Rob Goldstein, President & CEO, Las Vegas Sands

My pleasure. Thanks for having me.

Thank you. It has been very fortunate to be here and it has been a great 30 years.

It's a sordid story, but I'll give you a cliff notes version. I grew up in Philadelphia, actually outside Philadelphia, a little town called Trevose, Lower Bucks County. My dad was a dyed-in-the-wool small businessman. Everything from diners to hot roofing, you name it, he did it. And he did most of it pretty well. He had one bad habit. He gambled on everything from golf to cards to poker to craps. And he got in trouble late in the 60s, very honestly, with too much debt in Las Vegas. He was in the glory days of Joey Winrob. And his nickname was the Philadelphia Flash. I think it means he flashed and lost money. He owed a lot of money in those days and they came to our house literally knocked on my door as a kid. I still remember them, I was probably 14 or 15. They wanted to see my dad. I told my dad I'll be home tonight. My dad came home, these guys went in the room with my dad, he kicked me out, said go away, and they smoked cigarettes. I didn't know what it was and he later told me it was a business opportunity. The English to English translation was they said, unlike the movies where they're hostile or violent, it wasn't that way at all. They were from the Tropicana Hotel and they said, 'We'd like to get paid.' My dad said, 'I'm going to pay you. I just need time.' And they said, 'We have an idea for you. Why don't you work for us finding other people like you,' which is short for crazy gamblers who make a lot of money and like to lose it. My dad ended up running gambling junkets for the Tropicana. And like most things my dad did, he was wildly successful and within two years he was running a plane load a month from Philadelphia to Las Vegas. I was a kid. I thought it was very glamorous. I helped my dad type the manifest. I would help organize him, he was very disorganized, and occasionally I'd go on a trip with him. That went on for a couple years and then I went to college and I kind of lost track of the business. But my second year of college in the winter, my dad called me. He had a massive heart attack. He said, 'Rob, I'm in a tough spot. I have contracted all these airplanes. I need someone to take them.' I'm thinking, well, who's he talking about? And he said, 'You're the right person I trust to do it.' I was 19, which means I was underage. I spent the better part of that year going back and forth to Las Vegas and going to college, and it was pretty hectic. But I learned something. I could do a lot of things I didn't realize I could do as a 19-year-old kid. And what happened was, unfortunately for me, my dad passed away. I was in law school a few years later. My dad passed away and like most gambler's kids, there wasn't a lot of money left. In fact, we lost our house to foreclosure. And I said to my mother, 'I could do what dad did if you want.' She said, 'We need to make money.' So I went to Las Vegas. I was 23 years old. I knew the people there. I explained my predicament. They knew my dad. They knew me a little bit from the past and they said, 'Look, if you can do it, bring the gamblers. We don't care.' Well, I did it and I did it for a couple years and I made a lot of money, bought back the house. I decided to then go on to finish law school and pass the bar exam. But I got a call one day from a guy named Neil Smith who was at that time at Caesars Palace. And he called me into his office and I was very excited thinking, why would he want to talk to me? I'm just some kid that runs junkets. And I walked down there and he said, 'You're not Rob Goldstein.' I said, 'Yeah, I am.' He said, 'No, no, he's an old guy. He runs junkets.' I said, 'No, that was my father. My dad passed away. I'm doing it.' I said, 'Why do you want to talk to me?' He said, 'Well, we want to find someone to help represent us. We're going to buy the old Brighton Hotel in Atlantic City. We need someone to help us.' I said, 'No, no, I'm not doing that. I want to become a lawyer.' He said, 'Why are you so adverse to it?' I said, 'Well, the business in Las Vegas is a lot of tough guys out there. I don't feel comfortable and it's not what I want to do with my life.' And he said, 'Sit down, I want to talk to you.' He explained to me, he said, 'Have you ever heard of Mike Milken?' Michael Milken. I said, 'No, no idea who that is.' And he explained, 'The business is going to transition from this to that, licensing.' He explained, and it was very interesting. I was listening. I was fascinated by it. I got back in the car. I thought to myself, you know, out of law school was paying those days about $12,000 a year to be a law clerk. After passing the bar, he was talking about a lot more money than that. I thought, could this be something I should do? Maybe there's a real business beyond the gambling junkets. It never dawned on me to work in the casino business. And I took a job. He gave me a phone number and the guy's name attached was Bill Widner. I met Bill in 1981. And it was just an epiphany. And 30 some years, 40 some years later, I'm still at it. Bill and Steve Hyde spent the day with me in Atlantic City at the old Brighton Hotel. And that was my entree into gambling. And I never left.

