adelson's enthusiasm for Cotai is premature.
For his part, Adelson finds Wynn's view baffling, pointing to the fact that a third of the world's population is within a five-hour flight of Macau. The 3,000 rooms of the Venetian Macao brought the region up to just 8,500 rooms.
"I don't understand, with hundreds of millions of people in the area looking for a resort experience they've never had, how can it be that somebody questions whether or not there's enough market?" Adelson said.
Wynn's critique of the plan for Cotai is another point of contention in a legendary feud between men who once had a more friendly rivalry. Adelson said he was so impressed by Wynn's Mirage in 1989 that he asked Wynn to work with him on his own resorts, but Wynn declined.
Their relationship began to sour after the Mirage opened and Adelson complained about noise from the eruptions of its signature faux volcano across the street from the Sands. Wynn, whose sole Las Vegas operation is now the Wynn Las Vegas, directly north of the Venetian and Palazzo, has complained about Adelson's employee parking arrangement, and the height of the Palazzo, which is taller than the Wynn.
Wynn, through a spokesman last week, declined to comment for this article.
Rivals' fates are forever linked
Adelson said that he and Wynn have not spoken in years and that he has not been in Wynn's current resort. Yet, the financial interests of their companies are linked.
Last year, the Venetian Macao's revenue for its first month of operation failed to meet Wall Street expectations, prompting both Las Vegas Sands' and Wynn Resorts' stock prices to slide as investors re-evaluated their euphoria over Macau. Adelson blamed the correction on Morgan Stanley's Brown, whose revenue estimates, he said, weren't realistic. He also claims the analyst called to apologize to him later.
Brown recalled that conversation not as an apology but as a "clearing of the air" and said that she still believes that Las Vegas Sands is a fundamentally sound company that "longer term, will get a fantastic return." Deutsche Bank gaming-stock analyst Bill Lerner forecasts that Las Vegas Sands stock will soar to $120 a share this year.
At 74, Adelson knows he can't lead his company forever. He's giving away millions every year to medical research and other causes. He says Las Vegas Sands will be run by the executives now in place. Adelson acknowledges that there's no telling where he'll rank when Forbes does its list next time. But "I'm doing OK," he quipped. "Don't run a benefit for me."