The Sterile Transfer

These are funds that were simply sucked out of the local economy and into Mr. Adelson's pockets --

In 2011, Sands Bethlehem took in $376 million in gambling revenue.

Sands building boom to continue in Bethlehem
With Event Center and mall nearly finished, No. 2 Machine Shop is on deck.
By Matt Assad, Of The Morning Call
March 22, 2012

Maybe everyone else is climbing slowly out of the global recession, but Sands Casino Resort Bethlehem owner Sheldon Adelson is back to spending money like the economy never tanked.

Adelson in recent weeks has made international headlines for giving millions to presidential candidate Newt Gingrich, but that's pocket change compared with the tens of billions Adelson's Las Vegas Sands Corp. is spending on new casino resorts in China and possibly Spain.

Now, there's a good chance he'll be doing some of that new building in Bethlehem.

Though no plans have been drawn or approved by company officials, Sands Bethlehem President Robert DeSalvio said Sands will transform the massive No. 2 Machine Shop into a mall of up to 70 outlet stores and restaurants. Any action, he stressed, would come only after Sands finishes its event center and fills the remaining spots in its shopping mall.

"Job one is filling our outlet mall, but the master plan calls for expanding retail into the machine shop," DeSalvio said. "We have turned a corner in Bethlehem and the outlet model is doing really well. The logical next step is expanding the outlet mall into Machine Shop 2."

DeSalvio gave no timetable for when it might happen, but city officials are optimistic that design and planning can begin by the end of the year.

When it was built in 1890, the No. 2 Machine Shop was the largest enclosed industrial building in the world and, at nearly 1,500 feet long, is among the most vivid remaining symbols of Bethlehem Steel's century of dominance as the nation's 2nd largest steelmaker.

No. 2 is where Bethlehem Steel was able to churn out as many as 30 battleship guns a day for theU.S. Navyduring two World Wars. So iconic is the structure that Lehigh Valley residents routinely mention their time working there in their obituaries.

Though DeSalvio emphasized that no construction can happen without approval of Las Vegas Sands' board of directors, he said the No. 2 is envisioned as a one-story enclosed mall of 50 to 70 outlet stores and restaurants. Though the building is two to three stories tall, DeSalvio suggested that to preserve the building's historic integrity, an enclosed second floor would house massive heating and air condition units and shield them from outside view.

The project, he said, could include a skywalk from the existing outlet mall attached to the casino and hotel.

"Just a few years ago, [Sands was] in contraction and survival mode, and now they're very clearly in a spending and expansion mode," Bethlehem Mayor John Callahan said. "Some of that expansion is happening here, and we're all hoping it continues."

Talk of developing a former Bethlehem Steel building the size of more than four football fields would have been unthinkable three years ago. Much as it is today, Las Vegas Sands Corp. was in a building boom in 2008, with construction under way in Las Vegas, Macau, Singapore and Bethlehem. But the global recession hit hard — and with little warning — forcing the company to halt construction it could no longer finance. Its inability to get credit to continue projects (including its hotel and mall in Bethlehem) had some analysts fearing bankruptcy. Sands' $138 a share stock plummeted to $1.77 in March of 2009.

That all seems a distant memory now as Sands prepares to open on April 11 its newest resort, on the Cotai Strip in Macau, China. The $4.4 billion resort, built on a portion of reclaimed South China Sea, is to include a mall, a conference center, two casinos and 6,000 hotel rooms.

And that's small compared to what Adelson is proposing for either Barcelona or Madrid, Spain. There, he's planning to build over the next decade a strip of casinos that would include shopping malls, convention space and 36,000 hotel rooms. The total cost would be $20 billion to $30 billion and create more than 200,000 jobs.

And that won't be the end of it.

"The company continues to actively explore new development in Japan, Korea, Vietnam and Taiwan," Las Vegas Sands Corp. Spokesman Ron Reese said. "And we haven't stopped looking for new opportunities domestically."

That domestic expansion is the part Callahan is most interested in hearing about. Sands' 2011 annual report, released Feb. 29, shows it spent $1.5 billion on construction in 2011. Most of that was on the Cotai Strip, but $56 million was spent in Bethlehem to finish its 302-room hotel and 30-store outlet mall.

Sands Bethlehem is completing construction of a concert hall due to open in May. So far, the outlet mall has 13 shops open and eight others are to open by June. That leaves nine more spaces for DeSalvio to lease before he can move on to the No. 2 Machine Shop.

Macau is how Sands has vaulted out of the recession while other casino companies continue to struggle.

The administrative region of China has easily overtaken Las Vegas as the world's largest gambling mecca. Its $35 billion in revenues last year were five times as much as the Las Vegas strip, and Sands is the biggest player in Macau. Thanks largely to Macau, Sands' $3.5 billion in 2011 earnings before interest, taxes, depreciation and amortization was the most ever by any gaming company.

As a result, Las Vegas Sands Corp.'s market value of $43 billion is higher than the value of the next 10 publicly traded casino companies combined.

Bethlehem, though a fraction of the size of Sands' other developments, is contributing. Its table games are the busiest in Pennsylvania and overall the casino has become the state's second-most lucrative, behind only Parx Casino outside Philadelphia. In 2011, Sands Bethlehem took in $376 million in gambling revenue. [That's money local residents LOST!]

That's all helped make Adelson the world's 14th richest person. More important to Callahan, the casino complex drew 7 million people to Bethlehem last year, and that number figures to grow with every new development.

Callahan noted that Sands Bethlehem's master plan, filed with the city six years ago, includes a second hotel tower with hundreds of rooms, office space and hundreds of housing units.

"We can only take that [existing] development so far with visitors and tourists," Callahan said. "Our goal is for that to become a 24-hour site. That's office workers and new residents. That is, I believe, where we're headed."