Egos Bigger Than China

By Michael Schuman / Macau

Nobody plays "Can you top this?" better than Steve Wynn and Sheldon Adelson. Wynn, 64, is standing behind his desk, casually clad in a white polo shirt and beaming from ear to ear--with good reason. This morning he has just pocketed $900 million from the sale of a Macau gaming subconcession. A few days earlier, he opened the Wynn Macau hotel-casino with a barrage of fireworks and dancing fountains. The $1.2 billion, 600-room palace is the first Vegas-style luxury-hotel offering in Asia's booming gambling market. "This is a new Macau," says Wynn. "Would it have been the same without us? I don't think so."

A five-minute drive away, Adelson, chairman of Las Vegas Sands, is thoroughly unimpressed. Adelson, 73, is ensconced in a sofa-laden suite at his own casino, the shimmering gold Sands Macau, being fussed over by an overprotective bodyguard, an intrusive makeup artist and his doctor wife. The Sands has already been raking in a fortune in Macau for two years, and, after a recent expansion, it rates as the largest casino in the world. And he's just getting started. On a band of reclaimed land called Cotai, between Macau's two outer islands, Adelson is creating an Asian Vegas Strip-- practically by himself. By early 2009, he plans to build 12 hotels for $10 billion, anchored by a 3,000-room version of his Vegas classic, the Venetian, with its famous canal and gondola rides. No wonder he derides Wynn's opening as "a nonevent. He's just going to be the equivalent of the tip of the iceberg."

It's Wynn vs. Adelson, Round 2. The two have been banging heads in Las Vegas for years, and now their feud has been airlifted to China. The stakes couldn't be higher--then again, neither could the opportunity. With China's booming economy boosting the incomes of its 1.3 billion baccarat-crazed people by the day, gaming revenues in Macau will probably overtake the Vegas Strip's this year.

What gives this rivalry its extra punch is the obvious antagonism between the Vegas heavyweights. In a corporate world where p.r. spin masters train CEOs to spout boring managementspeak, Adelson and Wynn think nothing of tossing barbs at each other. Adelson complains that Wynn has "a big ego." Wynn calls Adelson "Mr. Magoo, with an edge."

Wynn and Adelson have done more to remake Las Vegas than anyone else, and yet no two businessmen could be less alike. Wynn is Vegas royalty, the artist who rejuvenated the Strip by going upmarket in tone with the Bellagio, which showcased Van Goghs and Cezannes and Degas's dancers instead of topless showgirls. He lost the place to raider Kirk Kerkorian, who took over Wynn's company, Mirage Resorts, and booted Wynn, who scored a $6.4 billion payout but still had a score to settle. Last year Wynn returned with the new Wynn Las Vegas: more hushed, more exclusive.

If Wynn led the charge to class, Adelson held the line on mass. An upstart from the trade-show industry, he burst on the Vegas scene in the 1990s with a very different business model. His giant Venetian is a scaled-down Venice in the desert, reimagined for U.S. tourists. It has plenty of glitter, and it's a draw for the conventioneers and business travelers who have become Vegas mainstays. Wynn is gregarious and charismatic, obsessed with the perception of his hotels and probably Vegas' most famous figure. Adelson is more down-to-earth, low key and operations oriented--a sarcastic, hard-nosed entrepreneur. "Adelson likes being a grumpy old man," says Bill Thompson, a professor at the University of Nevada, Las Vegas, and author of Gambling in America: An Encyclopedia. "Wynn craves everybody loving him. Adelson doesn't give a damn."

Both have demonstrated, in spades not to mention dollars, that the way to make money in Vegas is to own the casino rather than gamble in it. On this score, Adelson is ahead, at least when it comes to personal wealth. He ranks an impressive third on Forbes' list of America's 400 richest people, with a net worth of $20.5 billion, behind only Bill Gates and Warren Buffett. Wynn comes in at 107th, with a mere $2.6 billion.

Their wealth and success have not prevented the two from repeatedly disagreeing in Vegas about everything from parking spaces to labor unions, and history is repeating itself in Macau. The former Portuguese colony had been a seedy, rundown gambling pit (Wynn calls the place Dodge City), with a gaming monopoly controlled by one man, Stanley Ho, for 40 years. Then in 2002, the Macau government opened the market and issued new licenses to Wynn as well as to a Hong Kong company that granted the right to run casinos to Adelson. Now the two are remaking Macau into Asia's Las Vegas, with all of the high-quality restaurants, entertainment, shopping and whiz-bang showmanship that make Vegas Vegas.

