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March 15, 2013

Sands to bring new $9.8 billion, four-resort complex to Spain

Matt Assad, The Morning Call, March 11, 2013

As Las Vegas Sands tries to sell its casino in Bethlehem, it's looking to build one more that 10 times the size in Europe.

The Las Vegas-based gambling giant last month announced it has squirreled away $3.6 billion in cash to begin building the massive EuroVegas in Spain later this year. Even as Sands seeks buyers for Bethlehem, it wants to start construction on a $9.8 billion, four-resort complex that would include casinos, 3,000 hotel rooms and a stadium.


The simultaneous efforts to jettison Bethlehem, while proposing massive resorts around the world appears to suggest that Sands CEO Sheldon Adelson's experiment in running smaller, regional casinos like Bethlehem is over.

"It's safe to say that Las Vegas Sands is focused on large-scale integrated resorts, rather than smaller, regional sites," Las Vegas Sands spokesman Ron Reese said. "That said, we're very proud of our investment in Bethlehem."

Proud, but not looking to replicate it anywhere else, according to industry analysts who say Sands' actions have made that clear. Since Sands Casino Resort Bethlehem opened four years ago, the company has had a chance to spread the model to other states, but decided against jumping into gambling expansion in Maryland, Ohio and Massachusetts.

Instead, it has gone global in an effort to spread the model that is making billions in Singapore and Macau, China. In addition to Spain, Sands is also closely watching new efforts to expand gambling in Japan, Korea, Vietnam and Thailand, Reese said.

Its latest plan, EuroVegas, is very unlike Bethlehem.

To be under construction just outside Madrid as early as the end of this year, EuroVegas is a massive plan that would almost single-handedly prop up a region suffering from 26 percent unemployment.

The $9.8 billion phase one would include a 72-story hotel tower that would be the region's largest building. That would be part of a four-resort complex of four casinos, retail shops, entertainment facilities and a stadium due to be open at end of 2017.

The full complex, built in three phases and taking an estimated 18 years, would include 12 resorts, 12 casinos, nine theaters, three golf courses and a stadium, said Sands President Michael Leven last month in Madrid. Leven, who last visited Bethlehem in 2010, joked that the 79-year-old Adelson hoped to have it complete before his 100th birthday.

Reese cautioned that Sands still has to get through the regulatory process, acquire property and line up financing. And there are opposition groups fighting to keep casinos out of Spain.

But government officials in Alcorcon, Spain, seem ready for Sands to come. Mired in Spain's recession-induced austerity measures, the city of 168,000 just west of Madrid, could see tens of thousands of new jobs in phase one alone.

The full Sands development is projected to employ 165,000 people. Though the most optimistic estimates have the first casinos opening more than four years from now, the city has been inundated with people applying for work.

The plan mirrors the multibillion-dollar developments in Macua and Singapore and bears little resemblance to Bethlehem. While Sands' $800 million investment here is the largest in the state, its 302-room hotel and 2,500-member workforce is no longer in the company's business plan, said Robert LaFleur, senior gaming sector analyst at Cantor Fitzgerald in New York.

"When you look at how massive LVS has become, doing a project the size of Bethlehem doesn't make sense anymore," LaFleur said. "When you are trying to grow a company that large, building another Bethlehem just doesn't move the needle."

A look at Las Vegas Sands revenues makes that perfectly clear. According to its annual report for 2012, earnings before interest, taxes, depreciation and amortization - the primary measure of casino resort profits - were $3.8 billion in 2012. Bethlehem's $114 million in for the year represents just 3 percent of that.

Macau brought in $2 billion and Singapore $1.3 billion. Even Las Vegas, at $331 million, is a little brother in this equation.

So, the answer to the "Sesame Street" question, 'Which of these is not like the other?' is obvious.

That may explain why Sands has sent up a test balloon searching for buyers for Bethlehem. The company has not commented on that effort, and Reese said he's not aware of any offers for the Bethlehem property.

Still, Bethlehem Mayor John Callahan said the reason Sands isn't building casinos like Bethlehem anymore - it's too small to have an impact on revenues - might be why the city shouldn't fear a sale.

While Callahan said Bethlehem was lucky to have a casino company with pockets deep enough to continue building through the recession, he also said it's possible a sale could bring benefits.

"We've had a great relationship with Sands, so there would be that fear of the unknown if a sale happened," Callahan said. "But the flip side of that is we recognize we're a very small portion of their operation. As a bigger part of another company's operation, we might command more attention."

The kind of attention Alcorcon is about to get.



Reporter Milton D. Carrero contributed to this story. ___

(c)2013 The Morning Call (Allentown, Pa.)

Visit The Morning Call (Allentown, Pa.) at www.mcall.com

Distributed by MCT Information Services

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