Las Vegas Sands pulls out of Japan IR race
Adelson finds current conditions unattractive to exploit IRs
Las Vegas Sands has unexpectedly announced that it would be giving up its bid to build a major urban IR, thus removing a contender that many analysts predicted would become one of the main winners in the contest.
“My fondness for the Japanese culture and admiration for the country’s strength as a tourism destination goes back more than thirty years to the days when I was operating COMDEX shows in Japan and I’ve always wanted our company to have a development opportunity there,” explained Sands Chairman and Chief Executive Officer Sheldon Adelson.
While Adelson himself offered no explanation other than his statement that “the framework around the development of an IR has made our goals there unreachable,” analysts quickly offered more detailed elucidations.
Bernstein Research observed, “The announcement does not come as a complete surprise to us, as the Japan process has gotten bogged down by increasing government requirements and terms that were beginning to look less attractive. Short term of licenses, high tax rate, growing constraints on local play, and financing arrangements”, were among the key factors that would have cooled Sands’ previous ambitions to go big in Japan.
Bernstein felt that liquidity concerns arising from the Covid-19 crisis were likely not a major factor for Las Vegas Sands, a firm known to possess a very strong balance sheet.
However, mid-April reports indicate that Las Vegas Sands Corp. LVS, showed a 51.1% decline in revenue amid the COVID-19 pandemic. The company reported a first-quarter net loss of US$51 million, or zero cents a share, compared with net income of US$744 million, or 75 cents a share, in the year-ago period. The company said it has suspended its dividend payments and the last of 79 cents a share was paid out March 26.
