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Adelson Survives Like `Cockroach' After $30 Billion-Plus Loss
By Peter Robison
Nov. 12 (Bloomberg) -- No one climbed the list of American billionaires faster than Sheldon Adelson. And this year no one is falling any more quickly.
A year after calling critics of his expansion strategy for Las Vegas Sands Corp. wrong, Adelson on Nov. 10 was forced to slow or suspend new projects from Macau to Pennsylvania and invest $525 million of his family's money in the company to avoid bankruptcy. That's on top of $475 million he put up in September.
Even so, it's too early to count the 75-year-old entrepreneur out, long-time associates say.
``If the world came to an end, there would be cockroaches and Sheldon,'' said David Kaminer, 64, a former vice president at an Adelson operation that ran the Comdex computer trade show in Las Vegas. ``And Sheldon would immediately be smart enough to open a pest-control company.''
Adelson, 75, a former bagel salesman who said in 2006 he would end up richer than Bill Gates, now faces dissension within the ranks of his senior managers, according to a regulatory filing that disclosed the formation of a committee to ``resolve disagreements.'' As the credit crunch and economic decline squeeze gambling's growth, he risks the loss of some of his trophy properties, said John Staszak, an analyst with Argus Research Corp. in New York.
``He's bought time'' with the new capital infusion, said Staszak, who has a ``sell'' rating on the stock. ``The future is not good, quite frankly.'' Las Vegas Sands lost $32 million in the quarter ended Sept. 30.
50 Percent More Common
Adelson's company, best-known for the Venetian casino on the Las Vegas Strip, said yesterday it will raise $1.62 billion from sales of preferred stock, warrants and 181.8 million common shares at $5.50 each. That increases the outstanding common stock by more than 50 percent.
Las Vegas Sands shares fell $2.66 to $5.34 yesterday, taking their one-year decline to 95 percent. The stock peaked at $144 in October 2007. The value of Adelson's two-thirds stake fell to less than $2 billion after surpassing $32 billion last year.
Underlining what's at risk for Adelson and his company, the government of Macau -- the Chinese gambling hub where Las Vegas Sands collects two-thirds of sales -- said yesterday that it would take over any casino that goes bankrupt. Macau Chief Executive Edmund Ho told reporters he wasn't referring specifically to Las Vegas Sands.
Las Vegas Sands spokesman Ron Reese didn't reply to two calls seeking comment.
Bagels in Boston
The son of a Lithuanian immigrant taxi driver, Adelson grew up in Boston where he shared a one-bedroom apartment with his parents, two brothers and a sister, Kaminer said. After selling newspapers and bagels as a teen, he worked as an advertising salesman, investment adviser and magazine publisher before founding Comdex in 1979. The $800 million sale of his trade-show company gave him the cash to build a casino empire.
He delighted in his run up the Forbes list of wealthiest Americans after he took Las Vegas Sands public in 2004. Ranked No. 60 in 2004, with a net worth of $3 billion, he reached No. 3 in 2006, with $20.5 billion. That year, he said he'd already figured out when he would pass Gates to top the list.
During this period, Adelson got rich faster than anyone in history, ``making just under $1 million an hour,'' said Peter W. Bernstein, co-author of ``All the Money in the World,'' a study of billionaires on the Forbes list out in paperback next month.
Losing $3.5 Million an Hour
Forbes recalculated its rich list for the Oct. 27 issue and found Adelson's fortune dropped $4 billion from Aug. 29 to Oct. 1, the steepest decline for any American who lost at least $1 billion. At his present pace, the one-year loss may rank as the largest ever for a U.S. billionaire in percentage terms, according to Bernstein.
Since Las Vegas Sands stock peaked, Adelson lost about $3.5 million an hour, counting just the value of his stake.
Adelson expanded at ``the worst possible time,'' said Travis Sell, a consumer-industry analyst at Minneapolis-based Thrivent Asset Management, which doesn't own shares in Las Vegas Sands.
Gaming revenue for Las Vegas Strip casinos fell for the eighth straight month in August from a year earlier, the longest streak of declines since records began in 1983, according to the Nevada Gaming Control Board in Carson City. Macau felt the contraction as the number of visitors was off 10 percent in September.
Big Bet on Macau
Adelson bet more heavily on Macau than any other U.S. casino, pledging $12 billion for new hotels, casinos and condominiums to create a mass-market tourist destination like Las Vegas. The Sands Macao was the first Vegas-style casino to open there in 2004, followed three years later by the Venetian Macao. Work has started on five other developments, among them a tower called the Shangri-La.
