Adelson’s October Surprise By Ken Adams, CDC Gaming Reports November 2, 2020 at 3:00 am Sheldon Adelson has always been an outlier in gaming. His background and experience were from other industries, and his decisions and actions during his time in gaming have reflected that background. Consequently, most of the things that he has done have been surprising to traditional gaming people. His latest surprise came on October 26th. After the markets closed that day, a story broke that Las Vegas Sands was trying to sell its Las Vegas properties. Subsequently, the company released a statement acknowledging that it was, in fact, involved in discussions concerning a possible sale. The news was a bombshell and totally unexpected, a typical Sheldon surprise. The possible reasons for a sale remain obscure, but the speculation runs the gamut from Adelson’s age and health – the 87-year-old was diagnosed with non-Hodgkin’s lymphoma in early 2019 – the potential of a real estate investment trust to monetize the real estate, a switch in focus to an all Asian company, or an unexpected offer too good to ignore. In Las Vegas, Sands owns and operates the Venetian, Palazzo and Sands Convention Center. Initial estimates place the value of the properties at $6 billion. With the stock currently trading at $48 a share, the company’s market cap is $36.8 billion. Six billion is a tidy – and, let’s be honest, fairly incomprehensible – sum, but maybe not to Sheldon, the board, or the stockholders of LV Sands. Adelson is credited by Forbes as being worth $31.8 billion. He owns 58 percent of the company. In those terms, $6 billion is not enough to lead the company to do something compulsive and foolish. Las Vegas Sands Chairman and CEO Sheldon Adelson The news came just a week after the company’s quarterly earnings call. On that call, Adelson and other executives concentrated their comments on Asia. In any context, that is not unusual; the Sands derives 85 percent of its revenue from Macau and Singapore, and that 85 percent did not have a good quarter. While Las Vegas has been slower than other American markets to recover from the effects of the pandemic, Asia has been slower yet. In his remarks about Macau and Singapore, Sheldon reiterated his faith in the markets and its importance for Las Vegas Sands, but he did say that “in Las Vegas, we are pleased to report that the recovery is well underway. Weekend occupancies have been as high as 70%.” There was no hint of second thoughts about Las Vegas, or an end to Sands’ long history there. Adelson, with some assistance, bought the Sands in 1988. The name itself was already famous for its connection to Frank Sinatra and his Rat Pack antics; a Sinatra live album recorded in the Copa Room at the old Sands in 1966 sold more than a million copies. Over the years, Adelson built the Sands into a resort and convention driven business. He had prior experience in conventions; he and partners developed COMDEX in the 1970s and 80s. In 1995, they sold COMDEX for $982 million. Prior to COMDEX, Adelson had operated a tour bus company. Wikipedia says that, over the course of his career, he has created 50 businesses. That number seems somewhat fanciful, but never mind; his convention and tour experience led him to develop a business model unique at the time in Las Vegas. Up until that time, the major focus had been on the individual traveler, not the groups that Adelson courted. Then in 1999, the $1.5 billion Venetian opened. The once semi-private playhouse of Frank Sinatra and friends had been transformed into a playhouse for everyone, and for large groups of those everyones. Unlike the other industry movers, shakers and influencers, Sheldon Adelson was not a casino guy, not a gambler. He was simply a businessman that believed in a vertically integrated business model. He used that same philosophy to push for the development of the Cotai Strip; somewhere between $20 and $30 billion in investments have been made on that Strip. Adelson’s vision was larger than a single casino, he envisioned a Las Vegas-like strip with many casinos and operators. As a result, Macau has ten multi-billion-dollar destination resorts on the Strip; two more are expected to open within a year. It is a major attraction for gamblers from around the world. Adelson tried unsuccessfully to bring that same vision to Spain later. Sheldon’s surprises have not all been limited to gaming. For reasons that are not entirely clear, some years ago Adelson switched from supporting the Democratic Party to the Republican Party, claiming the Democrats had deserted their values. Sheldon has since been extraordinarily generous to the candidates he supports, and with each presidential election cycle he has gotten more generous. He is now the largest Republican political donor in the country, giving over $100 million in a presidential year. But possibly his most surprising move involved the Las Vegas Review-Journal. In 2015, a group backed by Adelson bought the Las Vegas Review-Journal for $140 million, a price nearly ten times its estimated value. The move was not completely out of character for him, however. For more than ten years, Adelson had been involved in media in Israel. In both cases, it appears that Adelson might have wanted to shape the political process with the media, much in the same way he’s shaped it with his money. In the case of the media and political donations, he is in a class of his own, at least for a guy that owns casinos. There are other big political donors in the industry, Steve Wynn for one, who has also been a strong supporter of the Republican Party and whose exposure last year as a sexual predator hasn’t seemed to matter even a little to the party he helps fund. But Steve is small potatoes compared to Adelson. The big question before the 2016 election was “Who will Adelson support?” He famously held auditions where he forced each of them to come to Vegas and interview for his cash. That, too, was the first of its kind, and a surprise even to veteran political observers. Is Adelson too sick to continue, and does he thus want to sell his casinos interests? Is the company going to double down in Asia, chasing casinos in Japan, the Philippines, Vietnam, and Cambodia? Has Las Vegas become too difficult for the Sands? Did someone offer Sheldon enough money to turn his head? The range of questions is reflective of the enigma of Sheldon Adelson. He walks to his own beat. And that pretty much guarantees that whatever comes next from the Sands boardroom or the Adelson residence will be a surprise.