It’s definite: Las Vegas Sands is shopping Sands Bethlehem, no matter what Ron Reese tells you. Company executives visited Pennsylvania Gaming Control Board Commissioner Richard G. Jewell with the news, which he confirmed to the Allentown Morning Call. Corroboration came from Bethlehem Mayor Robert Donchez. Sources for the news paper finger MGM Resorts International as the likely buyer, and a similar leak has trickled down from Sands Bethlehem supervisors to floor employees, although MGM is hunkering down behind a ‘no comment’ policy. A purchase would put the lion right on the doorstep of the greater New York City area, able to draw on that market without great fear of competition until at least 2023, when the five boroughs become eligible for casino development.
So why is Big Sands selling Little Sands, especially on the heels of announcing a $90 million expansion? There are four theories. Take your pick:
* Sheldon Adelson is taking umbrage that Pennsylvania lawmakers have defied his express wishes and are considering Internet gambling. Adelson is so irrational about this that last year he bought attack ads against online proponent state Rep. John Payne — even though Payne was a lame duck. (Ironically, Venelazzo offers tablet gambling, which Adelson pretends to oppose, and MGM doesn’t.)
* Taxes on table games are going up, from 14% to 16%, and Adelson doesn’t want to pay the extra $5 million this will cost him.
* It’s a knee-jerk reaction by Adelson against the unionization of Sands Bethlehem’s security force. (Despite being the least-rational reason, this is the one that makes most sense if you’ve been following Adelson the last 20 years.) Sands conceded to the union on the condition that there be no succession clause in the contract — if Sands goes away, so does the union. It’d be a dastardly move, but there’s always been a considerable amount of Mr. Potter from It’s a Wonderful Life in Adelson’s makeup. Just swap out the wheelchair for a motorized scooter and the transformation is complete.
* Sands fears the prospect of slot routes in Pennsylvania bars and airport lounges, which could dilute revenue.
Adelson may be throwing in the towel (and he never did get around to building that museum he promised Bethlehem) but he’s driving a hard bargain: It’ll cost 9X cash flow — or $1.2 billion — to obtain the billion-dollar megaresort. According to state Sen. Lisa Boscola (D), “I heard that it was MGM and that the offer was really, really good — that it was almost an offer they couldn’t refuse. That is how high the number was from MGM. This is a business decision.” In return, the buyer inherits $305 million in monthly slot win and $228 million in table revenue. Why would MGM pay so much? Two more theories: CEO Jim Murren wants to build up a network of East Coast properties, tying in Bethlehem with Borgata, MGM Springfield and MGM National Harbor. Second, he’s got money burning a hole in his pocket after being rebuffed by the Georgia Lege (again) and needs some retail therapy. Take your pick.
Don’t stamp “sold” on Sands Bethlehem just yet. Adelson was rumored to be in talks with Tropicana Entertainment three years ago and that obviously went nowhere. But Murren is more “george” than Carl Icahn when it comes to paying for assets, so the chances for a sale look better this time around. One thing is induspitable: Sheldon Adelson is taking his collection of hairpieces and going home.