It’s difficult to think about the Las Vegas Sands Corp. (LVS) without founder Sheldon Adelson at the helm, but the billionaire’s successors are moving quickly to make their mark, promising both fidelity to Adelson’s legacy and a commitment to expand it.
As widely expected, on January 26 Adelson’s longtime right-hand man Rob Goldstein was confirmed as chairman and CEO, and Patrick Dumont was promoted to the No. 2 spot as president and chief operating officer.
Goldstein also was named chairman and CEO of Hong Kong-listed Sands China, the company’s Macau operator and principal money-maker, which is 69 percent owned by LVS.
The 65-year-old joined LVS in 1995 and has been president and chief operating officer since 2015. He served also as president of global gaming operations and is a member of the board of directors.
Dumont, 46, a son-in-law of Adelson’s widow and controlling shareholder Miriam Adelson, joined the company in 2010 and was promoted to executive vice president and chief financial officer in 2016. He is succeeded by Randy Hyzak, who joined the company in 2016 and served under Dumont as chief accounting officer. Dumont also is a director.
Goldstein was appointed acting chairman and CEO on January 7, four days before Adelson succumbed to a long battle with cancer at the age of 87, leaving behind a fortune estimated at nearly $36 billion and roughly 57 percent of LVS’ New York Stock Exchange-traded shares in the possession of various family trusts.
Goldstein’s confirmation, timed for the day before LVS reported sizable losses for the fourth-quarter and full year, satisfied Wall Street that continuity of leadership will be intact to answer the unprecedented challenges the Covid crisis has visited upon the billions the company has invested in Macau, in Singapore and on the Las Vegas Strip.
“Our spirits have been dimmer in these few weeks since his passing, but the future of the company he founded shines bright,” Goldstein said. “He would expect nothing less than an aggressive pursuit of the work he started, and I am determined to lead this company forward in a way that best honors his vision.”
Macau continues to be the priority, Goldstein said on the earnings call, stating that the company was prepared to up the $2 billion or so it’s currently pouring into the Chinese casino hub by another $5 billion to $10 billion, if that’s what it takes to maintain its license there.
The territory’s six casino concessions are scheduled to expire in June 2022, and the local government is expected to make fresh capital commitments a condition for renewal.
Adelson was a pioneer in Macau’s transformation into a gaming destination on a Las Vegas scale. It started in 2004 with the opening of Sands Macao, the city’s first Western-style casino hotel. Soon after, he recognized the potential of the swampy Cotai area, and proposed a new land mass for multiple casinos.
Today, the portfolio numbers five resorts representing in all around $15 billion in investments. They include the Venetian Macao, the Plaza and Four Seasons Hotel Macao, Parisian Macao and a three-hotel complex, formerly Cotai Central, that is slated to reopen in phases beginning February 8 as a remodeled themed resort called the Londoner Macao.
“When the Macanese government makes its decision I think we will continue upon a rather solid capital investment, which I know is how Sheldon felt, to grab that opportunity with both hands,” Goldstein said. “There is just no place like Macau, and we’re not done in Macau. We’re going to be there for many more years.”
The company also is moving forward on a $3.3 billion expansion of its Singapore megaresort, Marina Bay Sands.
Exploring greenfield markets in the U.S. will continue as well, with New York City and Texas topping the list.
“We’ve been looking at New York City for, what, 100 years. It’s an extraordinarily good opportunity for anybody,” he said.
In Texas, where it’s possible the state legislature will discuss casino legalization in the upcoming session, LVS has built a 50-strong lobbying team, according to news reports, to back up the lavish sums Adelson has donated to the campaign coffers of Governor Greg Abbot and other political leaders in the state.
“We’re deep in the hunt,” Goldstein said.
But in an apparent break from Adelson, his “great mentor and great friend,” as he termed him, he is launching LVS on a pursuit of opportunities in sports betting and other sectors of the digital gaming space, which has been one of the few bright spots in a U.S. gaming market ravaged by the pandemic.
Adelson was the industry’s most prominent foe of the industry’s expansion onto the internet and spent millions on lobbying and campaign contributions over the years to try to quash it.
“I have very strong thoughts about this, but I don’t want to talk about them at this time,” Goldstein said. “We are exploring it, and if we have something concrete to say we will tell you. Right now, it’s simply exploratory in the same way we explore lots of things over time. I saw something about the possibility of an IR in Thailand and we’re exploring that as well. Everything is up for grabs, and as a company our balance sheet enables us to have a very curious appetite to grow.”
The question is where and it’s a major one. The convention-based tourism model Adelson built at the Venetian and Palazzo on the Las Vegas Strip has been gutted by the pandemic. The twin resorts were in negative cash flow for 2020 to the tune of $124 million on total revenues that declined nearly 60 percent to $738 million. The company even has weighed selling the Strip business, though Goldstein made it a point to walk that back on the call.
“The customer demand for Las Vegas from 2022 to 2027 is unbelievable,” he said. “It may take significant time to recover, but the demand will be there. We remain bullish on Las Vegas.”
Macau revenues were down 69.7 percent year on year to $669 million and by 59.6 percent to $345 million in Singapore, though both markets returned to black in the fourth quarter in terms of adjusted property EBITDA to $47 million in Macau and $144 million at Marina Bay Sands.
Corporate-wide, LVS went from $5.38 billion in EBITDA in 2019 to a loss of $172 million in 2020 on total net revenues that plummeted to $3.61 billion from $13.78 billion the year before, a full two-thirds of that generated by Macau.
The net loss for 2020 came in at $1.68 billion.
The balance sheet remained strong, though, with $2.12 billion in unrestricted cash at year’s end.
“Our path forward is clear and remains true to the principles our founder was committed to for so many years,” Goldstein said. “We will continue supporting our people and the local communities in which we operate, reinvesting in our current markets, producing strong returns for our shareholders, and aggressively pursuing new development opportunities.”
