Is EuroVegas Falling Victim to the Euro Crisis? Or Will The Spanish Win Another Cup?

Posted on July 3rd, 2012

It’s the 20 Billion Dollar question. Is Sheldon Adelson’s Eurovegas project (building a massive casino complex in Spain) hitting the brakes due to the Eurozone crisis, or is Spain going to follow Euro 2012 glory with another massive win- this time for the economy?

American casino billionaire Sheldon Adelson seems to have paused to take stock before moving his chips onto Madrid or Barcelona (or possibly even Valencia?) with his humungous bet on a Las Vegas-style casino complex in the Iberian Peninsular in the middle of a eurozone debt crisis that is still gathering pace.

Madrid and Barcelona are still slugging it out for the investment- they are both flirting with the casino taipan to entice him to Spain. However, the lack of financing from banks hit by bad loans from a 2008 property crash may leave them both looking like doe eyed labradors in a greyhound race.

Adelson’s CEO Michael Leven, hinted as much as he did a tour of Madrid and Barcelona last week to complete the analysis of the rival sites.

For the Catalans and Madrilenos, it is a big prize- a cash investment of up to 15 billion euros ($19 billion) at a time when the economy is in reverse and with an unemployment rate that is  nearly one in four, and one in two for young people.

Barcelona and Madrid Alfombra Roja.
Madrid regional president Esperanza Aguirre rolled out the red carpet for Sr Leven on Tuesday, and she was joined by top execs from Iberia, Banco Santander, Inditex (of Zara fame) and construction companies such as FCC Construction.

And the Catalans wheeled out World No. 1 Chef Ferran Adria (of el Bulli fame) who promised to work with the Americans if the Claret and Blues got the nod over the white team.

In total, the 10-15 year project would result in 4 complexes with 12 hotels providing 36,000 rooms, 9 theatres, 3 golf courses, and plenty of convention space around the gambling tables.

Leven reckoned it could create up to a quarter of a million jobs- some carrot.

The first, most cash intensive, phase, would result in 12,000 rooms, 4 gambling palaces and all the infrastructure needed (roads, rail links, airport connections etc) for a price tag of almost 7 billion euros. This 1st wave could generate 150,000 jobs, he said, using numbers proven from their experience in Singapore and Macao.
The challenge thogh, is raising the funds.

Las Vegas Sands says it would supply just over a third of the investment needed for the first phase and it would plan for an annual ROI of around 20%. So 2/3 of the money has to be raised.

Sands had held talks with about 30 banks and he admitted the going was tough.

The other challenge for Sands is to persuade politicians to pass legislation that loosens laws on anti-money laundering and anti-smoking laws. Plus they want a 10-year holiday on gambling taxes.
Opponents are worried that Eurovegas would encourage prostitution (already a problem in nearby Castelldefels near Barcelona and not much better in Madrid), the local mafia, and would fuel another property bubble.

So there’s a certain amount of local opposition, but I suspect the overall business case for doing this is overwhelming positive.

Our view?

Head to Barcelona Sheldon! Here’s why:

1. The City is already the No 1 City Break destination in Europe.

2, If you are going to duplicate the success of Singapore Marina Bay Sands, it has to be Barcelona. It’s by the sea, it’s a very popular destination for Chinese visitors.

3. There’s already a huge cruise liner market in BCN- the 2 would fit together nicely.

4. It’s a quicker flight from most of Europe.

5. You’ll be closer to the airport.

I tell you who won’t be supporting the bid. And that’s Grup Peralada who run Casino Barcelona. I don’t think there’ll be many people through the door there if there’s a Euro Vegas down the road. Of course we could be wrong. It might just mean that their business takes off with all of the gamblers in town.

 

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