The Venetian, Palazzo, and Venetian Expo Center no longer belong to the Las Vegas Sands Corporation (LVS) and the Adelson family.
Sheldon Adelson and his company leave a 40-year legacy in Las Vegas that began with COMDEX in the 1970s and ends with the Venetian in 2022. In 1988, Sheldon Adelson purchased the famous Sands Hotel, the playground of Frank Sinatra and his Rat Pack. The next year he built the Sands Expo Center; he made conventions and mass travel the center of what became one of the most successful casinos on the Strip. Sheldon died in January 2021, but the deal to sell the iconic property was first announced four months earlier.
Last week, Apollo Global Management and VICI Properties closed on the purchase of the real estate and casino operations of the Venetian, Palazzo and Expo Center for $6.25 billion. Apollo bought the casino operations for a total of $2.25 billion, half of which is being financed by LVS. A REIT formed in the aftermath of Caesars’ bankruptcy in 2017, VICI is buying the real estate. Apollo will pay $250 million to VICI in annual rent.
When VICI closes on its purchase of MGM Properties sometime in 2022, it will own more than 660 acres of Las Vegas Strip property and be the landlord of 12 Strip mega-resorts.
Apollo is a private equity firm with billions of dollars in assets. The Venetian property is a major player on the Strip, though a small part of Apollo’s portfolio. But Apollo says the Venetian is the crown jewel and is promising significant capital investment to improve and update the property.
The sale, along with the exit of the Las Vegas Sands Corporation from Las Vegas, is a major story in the gaming industry. It is a two-part story; the first half is the deal. REITs are buying up most of the gaming real estate, not just in Las Vegas, but nationally. The Venetian transaction makes the process complete.
The second half is the Adelson/Sands story. In the midst of a pandemic, inflation, and exploding sports and mobile gaming, traditional casino companies are rethinking their strategies and reevaluating future options. The decision by LVS to leave Las Vegas was the result of rethinking the company’s basic strategy. The LVS sold its Las Vegas properties to concentrate on Asia. When initially announcing the sale, the Sands said it saw Asia as the best option for its future; Las Vegas had become passé. That of course was before Las Vegas had 11 consecutive months of record revenue and Macau and Singapore had 22 consecutive months of COVID-depressed revenues. At this moment in time, the future of Las Vegas looks brighter than Asia.
In fact, the other casino company from Singapore, Genting, last year opened its $4.3 billion Resorts World Las Vegas built on the grave of the famous Stardust Resort. Genting sees a bright future in Vegas. But the Sands has not backtracked on its view of Asia. The Sands is promising to put yet more money into both Singapore and Macau when conditions improve. Even the opportunities to bid on a casino in Chicago and New York City did not tempt the company into finding a new home in the USA. Well, that is almost true. On the way out of town, the Sands — or rather Sheldon’s widow, Miriam — put down a couple of million dollars to fund a campaign to legalize casinos in Texas.
This will be the Sands’ second go at Texas. Last year’s effort failed; in a story in the Texas Tribune, a LVS spokesman is quoted as saying LVS is in Texas for the long run. It promises to be back again next year, the year after, and continue until Texas finally puts casinos on the ballot. It is a strange aside for the company: first leaving Las Vegas completely and then choosing Texas over Chicago and New York City. It might even be Miriam Adelson acting as her dead husband’s agent and not a priority of the LVS corporation
The sale of the Venetian also marks the end of an important era in Las Vegas, the era of creative and individualistic entrepreneurs. Bugsy Siegel, Benny Binion, Jay Sarno, Kirk Kerkorian, Bill Bennet, Steve Wynn, and Sheldon Adelson made Las Vegas a unique place. Some of that legacy remains with the Boyd and Fertitta families in the locals’ market and Tilman Fertitta and Derek Stevens reshaping downtown. But the Strip is now firmly and completely in the hands of corporate managers.
The transition from individual to corporate ownership and management began in 1972 when Howard Hughes took his Summa Corporation public. Summa was the first licensed public corporation in gaming. Hughes and Summa opened the door to conventional financing in Nevada. It also ended the era of Teamster and mob funding. Even back then, one needed big bucks to play on the Las Vegas Strip.
Today, it takes billions of dollars to buy or build a resort on the Strip. It has always been expensive and few individuals could swing it; the early pioneers borrowed from very questionable sources. Steve Wynn and Sheldon Adelson brought money from big deals; Wynn had $400 million from the sale of his Atlantic City casino and Adelson had $500 million from the sale of COMDEX, and on top of that they used public money. The Boyd and Fertitta companies are publicly traded.
The loss of imaginative individuals does not necessarily mean the loss of creativity. It just means another kind of creativity, financial creativity. The engineering of the purchase of the Venetian was very creative. Sarno, Wynn, and Adelson reimaged the Las Vegas Strip. VICI, Apollo, Caesars, and MGM reimaged the basic business model. Sheldon is gone, but his vision, as well as that of Steve and Bugsy, remains, if only as a shadow.
