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."
