Casino Journal's 2010 Gaming Executive of the Year
by James Rutherford
June 1, 2010
The Adventure Gene
Authentic Italian gondolas ply the canals that wend through the Venetian hotel-casino's Canal Shoppes
I’d never seen a Nobel laureate in the flesh either, but as we enter the conference room, there is Elie Wiesel leaving Adelson’s office in the company of Adelson’s wife, Miriam, a physician and an Israeli by birth. Wiesel, Holocaust survivor, humanitarian, winner of the Nobel Peace Prize, is one of the better-known members of Bernie Madoff’s sucker list. The scale of his misfortune has been reported at upwards of $37 million, including all the assets of the Elie Wiesel Foundation for Humanity.
Of course, Adelson’s philanthropy in the Jewish community and on behalf of the state of Israel is almost as well-documented as his legendary pugnacity.
“That’s Elie Wiesel. You know who that is?” he says to me quietly as he takes his seat at the head of the conference table. An aide comes with a cup of tea and a dainty slice of dark bread and sets them in front of him. The table is topped with granite of a rich, flecked, chocolate-gold finish that is all but buried under papers, notes, bound reports, drawings, renderings.
At 76, Adelson, who never in his life would have been mistaken for a big man, seems obscured by the clutter and the attention.
Then he speaks. “Shoot,” he says in that gravelly voice. Suddenly the room is his. And I’m reminded of something Michael Leven, the company’s chief operating officer, told me. “At the end of the day,” he said, “you’re looking at a person who is a historical character.”
Leven, a veteran hotelier in his own right, 72 years old, a former president of Days Inn and Holiday Inn Worldwide, founder of the company that developed the Microtel and Hawthorne Suites brands, knew Adelson when the latter was operating charter tours, and later when Adelson had Comdex and Leven was running Days Inn they’d meet from time to time over dinner. He remembers Adelson in those days as the “penultimate entrepreneur, incredibly creative and wide-thinking. … And incredibly optimistic,” he adds, “which is what you have to be to be a successful entrepreneur.”
Leven turned down an offer to run the Sands when Adelson bought the famed Strip resort in 1988. When Adelson took Las Vegas Sands public in 2004 Leven accepted a seat on the board of directors and served for about a year. When he finally accepted Adelson’s offer of employment last March he wasn’t surprised to see that his new boss hadn’t changed.
“He’s not a corporate CEO, he’s an entrepreneurial CEO,” he says. “A very broad strategic thinker: ‘We’re going to build a business with my vision.’”
Managerial processes and procedures, the accounting and cost controls, the legal and regulatory intricacies, these are of little interest to him. His end of this enormous global enterprise is Sheldon Adelson.
“What he brings is his own iconic nature,” Leven says. “He has the ability to draw immense numbers of people to him because he’s done things no one else has done. … It’s not about wealth. There are lots of wealthy people. He changed Las Vegas.”
It hasn’t been that long, not two years, since Adelson’s vaunted Las Vegas convention model appeared to lie in ruins. The housing crash had morphed into widespread panic, the economy was hemorrhaging jobs, consumers stopped spending, the credit and equities markets were in a swoon. Earnings had hit the skids up and down the Strip. Las Vegas Sands wasn’t the only company in danger of foundering on its loan covenants. Then Adelson delivered a gesture worthy of an icon, going into his pocket for $1 billion.
Analyst Joel Simkins of Macquarie Securities calls it “a case of too-big-to-fail applying to the gaming industry. It was the same for Harrah’s, MGM Mirage, all of them. The banks realized they had to be flexible or they were going to own all these assets.”
For Deutsche Bank analyst Andrew Zarnett, though, Adelson going to the mat like that was “an incredibly important moment.”
“It gave investors reason to believe in the company as much as he believed in the company.”
Which, for Adelson, had been the frustrating part all along.
“I’d say to people, ‘Why is the stock going down?’ They’d say, ‘I don’t know.’ … ‘Well, you’re in the market, why don’t you tell me why it’s going down.’ They said, ‘Well, why do you think?’ I said, ‘All I can tell you is why I don’t think it should go down.’ And they said, ‘What is that?’ I said, ‘Nothing has fundamentally changed with our company.’”
The rest of us didn’t see it that way. Chapter 11 seemed inevitable.
“Never,” he asserts sharply. “Because I knew I had the money. From my own personal bank account. I knew if worse came to worse I could bail out the company myself.”
Twelve months earlier, LVS was trading north of $140 and only Bill Gates and Warrant Buffett outranked him on the Forbes 400. But there was little he or anyone could do stop the investment community from deserting the industry en masse. By March 2009, around the time Leven took the helm, the stock had fallen below $2 and 65 percent of his wealth was gone. He bought more stock. “I knew everything was going to be all right,” he maintains. “At all times. I knew … I knew. … And I discussed it with my family. And we were ready to do what it took to get the company back on its feet. Because nobody ever expected the stock to go down to $1.38. … We’re up now to almost $24.50. That’s 1,500 percent.”
