It's too early to count the 75-year-old entrepreneur out, long-time associates say, according to Bloomberg news. -- PHOTO: REUTERS
LAS VEGAS - NO ONE climbed the list of American billionaires faster than Mr 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 wrong, Mr Adelson on Nov 10 was forced to slow or suspend new projects from Macau to Pennsylvania and invest US$525 million (S$788 million) of his family's money in the company to avoid bankruptcy. That's on top of US$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, according to Bloomberg news.
'If the world came to an end, there would be cockroaches and Sheldon', said Mr 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'.
Mr 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 Mr John Staszak, an analyst with Argus Research in New York.
'He's bought time' with the new capital infusion, said Mr Staszak, who has a 'sell' rating on the stock. 'The future is not good, quite frankly'. Las Vegas Sands lost US$32 million in the quarter ended Sept 30.
Mr Adelson's company, best-known for the Venetian casino on the Las Vegas Strip, said on Tuesday it will raise US$1.62 billion from sales of preferred stock, warrants and 181.8 million common shares at US$5.50 each.
That increases the outstanding common stock by more than 50 per cent.
Las Vegas Sands shares fell US$2.66 to US$5.34 on Tuesday, taking their one-year decline to 95 per cent. The stock peaked at US$144 in October 2007.
The value of Mr Adelson's two-thirds stake fell to less than US$2 billion after surpassing US$32 billion last year.
Underlining what's at risk for Mr Adelson and his company, the government of Macau - the Chinese gambling hub where Las Vegas Sands collects two-thirds of sales - said on Tuesday 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 from Bloomberg seeking comment.
The son of a Lithuanian immigrant taxi driver, Mr Adelson grew up in Boston where he shared a one-bedroom apartment with his parents, two brothers and a sister, Mr 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 US$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 US$3 billion, he reached No. 3 in 2006, with US$20.5 billion. That year, he said he had already figured out when he would pass Mr Gates to top the list.
During this period, Mr Adelson got rich faster than anyone in history, 'making just under US$1 million an hour', said Mr 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 US$3.5m an hour
Forbes recalculated its rich list for the Oct 27 issue and found Mr Adelson's fortune dropped US$4 billion from Aug 29 to Oct 1, the steepest decline for any American who lost at least US$1 billion.
At his present pace, the one-year loss may rank as the largest ever for a US billionaire in percentage terms, according to Mr Bernstein.
Since Las Vegas Sands stock peaked, Mr Adelson lost about US$3.5 million an hour, counting just the value of his stake, said Bloomberg.
Mr Adelson expanded at 'the worst possible time', said Mr 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 per cent in September.
Big bet on Macau
According to Bloomberg, Mr Adelson bet more heavily on Macau than any other US casino, pledging US$12 billion for new hotels, casinos and condominiums to create a mass-market tourist destination like Las Vegas.
The Sands Macau was the first Vegas-style casino to open there in 2004, followed three years later by the Venetian Macau. 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, Mr 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.
Mr Steve Wynn, chief executive of Wynn Resorts, delayed expansion of the Wynn Macau after the Chinese government began restricting visas in April 2007. Mr Adelson called Mr Wynn's decision 'wrong' in August 2007.
'If Steve Wynn is so smart, why isn't he richer than I am?' Mr 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. Mr Adelson's hotel slipped to third place, behind Wynn and MGM Mirage.
Mr 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 Mr Joel Simkins, an analyst at Macquarie Capital in New York, referring to Mr Adelson's strategy.
'Steve's was, 'Let's go for the high end of the market. Let's build what's appropriate'. Mr Simkins has a 'sell' rating on Las Vegas Sands.
Along the way, Mr Adelson's go-for-broke attitude made him enemies.
Mr D. Taylor, secretary-treasurer of Culinary Workers Union Local 226 in Las Vegas, has fought unsuccessfully to unionise workers at the Venetian. The union is defending itself against a defamation lawsuit Mr Adelson filed in the UK, according to Mr 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', Mr Taylor said.
