Operator News
Japan – Adelson promises $10bn investment on Japan’s ‘holy grail’
By Phil - 23 February 2017
Sheldon Adelson, Chairman of Las Vegas Sands, has described a Japan casino licence as the ‘holy grail’ of casino gaming, promising to invest up to $10bn if he was given the chance to develop an Integrated Casino resort in Japan’s capital.
Speaking at the CLSA Japan Forum in Tokyo, Mr Adelson described Japan as ‘the ultimate of business opportunities’ referring to the US$6bn the company invested in building Marina Bay Sands in Singapore as ‘a warm-up to this.’
Speaking the day after, MGM Chairman and Chief Executive James Murren looked to nullify Mr. Adelson’s headlines by adding at the conference that an investment of $10bn was ‘a good number to use at this point in time.’
He added that the Japanese market would be ‘much bigger than Las Vegas’ and that MGM was ‘more focused on metropolitan areas.’
Hard Rock was also at the CLSA forum. It said it had shortlised 20 to 30 potential Japan-based partners, including financial companies, manufacturers and landholders.
Hardrock Chairman James Allen said: “We are looking at 40 to 60 per cent equity participation. It’s important to make sure our local partners are involved in the relationship, not just as blind investors.”
Edward Tracy will lead Hardrock in Japan. He added: “At some point it will be all hands on deck,” Tracy said. “When you get definition around the legislation, you are on the bullet train, and hopefully you’re not trying to catch up.
Genting Singapore said it was ‘well placed’ for Japan with ‘sufficient financial resources’ with the Japan investment likely to be as high as $12bn.
“The group has completed a study of our capital structure, and over the next three years will execute a corporate finance strategy that fulfils our various investment requirements including integrated resort projects, and yet maintaining an efficient capital funding model,” it said.
However Union Gaming analyst Grant Govertsen said of Japan: “The field is getting a lot more crowded and suggests the odds are getting longer for Genting Singapore. How the selection process plays out will result in different kinds of strategies.Regardless of the structure, there will be significant interest from international developers.”
TA analyst Tan Kam Meng disagreed though. He said of Genting’s prospects in Japan: “Sitting on a cash pile of S$5bn and borrowings of S$3.5bn, where the bulk of the borrowings are perpetual securities, Genting Singapore is in a good financial position in contending for a casino licence in Japan. According to management, a project IRR (internal rate of return) between 10 per cent and 15 per cent is required, considering all factors including political risks. Management also hinted that the project is still viable even without a controlling stake in the JV but it will be infeasible with a stake as small as 10 per cent.”