That's right. And it had no relation to the Las Vegas Sands. At all.

It's an interesting story that they were paying a licensing fee which then transferred when Sheldon bought the Sands in whatever year that was. That licensing fee transferred to Sheldon and that was the first nexus. So in a way it did have a connection. My whole world's been driven by Sands somewhere or the other. It's ironic but true.

That's true.

All correct. It was brown with butterflies. It was the businessman's hotel and it didn't have any attractiveness to the gambler and it was failing miserably.

So, Bill, you went in there with Bill Widner, Steve Hyde, Bill Widner, and I met Brad Stone all at the same time.

Steve Hyde was one of the nicest people in the whole world. Steve Hyde was superb in every way. He was a gentleman. He was bright. He was honest. Funny story, when Steve moved back to Las Vegas to run the Sands because Bill was taking over at the Sands and Steve was moving back because they were struggling in Las Vegas. They bought the Sands as well, right? And it wasn't going well. Steve called me in his office and I'll never forget he said, 'Rob, I want you to take my house.' Now, I didn't have money to buy. He had a big house in the country club, Long City. And I started laughing. I said, 'You must have me mistaken. I have no money.' He said, 'No, no, no. I don't want you to buy the house. I want to give it to you to live in it free. All you have to do is cut the grass and pay the electric bill.' I started laughing. I said, 'How long?' He said, 'How long you want to stay?' I said, 'In those terms, I'll stay forever if I was going to cut the grass.' And Steve started laughing and I moved into his house. He was just a wonderfully sweet guy. And what happened, of course, the tragedy with him and Mark and John, but nothing but fond memories of Steve Hyde.

Brad Stone was there already. Brad had worked at the Plaza. He knew Bill. Bill worked up the street in New York at the Essex House. Brad was recruited by Bill. Bill was running the Caesars front desk. He brought Brad over as VP of hotel operations. Brad was my age, but he was far ahead of me in terms of he knew more about management and hotels. He was my mentor. I learned a lot from Brad. He's extremely talented. He was a gifted guy even in those days. And Bill gave him a huge responsibility, which he did very well with. So, we all formed a group very quickly.

Bill was the guy that said we got to get rid of the Brighton. They hated the brown. I won't tell you the words he used if it's a family show, but Bill didn't like the name. We moved the Sands name which gave it great authenticity, maybe more than it deserved at the time. We also redid the casino floor, you know, it was off the boardwalk about half a block. And Bill frankly rethought the whole thing. He was really ahead of his time and re-engineered the brand, the entertainment, the thinking. I was in awe of Bill and his vision. And we repositioned it. And in no time at all, it was one of the great turnarounds I've ever been part of. I was given too much credit being part of it. It was really Bill and Brad who were masterful and it became, as you know, very successful within a couple years, cash flow positive. I think we went from losing 15 to 20 million to making 20 to 30 million. So it was a hell of a turnaround.

Young Tom Cantone helped turn it around. Tom Cantone brought the entertainment. That was a little later. He didn't come until the mid 80s, I think. Tom came from Hershey Park and he was terrific. He was promoting and hustling and energetic. He was great and those were fun days. I didn't realize at the time how great those times were. They were wonderful times. We were all young. We were full of ourselves. We worked day and night and we worked as a team. It was a monumental success, but also a great cohesive, coherent team. When everyone's rowing in the same direction, great things happen. And Widner was the captain of the ship and we all adored him and all of his talents.

He did great. More than for us though, what it did was reposition. But also, what he did is he and before Tom came here doing entertainment, Tom just upped the ante. But I think what it really did was position. It taught me something that you could take something like the Sands, which wasn't a great product. It sure wasn't the Golden Nugget. It sure wasn't Caesars. It was just off the boardwalk. It was a very mediocre product, but we kind of pretended it was something better. And Tom's branding with all the big names in those days, and then of course later on we brought Sinatra, we had Cher, Whitney Houston, Billy Crystal, it was endless. Whitney Houston, we had great talent there. But it really repositioned and it taught me something. You take something that isn't really an authentically great product, but make the public think it's much better than it is. And I think that was the trick of the Sands. At its peak, the Sands was making $50 million a year, which was a lot of money in those days.