To be precise, a couple of hours before we’d gathered around the conference table, LVS had closed at $24.43, good for about $10.8 billion for the Adelsons.
Once again, the man had lived to savor what must be one of the most satisfying experiences imaginable — the one where you get to be colossally rich by being right when so many others believed you were wrong.
Recalling it now, his voice goes surprisingly soft. “A billion dollars,” he says, the words dipping almost to a whisper. He finishes with an impish smile. “But, you know, a billion dollars doesn’t buy what it used to.”
Leven says, “He has the largest testicular dimensions of anyone I know.”
I’m one of the most curious guys you’ve ever met,” Adelson says. “I want to know how everything is made.” He taps on the table. “This granite, I want to know how this is created. I want to know how they make leather. I want to know how wood is fabricated, how stone is fabricated. I want to know about everything. And why am I doing all these things that I do? I believe I have a need to accomplish things, and I have a need to take a risk to accomplish things. Why would somebody take so many chances in life? And have so much risk? I don’t know. I think it’s in my genes.”
He says his wife, an internist with a specialty in chemical dependency, sees it as a form of compulsive behavior.
“I call it an ‘adventure’ gene,” he says. “What is the mentality of someone who goes from one business to another, or gets motivated to create things? I think it’s a risk-taking-mentality gene. That person needs something to satisfy the genetic desire for accomplishment.”
It’s this appetite for risk, ensconced on the throne of his personality, of one substance with it, its lord and master, that defines the entrepreneur, the appellation he feels defines him, and a word he particularly enjoys, the Boston growl falls away when he pronounces it, it rolls from his lips with a succinct, rounded precision.
What Leven sees is what we’ve all seen, the “unstoppable, insatiable desire to win,” as he describes it.
Adelson would not disagree, although he suggests there is more than one side to it. In explaining it his thinking seems to grow more expansive. The stock enjoying its best prices in more than 18 months may have something to do with it. Or maybe while the camera has been rolling and my cassette tape running he’s hit upon some novel way to help his friend Elie Wiesel. “My perspective is, look, what is the purpose of being financially successful if you can’t do things for the betterment of people?” he says. “The achievement of riches is only a tool to do things that in your heart you feel you want to do.”
He directs my attention to a poster on the wall behind me for the Dr. Miriam and Sheldon G. Adelson Medical Research Foundation — “a paradigm-changing technique to conduct medical research,” he calls it, in which he distributes grants for collaborative studies that bring together different, and in some cases, disparate, disciplines. The foundation currently supports some 200 scientists working in 70 institutions. It’s one of a long list of causes that lay claim to the millions he gives away.
“That’s the reason why I want to make more money. To give away more money.”
Ron Reese, the VP of Communications, leaves me at the elevator in the hotel lobby, where the line to check in snakes back maybe 30 yards. The interview is over and I want to ask him about the video camera. But now it doesn’t seem to matter. Floating somewhere in the cavernous space above me is Mozart’s Piano Concerto in C Major, the 25th. I follow the music down a long, wide, giddily ornate corridor swarming with tourists. The Chinese can’t get enough of this stuff. Their arms in the air, cell phones stretched toward the vaulted, faux Rococo ceiling, they stare intently into their tiny screens, their mouths agape, expressions frozen somewhere between duty and excitation, as if something very important is going to fall any minute from the faux frescoes splashed high above them and they need to be there to catch it.
Across the casino floor I manage to pick out a strange, golden light in the distance. I move toward it — past the last phalanx of slot machines, past a bit of fake Paris called Pinot Brasserie, past the pretty young clerk trying to stay awake at the Swarovski stand, past the Blue Man Theatre and Delmonico’s — it’s the Salvatore Ferragamo shop at the entrance to The Palazzo. And there’s Barney’s New York and Bellusso and Ralph Lauren and more Chinese taking pictures. It’s a shrine to affluence piled three stories high around an atrium lush with foliage and crowned by an enormous domed skylight. Suspended from the skylight are maybe 50 pastel-colored umbrellas. A waterfall tumbles between the escalators, mellifluous and shimmering. Nearby a fountain sparkles with hundreds of coins destined for The Dr. Miriam And Sheldon G. Adelson Clinic for Drub Abuse Treatment and Research, each coin to be matched by the doctor and the chairman of the board.
“May All Your Wishes Come True,” the plaque says.
He’s the classic American tale, isn’t he, the tale we won’t let go of even after everything that’s happened — born in the depths of the Great Depression, the child of immigrants, the cab driver’s son who through brains, discipline, charm and an unquenchable desire to succeed rises to become the third-richest person in the richest country on Earth. He has owned 50 companies, by his count, in the 64 years since he first went into business for himself at the age of 12, borrowing $200 from an uncle to sell newspapers, so the story goes. He is, as Leven implies, larger than life.