His decisions went against the grain of other casino operators, who were pulling back. As the subprime credit crisis worsened, Adelson was opening a 50-floor tower called the Palazzo adjacent to the Venetian in Las Vegas, making the 7,093- room complex the largest hotel and resort in the world.
Steve Wynn, chief executive of Wynn Resorts Ltd., delayed expansion of the Wynn Macau after the Chinese government began restricting visas in April 2007. Adelson called Wynn's decision ``wrong'' in August 2007.
``If Steve Wynn is so smart, why isn't he richer than I am?'' Adelson said in a Bloomberg TV interview. ``I've proven it over 50 times in my life: You change the status quo, then you're going to win.''
Wynn Moves To Top
Wynn Resorts has withstood the dip in gambling revenue better than the Las Vegas Sands and replaced it as the largest casino operator by market value last month. Adelson's hotel slipped to third place, behind Wynn and MGM Mirage.
Adelson's company said Nov. 10 it would leave the Macau developments half-finished as it focuses on completing a new casino in Singapore. Executives said they hope to secure financing in three to six months to finish the work in Macau.
``The bottom line is there were two paths chosen in Macau - - one was the mass-market, leveraged growth strategy: `If you build it they will come,'' said Joel Simkins, an analyst at Macquarie Capital (USA) Inc. in New York, referring to Adelson's strategy. ``Steve's was, ``Let's go for the high end of the market. Let's build what's appropriate.'' Simkins has a ``sell'' rating on Las Vegas Sands.
Along the way, Adelson's go-for-broke attitude made him enemies. D. Taylor, secretary-treasurer of Culinary Workers Union Local 226 in Las Vegas, has fought unsuccessfully to unionize workers at the Venetian. The union is defending itself against a defamation lawsuit Adelson filed in the U.K., according to Taylor.
The casino owner also sued the union in 1997 for picketing on the sidewalk in front of the Venetian. He pursued the case to the U.S. Supreme Court, which declined to overturn an appellate court that ruled the sidewalk constituted a public forum.
``His arrogance came back to haunt him,'' Taylor said.
To contact the reporter on this story: Peter Robison in Seattle at [email protected]
Last Updated: November 12, 2008 00:30 EST
By Peter Robison
Nov. 12 (Bloomberg) -- No one climbed the list of American billionaires faster than Sheldon Adelson. And this year no one is falling any more quickly.
A year after calling critics of his expansion strategy for Las Vegas Sands Corp. wrong, Adelson on Nov. 10 was forced to slow or suspend new projects from Macau to Pennsylvania and invest $525 million of his family's money in the company to avoid bankruptcy. That's on top of $475 million he put up in September.
Even so, it's too early to count the 75-year-old entrepreneur out, long-time associates say.
``If the world came to an end, there would be cockroaches and Sheldon,'' said David Kaminer, 64, a former vice president at an Adelson operation that ran the Comdex computer trade show in Las Vegas. ``And Sheldon would immediately be smart enough to open a pest-control company.''
Adelson, 75, a former bagel salesman who said in 2006 he would end up richer than Bill Gates, now faces dissension within the ranks of his senior managers, according to a regulatory filing that disclosed the formation of a committee to ``resolve disagreements.'' As the credit crunch and economic decline squeeze gambling's growth, he risks the loss of some of his trophy properties, said John Staszak, an analyst with Argus Research Corp. in New York.
``He's bought time'' with the new capital infusion, said Staszak, who has a ``sell'' rating on the stock. ``The future is not good, quite frankly.'' Las Vegas Sands lost $32 million in the quarter ended Sept. 30.
50 Percent More Common
Adelson's company, best-known for the Venetian casino on the Las Vegas Strip, said yesterday it will raise $1.62 billion from sales of preferred stock, warrants and 181.8 million common shares at $5.50 each. That increases the outstanding common stock by more than 50 percent.
Las Vegas Sands shares fell $2.66 to $5.34 yesterday, taking their one-year decline to 95 percent. The stock peaked at $144 in October 2007. The value of Adelson's two-thirds stake fell to less than $2 billion after surpassing $32 billion last year.
Underlining what's at risk for Adelson and his company, the government of Macau -- the Chinese gambling hub where Las Vegas Sands collects two-thirds of sales -- said yesterday that it would take over any casino that goes bankrupt. Macau Chief Executive Edmund Ho told reporters he wasn't referring specifically to Las Vegas Sands.
