Sheldon Adelson’s Las Vegas Sands, the international mega-casino and resort company with a market capitalisation of US$65 billion, finally on Friday officially took its Bethlehem Pennsylvania casino property off the market, after several months of unconfirmed rumours there was a deal in the works to sell it to fellow billionaire Carl Icahn’s Tropicana Entertainment.
In a recent quarterly earnings call, Sheldon Adelson was full of acclaim for both Las Vegas Sands achievements, and its future growth potential, in far-flung places such as Macau, and Singapore. In contrast, even Las Vegas itself, which used to be the cornerstone of the company and its most prolific cash cow, is now already a much smaller piece of the Las Vegas Sands global pie.
And as for their casino in Bethlehem, Pennsylvania, which pulled in a scant US$117 million in the first quarter in net revenues it had been semi-publicly up for sale for quite a while and got no mention at all.
Rumors have abounded for some months, however, that Carl Icahn’s Tropicana Entertainment was in line to buy the Bethlehem property, and that a deal was ready to go once there was a handshake between the two billionaires.
Already a month ago the local paper there, The Morning Call, ran a major article on a possible pending purchase, with town Mayor Robert Donchez saying, carefully, then “I’ve heard the rumors like everyone else, but I’ve heard nothing directly from the Sands or any possible buyer, ” adding that Sands’ interim President Douglas Niethold had told him that the Bethlehem casino was not yet sold, but that “for the last 1 1/2 years there probably have been discussions on selling it.”
Exactly what was on the table with Tropicana Entertainment then remained unclear, but sources told the paper that at least one model would have Las Vegas Sands sell the Sands casino, hotel, shopping mall and concert venue to Tropicana Entertainment. But all the spare real estate, including vacant former Bethlehem Steel buildings and the blast furnaces west of the casino – would be spun out and sold instead as development land for future development to a group of Bethlehem and New York investors who currently hold a minority share of the total property.
Well, instead, on Friday, Las Vegas Sands announced it now has no intention of selling its market-leading property in Pennsylvania and, in fact, is working on a variety of concepts in which the company would further invest in the property.
Las Vegas Sands also announced it has appointed Mark Juliano, an executive with extensive East Coast ties and industry experience, as the Bethlehem property’s new President. Mr. Juliano comes from Marina Bay Sands, the company’s integrated resort in Singapore, where he served as Senior Vice President and Chief Casino Officer.
Sheldon Adelson himself knocked in the final nail in the coffin of the sale rumours, saying ”We are certainly proud of the financial success Sands Bethlehem has achieved, but we are also very proud of fulfilling the commitments we made to the people of the Lehigh Valley. Bringing pride back to a historic site many thought was lost for good is the real legacy of Sands Bethlehem and that is the foundation on which we will continue to build.”
As a man well-known to be completely unsentimental about maximising his profits, Sheldon Adelson nevertheless has a considerable knack for saying exactly the right thing at the appropriate moment and his remarks are very apposite now they are keeping the casino.
Current Las Vegas Sands President and Chief Operating Officer Michael Leven said the company was extremely proud and appreciative of the continued loyalty and dedication exhibited by the property’s team members.
“Many of our people have been with us at Sands Bethlehem since the first day the doors opened and they have had to endure some trying events in recent months, including waves of media speculation about the future of the property. Today, that speculation stops, and a new chapter in the history of Sands Bethlehem begins, ” stated Mr. Leven.
He also said Mr. Juliano’s knowledge of the East Coast and previous operating experience in the region will make for a smooth transition, ensuring the property maintains the positive leadership role it plays in the community.
“Sands Bethlehem has become one of the leading entertainment and casino destinations on the East Coast, and I am very excited to be joining the team, ” Mr. Juliano said. “The property has had a tremendous run to this point, but I think there is a real sense of optimism that our best days are still ahead.”
The Sands Bethlehem casino resort is located on part of the site of the old Bethlehem steel mill. It was granted a gambling licence in 2006 when construction then commenced.
It opened finally only in the spring of 2009 after significant construction delays. these were caused by the difficulties of demolishing some of site’s original, very substantial, facilities including some very strong foundations.
Accordingly the new resort opened its doors just in time for the recession that hit the country with the US financial crisis. So now, after having early-on become a relatively insignificant star in the Las Vegas Sands cluster of galaxies, now the company has decided to knuckle down and really develop it in today’s improving US economic climate.
This could end up being a sound decision too; sometimes it is too easy just to sell something and move on when you have really only just begun to embrace its potential, whatever the lure of foreign parts may be.
As for Carl Icahn, after rescuing Tropicana Entertainment from bankruptcy in 2010 he probably thought he might pick up a bargain if Las Vegas Sands had bigger fish to fry. But Tropicana Entertainment itself is still relatively tiny, with a market capitalisation of only US$475 million presently, and probably not yet a strong cash buyer even today.
Hence the rumoured complex purchase formula hinted at above. Then, since Icahn didn’t get a bargain he just walked away could be a likely interpretation, though there has been no official comment either from him or from Tropicana Entertainment.