“Honestly,” Simkins says, “you can put him up there with any of the big dreamers we’ve had — Sam Walton, Ray Kroc — the individuals who thought the unthinkable.”
Simkins remembers rating the Venetian bonds back in 1998 as a junior analyst at Moody’s. “They were telling us, ‘We going to get $125 midweek from the conventioneers.’ People laughed. But the guy has had a tremendous ability for unlocking opportunities in gaming that no one visualized.”
Kareem Jalal, publisher of the Macau-based trade monthly Inside Asian Gaming, says, “He’s the only one who has taken Macau beyond its erstwhile gaming focus. He’s the only one who’s brought major shows in. Sheldon has delivered. He built 1.2 million square feet of convention space. Larger than anything in Hong Kong. … Venetian Macao does well. It’s gaudy, it’s kitschy. The Chinese walk around it and take pictures. They don’t eat at the restaurants, they don’t buy in the stores, it’s all gambling, but they love it. To the Chinese it’s a huge theme park. Then you look across the street at City of Dreams — which if I were a Chinese person from the mainland I wouldn’t find it very impressive — and it is having its problems.”
Union Gaming Group analyst Grant Govertsen calls him “absolutely the gaming visionary extraordinaire.”
Adelson demurs. “It wasn’t what I saw, it was what I experienced. I was Las Vegas’ biggest convention customer with Comdex. And I had a couple other shows. This was my profession for a long time. It’s 40 years now that I’ve been in the convention business. So I saw it from a different viewpoint. Here people thought, the operators thought, that the purpose of Las Vegas was gambling. And I said to myself, the purpose of Las Vegas is the fungibility of money.”
The day I talked with Sheldon Adelson the company was about to close on $1.75 billion in bank loans to complete three more hotels and a casino on the Cotai Strip, and they were coming off their best quarterly results in two years: EBITDA up 42 percent to $371 million on record revenues of $1.33 billion, largely on the strength of a Macau market that is going gangbusters. As of this writing, early results for May had the Chinese casino enclave well on the way to another record month, table game revenues up 90 percent year on year to more than $1 billion.
He quips that “The only way you can stop the Chinese from gambling is just lock the door and don’t let them in.”
In less than a week he would be in Singapore for the soft opening of Marina Bay Sands, at $5.5 billion the most expensive gambling resort ever, a project commensurate with his towering ambition: 2,560 hotel rooms at full build-out, 160,000 square feet of casino space, 800,000 square feet of retail and dining, 1.3 million square feet of convention and meeting space, a three-acre city park 650 feet in the air. Analysts believe it could develop into the most lucrative casino in the world, capable of generating in the neighborhood of $1 billion of EBITDA a year.
“If we fast-forward to 2012,” Zarnett says, “the EBITDA this company generates will be the largest in the industry worldwide.”
Adelson flashes a light pen at the far wall to direct my attention to two elaborate scale models enclosed in clear plastic on either side of the conference room doors. They depict the same resort, both all in white, a mythical city of alabaster, like something out of the movies, a place almost unattainably dreamlike.
“You see that,” he says, “I want to do that somewhere.”
It’s amazing, really. Here we are inside a giant knock-off of Casanova’s Venice, replete with its own Rialto Bridge and canals and gondoliers. It cost $1.5 billion to build more than 10 years ago. It’s a total investment of $3.3 billion when you throw in The Palazzo, the largest building in the United States, containing more square footage than the Pentagon. Adelson could’ve stopped here, made his peace with risk, and gone off to play with the grandkids and tend to his philanthropic work. But, as he would tell you, it’s not in the DNA.
“I get a lot of gratification out of creating something new. When I create a Singapore — or whether it’s in Japan or Korea or Thailand or Taiwan or Europe or anywhere else — with one destination resort I can create value of 10 or 20 billion dollars. Ten to 20 billion! In what industry could a guy like me do this, or a company like ours, which we’re not a big company, although by this time next year we’ll have 50,000 employees, which to me is very big. If I can create and develop one project, which could take three or four years, and do two or three projects simultaneously, I can create a company that is phenomenal.”
No, Singapore has only rattled the adventure gene, same as the Strip had 10 years ago.
“We were once, in market cap, the 15th largest company in the United States. I want to get back there,” he says. “As a matter of rewarding those investors who had confidence in me — and as a personal lifetime achievement. I want to be the comeback kid of this century.”
He pauses a moment, smiles, there’s a glint in his eyes. “Well, you might say I’m the comeback adolescent. I’m not exactly a kid anymore.”
is a New Jersey-based freelance writer.
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