Are you in our out? When the question concerns Japan, two American companies have similar dilemmas.
The chairman and CEO of the Las Vegas Sands Corp. says he may be interested in bidding on a Japan integrated resort (IR), provided the government takes steps to make the market more investor-friendly.
According to GGRAsia, gaming magnate Sheldon Adelson, who withdrew from the IR race earlier this year, is “open” to rethinking his position on the market.
Las Vegas Sands had focused on Tokyo and Yokohama as possible resort locations, but withdrew from consideration in May. In a news release at the time, the parent of Macau casino operator Sands China Ltd. said the Japanese government’s “framework” for development of an IR had made the firm’s goals “unreachable.”
On the company’s second-quarter earnings call, Adelson said regulations “promulgated by the Japanese government” and the country’s parliament “were not conducive to attracting the kind of investment” required for such a project. Any Japan IR is expected to require an initial capital outlay of US$10 billion; three IRs will be permitted in the country to start.
Adelson now seems to be rethinking his position. On the earnings call, he said, “The cost of construction and the cost of land in Japan are very high, and there were just too many negative regulations that we couldn’t live with. If they change it, our mind is open to go back.”
In a July report, Bay City Ventures Ltd., a Japan-based marketing consultancy, said, “If it makes business sense, Sands will for sure be back. They did not leave Japan… forever.”
Meanwhile, MGM Resorts President and CEO Bill Hornbuckle says his company isn’t completely sold on Japan, even though it is the apparent winner of an Osaka bid. In a conference call with investors last week, Hornbuckle hedged the MGM bet a bit, saying the company would be “prudent” in its investment and only fully participate if it could get a decent return on investment.
“There is a long way to go,” he said. “We love where we’re sitting, we love the opportunity in Osaka, we love our partner in ORIX. We also like that we are not fully ‘all-in’ on this investment. We like the fact there is probably going to be a delay in the casino licensing process]and a reopening of some of the conversations, that will hopefully make this a better investment for anybody interested in it, most notably us.”
MGM was the last company standing in Osaka when Genting and Galaxy Entertainment withdrew in February. But since Osaka says the RFP process has been halted, it’s unknown if either of those companies, or even Las Vegas Sands, would re-emerge as competitors for the bid.
