Skip to main content

Las Vegas developer reshapes Macau

By Eunice Yoon, CNN
Click to play
Casino comeback in Macau
  • The Sands Macau went public in Hong Kong last month, raising $2.5 billion
  • Macau and The Sands has had a dramatic turnaround since the financial crisis
  • Adelson: As Harry Belafonte said in a song: "I'm not going to take the money and run Venezuela"

Macau, China (CNN) -- In a jubilant ceremony late last month, The Sands Macau went public raising $2.5 billion. At the center of the festivities was Sheldon Adelson, chairman of the Las Vegas Sands.

But the scene here in Macau was far from festive last year, when the financial crisis put the brakes on tourist dollars, suspended construction on several casino projects and forced the American gaming conglomerate to the brink of collapse. Now Adelson says his company and its ambitious plans for Macau are back.

The cityscape of Macau is nearly unrecognizable 10 years after the former Portuguese enclave returned to Chinese rule, and the Sands properties have been a major part of the city's redevelopment. CNN sat down with Adelson to discuss the Sands and the future of Macau as the city begins its second decade under Chinese rule.

CNN: How does it feel to be able to raise all the money, especially after only a year ago people were concerned about your company?

Adelson: Well, I wasn't concerned about it. You know, a number of people have asked me that, "How does it feel to come back from the depths?" And I say, listen only you guys thought it was the depths, not me. We still have the same profit potential. It's just that we are stuck in the middle of this economic tsunami, and I don't think that doesn't really affect us. People talked about whether or not our financing, that our covenants would be tripped, and I knew for sure it wasn't going to be. As a matter of fact, I thought it was such great bargain, I put in a billion dollars. Now my piggy bank is a little thinner, I wish that could apply to me.

But there were serious doubts the Sands would continue to be a going concern.

I guess I'm pretty stupid then. You could only say that if everybody was saying the Sands had a risk of not being a going concern, then why did I put in a billion dollars? I knew that what the market was saying was wrong, and that nothing fundamentally had changed with our company.

So do you feel that the debt problems are behind you?

Not that I feel they are behind me, they are behind us. We are sitting with $5 billion unrestricted at the parent level. We have slightly over $5 billion in debt ... So if we took the $5 billion dollars we had and paid off the debt: Hello, cash. Goodbye, debt.

What do you say to investors who might think that you are overstretched with Singapore, with Macau, with Las Vegas?

I guess if they are so smart, then why aren't they rich? Why aren't they richer than we are? I would say to investors, you are wrong, we are not overstretched. Each of the debt that we have follows the fundamental strategic path that I laid out for it to begin with. Our fundamental business model says we build core and non-core assets, and we sell the non-core assets and pay down the debt to build the core assets.

What are you planning to do first with the money now that you've raised it?

As Harry Belafonte said in a song: "I'm not going to take the money and run Venezuela," I'm going to keep the money in the bank and make sure that we have sufficient cash to do whatever, to take advantage of any opportunity that comes up.

Has the economic crisis had any impact, altered your vision for Macau?

No. No. No. There's no such thing as a straight line up or down. It's never occurred in history, and there's no reason to think that's going to happen. We are in the business for the long-term, and we are interested in the fundamentals of business, and the fundamentals of our business model has been proven to be far more profitable, predictable and reliable than any other business models of our competitors.

What's your outlook for Macau?

Upwards and onwards, or onwards and upwards. There is 60% of the world's population within a flight time that is similar to the flight time from New York to Las Vegas. And how many people are there [near Macau] besides just from mainland China? There are 128 million middle class Japanese that also like to play. There are 44 million Koreans that also like to play.

How do you see Macau evolving over the next 10 years?

I see it growing the way I understand the Central government wants it to grow, and as I understand what we were brought in for, our background and our expertise. We changed Las Vegas from a casinos-only mentality into an integrated resort mentality.

How big and bustling do you see Macau compared to Las Vegas in, say 10 years?

First of all, there is very little land left in Macau. So my original vision for Macau was about half of the size of Las Vegas. Las Vegas now has 140,000 rooms. I had a vision for 60,000 rooms. But based upon the land that we can get, and the rest of the land has been given out to others as I understand it, if we were able to put up all the integrated resorts that we originally planned, we'll have 20,000 rooms, which is only 1/7 the size of Las Vegas, but for 10 years, it's going to be absorbed.

Were you disappointed in the debut at all?

Not at all, we are not day traders. We are not in there for one day trade. We are going to let somebody in Dubai, some world news affect? Our trading has nothing to do with it. It's just an opportunity to buy in at a lower price.