THERE are losers and then there is Sheldon Adelson. He lost more money in the credit crunch than anyone. Not millions. Not a few billions. He took an 11-digit hit - $US36 billion ($42.7bn).
So why is the hotel and casino magnate on top of the world? Literally.
Last week Adelson looked out over the emerald waters of the Strait of Malacca from the 1.2ha Sky Park that sits atop a trio of 55-storey towers in Singapore, and declared: "This surpasses anything I've done. It's the best by the width of an ocean."
He is talking about the $US5.7bn, 930,000sq m Marina Bay Sands, which formally opened last week. The biggest single hotel and casino investment by his company, the Las Vegas Sands Corporation, it has 2600 rooms, a 600-table casino with 1500 slot machines, two theatres, art worth $US50m, 300 boutiques, a museum, an art gallery and a convention centre for up to 45,000 delegates.
The Sky Park is the centrepiece, with gardens, pool and restaurant that appear to float in mid-air. It's also the place where Adelson, 76, got his mojo back after probably the worst two years any businessman has suffered.
He got richer faster than anyone in modern history by building hotels, casinos and convention centres in America and Asia. In two decades, he became the sixth-richest man in the world, with a net worth of about $US40billion. Between September 2006 and September 2007, he made $US20.5m a day.
But when the credit crunch hit he suddenly found himself getting poorer faster than anyone could have imagined.
The share price of the Sands Corporation plunged from almost $US150 to barely $US1, wiping out most of Adelson's fortune. At one point, he was losing $US100m a day - $US4m an hour.
Things got so bad he was forced to pump $US1bn of his own money into the firm in loans and equity sales to prevent it breaching banking covenants. In the process, he diluted his stake from 70 per cent to about 50 per cent, only narrowly retaining control.
But that was then. Now the Marina Bay Sands is "the future of the Las VegasSands Corporation, the future of gaming and a grand-slam home run for us", he said last week.
The first gamblers inside the giant red and cream casino - playing sic bo, a dice game - were upbeat. Peter Lim, 36, an office worker, said. "It's modern, fun and there are no rules, unlike elsewhere in Singapore."
There is more than Adelson's legacy riding on men like Lim. Singapore sees casinos as an important part of its effort to shed its nanny-state image.
Ministers overturned a four-decade gambling ban and granted licences for two casinos - the second, run by Malaysia-based Genting, opened on Sentosa Island in February - as part of a big plan to reposition the island nation, famous for banning everything from chewing gum to Cosmopolitan magazine, as the new playground of Asia. It has also joined the glitzy Formula One motor-racing circus, hosting the first night-time grand prix.
Ministers believe the casinos will help to attract 17 million visitors a year and triple annual tourism revenue to $36bn by 2015, raising GDP by 1.6 per cent. But will clean-living Singapore really find virtue in vice?
Some locals condemn the presence of family entertainment - theatres, shops and cafes - beside the casino, fearing it will encourage gambling addiction and crime.Those who approve of gambling have attacked the casinos' $90 entrance fee. Ministers imposed the charge for locals and permanent residents - foreign tourists get in free - to fund initiatives to combat problem gambling.
Dennis Farrell, a bond analyst for Wells Fargo, the American bank, said: "Singapore's long-term revenue potential is still a large question mark for investors."
Adelson dismisses the claims. "I don't listen to a critic who is not rich because I say, 'If you're so smart, why aren't you rich? I send these guys embroidered Sheldon Adelson towels with a handwritten letter that says, 'This is for you to wipe the egg off your face when you come to realise how wrong you've been'."
Asian consumers love gambling, Adelson insists. "It's in the culture and once you give people something like the Marina Bay Sands, they don't say, 'Oh, I long for the day when I had nothing to do and it was boring here'.
"This place is going to be buzzing and around much longer than I am living. Everyone will come to see our new icon. It's Singapore's Sydney Opera House."
His architectural judgment may be questionable but you can't fault his geography or economics. Asia's economies and Asian gambling are booming. Singapore's economy is forecast to grow by 7-9 per cent this year, after contracting 1.3 per cent last year. Revenues in Macau, Asia's gambling capital, have overtaken Las Vegas.
Adelson insists he will recoup the $US5.7bn investment in Singapore in five years. "Any time you can pay off a property in under five years, you've got a big winner," he said.
Joseph Greff, an analyst at JP Morgan, agrees. He estimates the casino at Marina Bay Sands is already making an average of about $US3.6m a day, which implies an annual profit of $US1.3bn. "We view this as incredibly strong out of the gates," he said.
Thanks to the strong early performance in Singapore and the Sands Corporation's announcement that it made its first profit in two years in the first quarter - $US17.6m, against a $US34.6m loss last year - the ratings agencies Standard & Poor's and Moody's boosted the firm's rating from negative to positive.The share price is up almost 1000 per cent from its low, restoring Adelson to the ranks of the world's richest men - worth just under $US10bn, according to the latest billionaires list compiled by Forbes magazine.
"My family piggy bank is a little thinner," he concedes. But he is not out of the swamp yet. The Sands Corporation has $US12.2bn of bonds and loans due from next year until 2015, according to Bloomberg.
Adelson says the correct figure is $US10bn, adding: "We can easily meet it. We have a business model that is unlike those of other gaming and hotel operators. We build core assets - hotels and casinos - and non-core assets - shopping malls and property. We sell the non-core assets and pay down our debt. We started in Vegas and it worked well. We'll do the same in Asia."
He predicts that, in addition to asset sales, the company will be making $US3bn annual profits from worldwide operations by 2011-12. "We also have $US5bn in the bank - cash," he said.
Adelson is so confident he is on to a winner in Asia that he is re-starting work on his 20,000-room, 12-hotel development in Macau, suspended after the credit crunch, and is planning his next play: Japan. "We would like to enter Japan aggressively. The market for gaming there is $US25bn, minimum," he said as Diana Ross took to the stage at last week's opening party in Singapore.The only snag is, casinos are illegal in Japan.
But, as Singaporeans have discovered, Adelson is not the kind of man to let national laws or losing more money than God stop him getting what he wants.
http://www.theaustralian.com.au/news/.../story-e6frg9zo-1225887990550 |
Thread abonnieren