Bill met Sheldon I think through telephone. I met Win Chavis and other people in the 90s. We had contact with them because we actually were paying the Sands a license fee because Sheldon owned the brand and the Sands paid Sheldon. So, we met Sheldon and then he got in the casino business. Not that he wanted to, he really wanted to be in the convention business, but he bought the Sands for the real estate in the back with the thought of a convention center. So, we had meetings with Sheldon by telephone. It was funny. He was always very aggressive and he was no shrinking violet, no wallflower. Irwin Chafetz was involved. They would call us about credit decisions, about casino. It was clear they weren't operators and didn't know that part of the business. They clearly didn't really have an appetite for it. But I think I met Sheldon the first time in like '93 or '94. And actually, we bought a boat. We did a boat deal in Chicago, Illinois, actually in Aurora, Illinois. I think it opened in '93 but it was 1991. I was sent to New York City to meet a guy to pitch a management contract in Aruba. He was going to build a casino hotel. And I was in the meeting with the guy and a lot of people in a big room at the Plaza. And I said to him, you know, building in Aruba is challenging. Weather, unions, storms. The Caribbean is a great place to visit, not a great place to make money. Because we had operated and I built and helped operate the Sands there with Ed Tracy in the mid 80s. Anyway, so this guy says, 'What do you mean?' I said, 'I just don't see how you want to put that kind of money in.' So he pulled me aside. 'What else do you have in mind?' At that time, Bill had secured a riverboat license in Aurora, Illinois, but we didn't have the capital to build it. So I took Lars aside and I said, 'Look, this deal is available.' And he listened and he said, 'Let's go see it.' And I said, 'When do you want to go?' He says, 'Now.' So we jumped. He had a plane. I think it was a Falcon 20. We flew over it. He never got there, but he looked down at the water. He said, 'Looks like not much there.' I said, 'Yeah, but it'll do very well. Make a lot more money than Aruba.' Long story short, it happened. Lars was our partner, Eric Magnus. He funded it. It got done and we wanted the brand name Sands. Lars wanted a brand name. So, we called Sheldon. I think we talked a lot. Terry Lanni, I think we talked to, but we met Sheldon and Bill actually met with Sheldon and it was a brutal meeting because Sheldon basically threw him out of the office and said, 'I would never put my Sands brand on a boat in Chicago. It's ridiculous.' And he just pushed. I remember Bill called me said, 'This guy is a tough guy.' And we started laughing. I said, 'Yeah, we've talked on the phone. He does sound aggressive.' And so time went on. We never named the boat. We never made a deal with Sheldon nor Paul Lowden nor Terry Lanni. We opened the boat. It did phenomenally well. A huge success. We all made a lot. We went public on that. We all made some money. And subsequent to that, Bill comes to my office and says, I'll never forget, he said, 'How bad do you want to be rich?' And I said, 'Yeah, I've always wanted to be rich. What do you have in mind?' He goes, 'Do you want to work for Sheldon Adelson?' I said, 'The guy at the Sands?' I said, 'I don't know. I'm not sure I'm cut out for that.' He goes, 'Well, he's looking for a team and David Solomon, who was at Bear Stearns, called and David knew us and he says he wants us to go meet him.' So, we went to New York, met Sheldon, met Miriam there at the Four Seasons and I thought Sheldon was very interesting, very impressive. Miriam was delightful. She was elegant. She's a doctor. She's very smart. And I thought these people are interesting but I don't see myself in it. And Bill came back and said he wants to make a deal for you, myself, Bill, Brad, you and I and Lenny D'Angelo I think was part of it. Maybe Larry Cole. Larry Cole passed. Lenny in the end didn't go. It was just the three of us. And I wasn't committed. Bill and Brad, they loved the idea of going to Vegas and Sheldon had the land by the Sands and he wanted to build this monster hotel with a convention center. And I just wasn't sure. So I said, 'You guys go without me. Give me a week.' And Sheldon called me at home. I'll never know how. He said, 'Listen, invest in your future. Buy a plane ticket. Come to Boston. Let's have dinner. I'd like to talk to you.' Okay, why not? So I went to Boston. Cold night. I remember he picked me up in an off-color Rolls-Royce, like a light color. And we drove to some little Chinese restaurant. And it was fascinating. He talked. He ordered all these dishes. It was not a fancy place. It was a real down and dirty place. Like I grew up as a kid in Philadelphia. Very mediocre food. But he was really chatty. I was just sitting there taking notes. He finally said to me, 'Don't you eat?' I said, 'Yeah, I do eat, but I'm trying to figure out if I bet on you or stay where I'm at because I can stay where I'm at and make a lot more money than you're paying me.' He said, 'Now, Rob, there's no money in salary. Whatever they pay you, it's nothing. The money is in equity.' He said, 'Do you want to be rich?' And I said, 'This is a recurring theme. Yes, I do.' And I said, 'What do you...' He says, 'Well, if you work for me, you'll make millions and tens of millions of dollars.' So I said, 'That's a good idea.' He said, 'Then why don't you eat, put your pencil down, and just enjoy yourself because you're going to be successful as hell with me. I feel you and I are going to work well together. I really feel a connection with you.' I said, 'Okay.' So, I ate dinner. He made a lot of sense, but he was talking very differently about Las Vegas being a non-gaming destination: rooms, hotel, banquets. He said, 'There's a lot more money. The people in Vegas don't respect the non-gaming side of the equation. They're always focused on gaming.' And he said, 'And there's a lot more money made in non-gaming than gaming.' Now, to me that was very confusing because I grew up in the gaming world. After 10 or 12 years, I went back to my little room at the Sheraton at the airport with the Logan lights shining all night and I had a couple of little whiskeys from the mini bar. I sat there thinking about it. I looked at my notes and I thought, you know, I don't know what to do. I was up half the night and at 6:00 in the morning I called my wife and I said, 'I think I'm going to bet on this guy. I think it's worth trying. He's got a vision. I'm not sure I follow it, but he seems very, very capable. My instincts tell me he's very capable and I think I can work with him.' And that's how I ended up here. We packed up our house, sold it, and moved here within the winter of '95.

