The Convention King
Billionaire Sheldon Adelson is bringing the Vegas Strip to Macau.
From the Print Edition:
Tiger Woods, May/June 2008
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When I mention that maybe Vegas, as well as Macau for that matter, may be built out to its limits, Adelson reaches for a framed cover of the June 20, 1955, issue of Life magazine. He is not the first casino executive I've seen brandishing this, but it does make a point. The cover depicts Vegas showgirls in can-can attire and asks, "Las Vegas: Is Boom Overextended?" The point being that Vegas keeps growing and people keep challenging its ability to keep growing, yet the city defies all expectations. "We're now at 135,000 rooms," he says, "and that question gets asked every 1,000 rooms."
Bullishness suits Adelson in a way that it might not suit others in the casino business for the simple reason that he's got convention action to fall back on. He's right when he says that visiting groups keep his hotel-casinos busy midweek and that his properties function as fully integrated resorts. "What I mean by that," says Adelson, "is that all the elements for entertainment, conventions and exhibitions are in one place. We're the only integrated resort builder in the world. MGM will say that they are building City Center, but that is not an integrated resort. It's a real estate development."
It may sound as if Adelson is splitting hairs with his definitions in order for things to fall in his favor—and he probably is—but his ability to put it all together has made an impression. Proof of that can be seen in that Adelson was the only American operator tapped to open a casino on the highly desirable island of Singapore. "They saw how we changed Las Vegas and Macau," says Adelson, referring to his synergizing the hotel, resort, casino and convention profits. "The convention business here was always belittled and demonized."
Adelson is quick to point out that Steve Wynn was in the running for the Singapore project but dropped out before a decision was made. "I can only speculate that he couldn't stand losing to me," Adelson maintains. Coincidentally, I interviewed Wynn, in Macau, just days after Adelson was awarded the obviously lucrative concession in Singapore. At the time I asked Wynn why he chose not to keep his hat in the ring for that particular project. He told me that he dropped out because he was too committed to both his upcoming Encore hotel-casino project in Las Vegas and Wynn Macau to give Singapore his full attention.
Whatever the case, the reality is that influential people are taking note of Adelson's ability to create high-profit alchemy. They recognize that it can translate across borders and overcome unique cultural predilections. Such is the hope in Singapore. With the help of Israeli architect Moshe Safdie, Adelson will be putting up the three-towered Marina Bay Sands there. The hotel-casino boasts theaters, an ice rink, an art and science center, a two-acre sky park and what will seem like miles of convention space. It's an impressively conceived spread and, with a budget of $2.75 billion, it's slated to be the most expensive hotel-casino in the world (just squeaking past Wynn Las Vegas, which came in at $2.7 billion). Now rumblings from Japan, South Korea and India indicate a desire for Adelson to duplicate his success on their soil. "My competitors can build beautiful hotels and operate the casinos," says Adelson, pointing out that he has an edge in new markets where city fathers want more than just gambling and restaurants and resort amenities. "We bring the convention strategy and the convention experience that nobody else has."
Adelson may now rank as America's casino and convention king, but it's definitely not the sort of life he was born into—or even born near. As the oft-told story goes, he was the son of poor immigrant parents and grew up in a tough section of Boston. His dad drove a taxi and young Sheldon wanted nothing more than to make money. He hawked newspapers as a kid and owned his first business by age 12. He was in the vending machine biz, worked as a court reporter and brokered mortgages. A serial entrepreneur, he claims to have developed more than 50 companies and brought them to various stages of maturity.
Though the breadth of his businesses was clearly broad, casino gambling was not what he found himself naturally drawn to. Las Vegas was pretty much off Adelson's radar during the early stages of his climb to self-made billionaire. Certainly, Sin City was far from his mind when he experienced the first of several coincidences that would conspire to lead him to his destiny in the desert.
In 1969, Adelson and a partner were happily tooling along as venture capitalists with their fingers in a lot of different pies. "Then," Adelson remembers, "one day the market crashed. Suddenly, my partner and I couldn't get second-round financing for investments that we had hoped to take public. Money dried up almost overnight." He relates this in an unemotional tone and explains that they dealt with the situation by splitting up their holdings. One of the pieces that went to Adelson was a trade magazine aimed at people in the data communication world.
Not long after, Adelson happened to attend a trade show for condominium developers put on by a magazine covering that industry, and Adelson came to the logical conclusion that his publication could do the same thing. So he organized a data communication show. It went well and, six years later, he started buying trade shows. It wasn't long before Adelson discovered the need for a show aimed at people in the personal computer realm. As he remembers it, "The price/performance ratio [of PCs] was increasing almost hourly; I saw something that nobody else saw." That gathering of technology's burgeoning titans grew up to become Comdex, which hit just as the incredible growth in the PC industry began to surge. Adelson's timing was perfect.
Trade shows and exhibitions became his bread and butter. Las Vegas emerged as the place to do the shows. In 1989, he purchased the Sands, a second-tier casino on the Vegas Strip, for $128 million. A former executive has commented, "The [Mirage's] front desk looked better than our whole hotel." But at the time that didn't bother Adelson. He had no real interest in entering the casino business. "I bought the Sands so that I could build a convention center," he says of the property that lost money for its first five years under Adelson. "Nobody saw Las Vegas turning into a series of mega-resorts. For me it was just an investment. I had to buy a hotel so that I could get the land. I wasn't even interested in owning a hotel."
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