Some are calling it smart business. Others are reminiscing about the changing corporate landscape of Las Vegas. Still more must be wondering whether they’re getting out while the getting’s good.
But whatever your opinion of the departure of Las Vegas Sands Corp. from the city that enabled its founder to become a household name in the gaming industry, it’s a remarkable turn of events that reverberates from the Strip to Singapore.
Just weeks after the death of Sands Chairman and multibillionaire Sheldon Adelson, Las Vegas Sands has announced the pending sale of its two Nevada properties in an impressive $6.25 billion deal. The partnership of Apollo Global Management and VICI Properties is also impressive. It’s paying $2.25 billion for the Venetian operating company with VICI picking up the real estate assets for the remaining $4 billion. The deal includes the behemoth Las Vegas Sands Expo Center and a total of 7,000 rooms including the Palazzo.
Whether the arrangement will complicate the lives at the Gaming Control Board and Gaming Commission remains to be seen, but the experience of both companies figures to help smooth the transition.
For me, it’s a reminder that the gaming industry never sleeps. It constantly evolves and becomes increasingly reliant on world markets and morphing technology.
Rumors of a likely sale surfaced in the third quarter of 2020 as word of Adelson’s declining health circulated and his favorite politician began stalling in polls. Adelson’s death in January only increased speculation that the company was headed into a new chapter.
The announcement of a sale and complete departure from Las Vegas – a move that includes trimming the founding city from the corporation’s name – was still big news. It isn’t every day major casino corporations take a look around and are no longer excited about the Las Vegas gambling market.
Amid a protracted coronavirus pandemic that forced Nevada Gov. Steve Sisolak to close casinos a year ago and only recently announced a substantive loosening of the social-distancing and crowd restrictions, the near-term prospects for all casino companies remain pretty dismal. Companies that traditionally have been big winners find themselves keeping formerly profitable operations closed due to a lack of business.
Unlike some others who like to talk about Las Vegas being “over,” I think a new Las Vegas will emerge from the COVID-19 crisis that can be just as entertaining and profitable. But operators so accustomed to racing to the bottom line and enthusing about endless growth possibilities in the ultimate gambling boomtown will have to display some patience.
Here is where I think (Las Vegas) Sands might have made a mistake by leaving the land where its name and influence have rivaled any in our history. Adelson’s influence was undeniable, whether he was moving the Nevada Republican Party around like pieces on a chessboard or privately paying $140 million for the hometown Las Vegas Review-Journal newspaper. Whether politics or public opinion, the company enjoyed unprecedented clout here.
Perhaps it was time for a new Sands to move out of its comfort zone and into the substantial upside of chasing the seemingly limitless Asian gaming market in Macau and Singapore. There’s no denying cutting a $6.25 billion deal in a COVID-staggered economy was no small feat.
It’s also obvious that the Sands’ attention has been keenly focused on the Asian market for some years. Company CEO Rob Goldstein was unabashed when he said recently, “We’ve always believed there’s no better market for our company to invest in than Macau.” At last count, since 2004 it had invested more than $15 billion in Macau and Singapore, with plans to spend another $5.5 billion by 2025.
Call me naïve. It wouldn’t be the first time. But I think having a Las Vegas presence in the industry carries important weight. I think a Nevada gaming license brings a level of credibility to companies seeking to expand their operations into new jurisdictions.
Take New York. Sands would like to. And it’s not alone.
Maybe it won’t matter. There’s certainly a logical explanation for a company making substantive changes in the wake of the death of its high-profile founder.
We won’t know for a while, because Las Vegas won’t return to anything resembling normalcy until the fog of pandemic finally clears across the nation. That will take time.
When it does happen, who knows? Maybe some companies will bring their big bankrolls and buy their way back into the game.