Las Vegas Sands spokesman Ron Reese didn't reply to two calls seeking comment.
Bagels in Boston
The son of a Lithuanian immigrant taxi driver, Adelson grew up in Boston where he shared a one-bedroom apartment with his parents, two brothers and a sister, Kaminer said. After selling newspapers and bagels as a teen, he worked as an advertising salesman, investment adviser and magazine publisher before founding Comdex in 1979. The $800 million sale of his trade-show company gave him the cash to build a casino empire.
He delighted in his run up the Forbes list of wealthiest Americans after he took Las Vegas Sands public in 2004. Ranked No. 60 in 2004, with a net worth of $3 billion, he reached No. 3 in 2006, with $20.5 billion. That year, he said he'd already figured out when he would pass Gates to top the list.
During this period, Adelson got rich faster than anyone in history, ``making just under $1 million an hour,'' said Peter W. Bernstein, co-author of ``All the Money in the World,'' a study of billionaires on the Forbes list out in paperback next month.
Losing $3.5 Million an Hour
Forbes recalculated its rich list for the Oct. 27 issue and found Adelson's fortune dropped $4 billion from Aug. 29 to Oct. 1, the steepest decline for any American who lost at least $1 billion. At his present pace, the one-year loss may rank as the largest ever for a U.S. billionaire in percentage terms, according to Bernstein.
Since Las Vegas Sands stock peaked, Adelson lost about $3.5 million an hour, counting just the value of his stake.
Adelson expanded at ``the worst possible time,'' said Travis Sell, a consumer-industry analyst at Minneapolis-based Thrivent Asset Management, which doesn't own shares in Las Vegas Sands.
Gaming revenue for Las Vegas Strip casinos fell for the eighth straight month in August from a year earlier, the longest streak of declines since records began in 1983, according to the Nevada Gaming Control Board in Carson City. Macau felt the contraction as the number of visitors was off 10 percent in September.
Big Bet on Macau
Adelson bet more heavily on Macau than any other U.S. casino, pledging $12 billion for new hotels, casinos and condominiums to create a mass-market tourist destination like Las Vegas. The Sands Macao was the first Vegas-style casino to open there in 2004, followed three years later by the Venetian Macao. Work has started on five other developments, among them a tower called the Shangri-La.
His decisions went against the grain of other casino operators, who were pulling back. As the subprime credit crisis worsened, Adelson was opening a 50-floor tower called the Palazzo adjacent to the Venetian in Las Vegas, making the 7,093- room complex the largest hotel and resort in the world.
Steve Wynn, chief executive of Wynn Resorts Ltd., delayed expansion of the Wynn Macau after the Chinese government began restricting visas in April 2007. Adelson called Wynn's decision ``wrong'' in August 2007.
``If Steve Wynn is so smart, why isn't he richer than I am?'' Adelson said in a Bloomberg TV interview. ``I've proven it over 50 times in my life: You change the status quo, then you're going to win.''
Wynn Moves To Top
Wynn Resorts has withstood the dip in gambling revenue better than the Las Vegas Sands and replaced it as the largest casino operator by market value last month. Adelson's hotel slipped to third place, behind Wynn and MGM Mirage.
Adelson's company said Nov. 10 it would leave the Macau developments half-finished as it focuses on completing a new casino in Singapore. Executives said they hope to secure financing in three to six months to finish the work in Macau.
``The bottom line is there were two paths chosen in Macau - - one was the mass-market, leveraged growth strategy: `If you build it they will come,'' said Joel Simkins, an analyst at Macquarie Capital (USA) Inc. in New York, referring to Adelson's strategy. ``Steve's was, ``Let's go for the high end of the market. Let's build what's appropriate.'' Simkins has a ``sell'' rating on Las Vegas Sands.
Along the way, Adelson's go-for-broke attitude made him enemies. D. Taylor, secretary-treasurer of Culinary Workers Union Local 226 in Las Vegas, has fought unsuccessfully to unionize workers at the Venetian. The union is defending itself against a defamation lawsuit Adelson filed in the U.K., according to Taylor.
The casino owner also sued the union in 1997 for picketing on the sidewalk in front of the Venetian. He pursued the case to the U.S. Supreme Court, which declined to overturn an appellate court that ruled the sidewalk constituted a public forum.
``His arrogance came back to haunt him,'' Taylor said.
To contact the reporter on this story: Peter Robison in Seattle at [email protected]
Last Updated: November 12, 2008 00:30 EST