No. Sheldon's vision from day one was the convention center. The Sands was never going to stay. He wanted to tear it all down. He went through that phase of fixing it up, but when he saw the Mirage and he realized what Steve Wynn had built, he realized the differential was too huge. He said, 'Look, Wynn has done something monumental.' It also made Sheldon's real estate very valuable. He knew this was the Park Avenue, Fifth Avenue, Miracle Mile. He was sitting right there on top of the Mirage, which for all of us was shocking. I mean, what Wynn did was just shocking and to this day I still marvel at what he did. He just took Las Vegas and twisted it. All of us were shell shocked when he sold it. But he took a town that was down and dirty. Things were not believing and Steve twisted it and said, 'Okay, the future is Las Vegas. Legacy is the past.' And from that day forward, that's just what happened. Legacy never recovered. Steve lit the fuse to the 90s and what he did was incredible. The vision and the guts it took to build the Mirage and everyone looked at him in awe and said $670 million. You know, today we build nightclubs for that, but in those days it was an incredible amount of money. And I think Sheldon had realized that he couldn't keep the Sands. He had to blow it up and to his credit, he did. And we came in the winter of '95 and we opened in the spring of '99, May I think. So to Sheldon's credit, he delivered. He got the money privately. He privately funded it. He had huge vision and he had a completely different focus. He was laughed at and dismissed and derided. But Sheldon never wavered. He was staunch in his belief that he was right. And he was right.

People would call me up and say, 'Do you have a contract because he's going to have to fire you guys when he goes broke? Can you get paid for three years?' I mean, people called me and said, 'You're going to be this guy's out of his mind.' Not one person believed. I'll tell you one guy that did actually have lunch with Jack Binion one day. I think it was Billy Walters and Jack said, 'There's something about this guy that is interesting.' Jack wasn't like everybody else. Jack said, 'This guy has a different way of thinking.' Jack Binion may be the only guy in Vegas. No one else believed it. People used to fall down laughing at this casino hotel that was more hotel focused than gaming. Until the day we opened, people used to walk in and say, 'We'll buy this out of bankruptcy. Sheldon's crazy.' People say, 'You guys aren't from here. Sheldon doesn't understand this. He understands trade shows. He's not a gaming person. It will fail for sure.' I heard it from so many people. And you know, we opened and of course the first six months it was painful, but once it turned the corner, people just came over the wall and Sheldon's vision was vindicated, validated, and then emulated.

And Bill dragged him over there. I think it was 99 or 2000, I forget. And I'll never forget he called from there and it was the middle of the day midweek and he said to Brad and I it's like New Year's Eve here. It's amazing. We've been there many times. We knew it well. We were big fans of Macau. We were also in awe of Stanley Ho what he achieved over the years. Macau we've been there many times in the 80s and I started going there in 81 first time.

And we knew the value of Macau. Sheldon didn't.

but once he got there, his eyes got very big and he came back very enthused and no one thought we had a chance for a license because Bill Widner and David Freriedman and Brad, not that wasn't my involvement. They worked day and night. Bill lived there for like six to eight months and brought that license home and Sheldon again used the convention card which I think helped our bid immensely.

