Is This Las Vegas Sands' Next Big Growth Story?

Slowly but surely, Las Vegas Sands (NYS: LVS) is taking steps to realize its dream of a Las Vegas Strip-style development in Spain. This week, Sheldon Adelson is due to meet with Spanish officials to discuss the development, tax breaks, and other potential accommodations to build the project.

It was more than a year ago that we first began hearing about the development some are calling EuroVegas. Madrid and Barcelona appear to be fighting for the honor to host such a development, and the dollars being thrown around are staggering. The preliminary details are as follows:

  • $20 billion to $22 billion investment over 10 years in 12 hotels and six casinos.

  • 36,000 hotel beds to welcome guests, an incredible size.

  • 18,000 slot machines, three golf courses, a convention center, shopping, and, of course, world-class dining.

Spain is desperate for the development, with unemployment around 23%, a shrinking economy, and a huge budget deficit hanging over the county. So, like Japan, the Philippines, and Vietnam, Spain is looking to casinos to boost the economy and bring investment to the country.

Why Las Vegas Sands?
If Adelson is so excited to build this massive resort, why isn't everyone else? The first issue is sheer size. No one can match Las Vegas Sands' balance sheet and ability to make massive bets on a new gaming territory.

Wynn Resorts (NAS: WYNN) may have the balance-sheet potential to tackle part of this project, but Las Vegas Sands has far more flexibility. U.S. giants MGM Resorts (NYS: MGM) and Caesars Entertainment (NAS: CZR) are dealing with crushing debt levels after CityCenter and a buyout crushed their respective balance sheets. And Melco Crown (NAS: MPEL) , the Macau-centered gaming operator, is nowhere big enough to tackle this.

Simply put, Adelson is the only man to talk to who can consider throwing $20 billion around. There's no word whether he may be able to bring partners in, but for now it appears he's on his own.

The good and bad of Spain
Europe has casinos spread about the continent, but nothing like what's on the Las Vegas Strip. A new strip could be a major tourist attraction and bring in players from around the world. We've seen that even new casinos in old locations, like Atlantic City, can revitalize an area for a period of time. But it's still unclear what the revenue potential would be -- I would say probably in line with Las Vegas as opposed to Macau.

Building in Spain would probably be more expensive than building in Macau, and I can't imagine the payback would be higher, so I'm looking at this with a level of skepticism. With unemployment so high in Spain and all of Europe struggling to pull out of the recession, it seems like the wrong time and the wrong place.

There's also the spread of gambling around the world to consider. There are already numerous casinos throughout the U.S., