Building a Gambling Empire: The Sheldon Adelson Way
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Case Code: BSTR481 Case Length: 15 Pages Period: 1933-2015 Pub Date: -- Teaching Note: Available |
Price: Rs.600 Organization: Las Vegas Sands Corp. Industry: Gambling and Hotel Industry Countries: US, China Themes: Entrepreneurship, Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The First Major Breakthrough
In 1979, Adelson, along with partners, Robert Lively and Richard Katzeff, launched a computer trade show called the 'The Computer Dealers Expo' (COMDEX), at the MGM Grand Hotel in Las Vegas. And Adelson's foresight about the growth potential of the computer industry paid off. The late 1970s and early 1980s were a period when public interest in computers was on the rise and computer-based companies were experiencing exponential growth. COMDEX drew thousands of participants and exhibitors, with industry leaders vying with each other to deliver keynote addresses at the show....
A New Way to do Business
In the early 1990s, Adelson had visited Italy on a holiday. The architecture of Venice, with its unique canals and artwork, captivated him and made him take the decision to build a themed hotel-casino-resort at Las Vegas on the lines of Venice. For his new venture, Adelson decided to go it alone without any business partners. In 1996, he invested US$ 450 million and took a US$ 1.5 billion line of credit to demolish Sands and build the.....
Eyeing International Horizons
The success of Venetian prompted Adelson to be on the lookout for opportunities to expand into other countries. And in 2001, the opportunity he was looking for surfaced. The Chinese government began giving gambling licenses to international companies interested in setting up operations in the former Portuguese colony of Macau, near Hong Kong. Macau, which had been a part of China since 1999, was the only part of the country where gambling was legal, but it had a very seedy reputation....
The Successful IPO
The massive profits from the Venetian and Sands Macao, prompted Adelson to go in for an IPO for LVSC in December 2004. Speaking about the prospects for the IPO, Marc Falcone, a Deutsche Bank Equity Gambling Analyst in New York, said, "My gut tells me this will be a very high-demand or hot initial public stock offering. You have an outstanding business model with great growth opportunities, and you have a management team that has done an outstanding job with their assets."...
Rising Above Adversity
The global financial crisis that started in 2007 brought hard times for Adelson. The crisis squeezed gambling’s growth and led to the cancellation of several conventions, thereby adversely affecting LVSC'[s business. At a time when other gambling operators had pulled the plug on expansion keeping in view the tough market conditions, Adelson continued to take loans to expand operations at multiple locations. He took a US$ 10 billion loan to fund an expansion in Las Vegas worth US$ 1.5 billion, a US$ 12 billion project in Macau, and a US$ 5.5 billion project in Singapore...
Future Expansion Plans
As of 2012, Adelson had almost US$ 12 billion invested in casinos, condominiums, and hotels in Macau. This made him the largest foreign investor in China of all time. Adelson believed that Asia as a whole had the potential for more gambling places; he thought that there was room for the equivalent of five Las Vegases. As part of LVSC’s expansion strategy, Adelson had plans to build a Las Vegas like gambling location in Madrid or Barcelona in Spain. He estimated that the venture titled 'The EuroVegas Project' would cost US$ 30 billion and would take 10 years to complete. It was set to have an avenue of skyscrapers that contained 12 resorts, nine theaters, six casinos, three golf courses and 18,000 gaming machines....
Adelson and the Twilight Years
Even in his advanced years and having to get around with the aid of a scooter (he had reduced mobility stemming from a nerve condition), 81-year-old Adelson displayed no signs of giving up or even cutting down on his role in business. He was a micro-manager and was highly demanding of his executives. He had a philanthropic side and was particularly partial to Jewish-related causes. He donated millions to Jewish schools and Jewish museums, apart from being actively involved in Israel's political space. He was also considered to be a major political powerbroker in the US, having provided almost US$ 100 million to boost Republican fortunes during the US elections of 2012...
Exhibits
Exhibit I: Pictorial Representation of the Ups and Downs in Adelson's Life
Exhibit II: Forbes Rich List 2015
Exhibit III: Top Gambling Locations in the World 2014
Exhibit IV: Biggest Casinos in the World 2014
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