But I must say it was an amazing effort that Bill put forth. Sheldon's vision on the convention gave I think Edmund Ho who was one of the decision makers the confidence to bet on us and the success of Venetian in Las Vegas gave us the credential but we were still a little nothing company compared to MGM and compared to Wynn and compared to Caesars. We were still seen as a mom and pop company. We weren't public,

So it was still a very small venture.

We built that in about 38 minutes. I always used to joke. We built that in 14 months and we got the money back in 14 minutes. The Sands Macau was truly a brilliant stroke that Bill really and Brad drove home and got it built and Sheldon endorsed it. I think they built it in 14 months. We opened it about the same time we sold the mall. The mall sale was incredible.

and then they opened that at that time and it went public later that year. Those are very heady days, incredible times. But Macau, we built that for about 300 million. The first year it was open, it made close to 300 million EBIT.

Yeah. So then he went to the Cotai.

Sure.

It was like Atlantic. It felt like Atlantic or downtown Vegas.

When Sheldon said I never forget hearing the first time he went out to Cotai which was 15 and filled water in. And I remember thinking that makes no sense.

Yeah. It wasn't an easy opening. It was tough, but in the end the Venetian was built for $2.7 billion US. To date, I have to go back and do the numbers but easily it's earned 20-25 billion US. But we did it, people thought this is crazy, no one to follow. It was out there. It was like a Phoenix rising and one guy at the opening who worked at MGM said, 'This is the biggest white elephant in the history.' I said, 'I think it'll be the first place in our business to make a billion dollars EBIT.' He said, 'Rob, you're out of your mind. You've been hanging around Sheldon Adelson too long.' I said, 'I hope so.' And sure enough, it was a huge success as you know. And then Cotai, tens of billions, just what Wynn did, what Steve did in Las Vegas, he lit the fuse for development on the Las Vegas Strip in the 90s with Mirage. Sheldon did the same for Cotai in Macau. Once he lit the fuse,

I mean talk about a visionary decision. That was it. If it wasn't for Sheldon, all you have is these vertical two-acre buildings with gambling and a couple restaurants, no spa, no retail, no entertainment. You couldn't have done that. It was a brilliant stroke.

That's right.

I remember talking to him about building the Venetian over there. 'Fix all the mistakes I made in Vegas and it's perfect over here.'

I said, 'Doesn't it bother you those two guys who have been doing this for 50 years?' He goes, 'Rob, they've been doing the same thing for 50 years. They're not used to doing new things. They just build the same concept. They don't understand new concepts. Don't worry about it. We'll build them all.' I walked out and I said to Bill, 'Either he's the smartest guy or he's crazy.' And Bill said, 'I think he's the smartest guy.' And he was right about the mall. Never looked back. It was a huge success. But Cotai was Sheldon's pretty amazing moment. It showed the vision.

I think it was 30 some bidders for Singapore. Singapore was different though because we had some credentials by then. We went public. The Venetian was a runaway success. It changed Las Vegas. Sheldon's reputation soared and so had ours as successful people. I think the Venetian in Macau and the success of Sands, we were no longer the new kids on the block. We sold the mall. People thought that was hilarious. How could you sell the mall for 800? We sold it for more than we paid for almost the whole building. We had gone from being the questionable characters to being people to be reckoned with I think by Singapore. And I think it was a surprise we won in Singapore but not a shock. Macau was a shock. Singapore by then again Bill went into overdrive. Sheldon's vision again was convention-based and also was design-based for something very different than a themed hotel like he did in Vegas. It was meant to be something the government of Singapore was incredibly insightful. They didn't want another themed. They wanted something new and authentic architecture and Safdie delivered that. And of course what's happened there is extraordinary. But we went through some very tough times as you know. We went through the financial crisis 08-09, stopped construction in Macau and companies went under. So we went through the highest of highs in 04, 05, 06, and 07, and 08, 09 was a test of staying power,

I think it was a dollar. Yeah, we went from being very wealthy to not very wealthy. Our stock fell apart. We were a development company and we stopped development. So we still were doing well in Vegas, but Vegas struggled. Macau shut down and we were doing Cotai, Singapore shut down.

Yeah. For everybody, but us especially because we were still building. The company was halfway done and Macau was halfway done and Singapore was nothing. So it was an incredibly difficult time with a lot of sadness.