The Las Vegas Sands Corp., long one of the most prominent suitors to build an integrated resort in Japan, could be stepping back from the opportunity.
On a third-quarter earnings call in October, Sands President Rob Goldstein said the investment—$10 billion to $12 billion—simply may not be worth the potential return, even in a market that some analysts have valued at $25 billion per year.
“No matter how good you are at this business, that figure must give you pause to stop and think, ‘Is that prudent?’” Goldstein said. “Can you really deploy? Can you get the return? We’ve had those discussions, and we’ve had them with the Japanese government.”
Union Gaming analyst John DeCree said the company is being prudent indeed, focusing on “generating sufficient returns rather than just pursuing the investment at any cost.”
“We find this level of transparency in the company’s messaging around Japan refreshing, and appreciate management’s discipline in considering such a large potential capital commitment in an environment where some competitors appear to have already gone ‘all-in,’” agreed Stifel analyst Steven Wieczynski.
Both the Sands Corp. and Wynn Resorts recently announced they would no longer seek to development an IR in Osaka. And in August, Caesars Entertainment withdrew completely from the Japan race to complete its $17.3 billion merger with Eldorado Resorts.
While the Sands Corp. has not exited Japan, it is clearly acting with caution. “I think there is some time to ponder how Japan plays out in the end,” Goldstein said. “We hopefully are right in the middle of it and will make the best decision for our company and our shareholders.
“Japan will take a little more thought process,” he said. “All that money for one (integrated resort) does make you stop and say, ‘can you get the returns that your shareholders deserve? Our chairman and our board will make that decision ultimately.”
Wynn Resorts CEO Matt Maddox, meanwhile, says the U.S. company must “make sure… there is something (in Japan) that’s right for Wynn.” He too, mentioned the word “prudence.”
“We’ve been working on Japan quietly behind the scenes for almost a decade now,” he continued. “We didn’t necessarily change strategy.”