Each is importing his strategy from the U.S. Adelson is focused on big casinos, big shopping malls and big conventions, Wynn on attracting the glitterati with pricey eateries and boutiques. Walk into their casinos, and the contrasting business models are obvious. The Sands is a colossal gambling hall with deafening pop music. Wynn's joint has dimly lit, yellow-colored walls, mosaics on the floor and a live jazz band. The Sands has a giant TV screen; the Wynn boasts a real Renoir in the main lobby, as if the average gambler would know a Renoir from a Renault.

In Macau, however, one of their roles is reversed: Adelson is the established giant, Wynn the newcomer. Adelson says the Sands snatched 20% of Macau's gaming business before Wynn even opened, and he has no intention of allowing his lead to slip. He reads off a long list of stats demonstrating how many more gaming tables, slot machines, stores, rooms and convention space he'll have over Wynn after his Chinese Venetian debuts next year. For good measure, Adelson is tossing in a 15,000-seat arena. Wynn "yakity yaks about how [the Wynn Macau] is going to be Asia's true destination resort," says Adelson. "Well, when the Venetian opens up, the comparison will tell its own story." He also got a leg up on Wynn elsewhere in Asia. Earlier this year, the Sands won the right to build a hotel-casino in Singapore set to open in 2009 and to cost more than $3 billion. Wynn dropped out of the bidding.

Wynn isn't intimidated by Adelson's massive building program, which he dubs the "Sheldon Avalanche." Adelson's "use of pejorative rhetoric and dismissive language is not so much a reflection of any deep understanding on his part as it is his personality. He can't help himself," Wynn says. His posh inn, Wynn believes, will draw customers who will run up larger tabs--and create fatter profits. "Bigger ain't better. Better is better," Wynn says. The Wynn Macau "would look not like an office building, but a resort. We will always get our market share, because we've got a better mousetrap." Adelson has "got an advantage, but I'll catch up lickety-split," Wynn says.

Adelson says that Wynn misses the point in Macau. Although he concedes that Wynn "does a very good job at the high end of the market" and "a good job at design," he adds that Wynn loses money on the bottom line. "Steve Wynn's objective is to get everybody to say he does a nice design and swoon over his design, and he obviously doesn't care about making money," says Adelson. "So why should I be concerned about a guy like that?"

Wynn contends just the opposite is true--that in Las Vegas his hotel produces more profit than Adelson's larger Venetian, and that the same can happen in Macau. Adelson "can't keep up with us in earnings," Wynn says.

So, who really makes more money? NASDAQ-listed Wynn Resorts lost $20 million in the quarter that ended in June on sales of $310 million, while Adelson's N.Y.S.E.-listed Las Vegas Sands Corp. posted a $109 million net profit on sales of $541 million. Over the past 12 months Wynn Resorts total return to shareholders was more than 60% vs. Sands Corp.'s 120%. So on that count Adelson wins.

But Deutsche Bank gaming analyst Bill Lerner says Wynn's loss isn't surprising for a company still very much in development. According to Lerner, the competitors' two Vegas hotels earn just about the same operating profit, though since Wynn's property is smaller, it does average more per room and gaming table. However, Lerner says the best way to compare the two properties is to look at return on net investment. By this measure, the Venetian wins out, 30% vs. 12% to 14% for Wynn, but since Wynn's hotel is so much newer, he could catch up. Amazingly, Lerner expects Wynn's new Macau hotel to earn more than a 100% return--as Adelson's Sands already does. The bottom line is that running a casino in Macau is, as the sports books say, a lock.

Just as in Vegas, their fierce competition in Macau will spur other developers to build better and bolder projects that will attract larger crowds. Wynn says he's "rooting for my competitors to do a good job"--even Adelson. "If he can fill it, God bless him. That kind of stuff, notwithstanding the attitude of the chairman, is a great thing for this town."

The battle of Macau is just heating up. Adelson's main entries on the Cotai Strip are still to come. "People say I've changed the face of Vegas, and now I'll change the face of Macau," he says. Wynn has much more in the works as well. He's secured a 54-acre site next to Adelson in Cotai to build four hotels--three of them full casino resorts. "I think it is more important to focus on people's work than it is their talk, including mine--but especially his," says Wynn. "And when the smoke clears and all the flap-jaw, and all of the rhetoric and dust settles we'll see what we'll see." More than likely, we'll see Wynn and Adelson making another killing.

With reporting by Stacy J. Willis/ Las Vegas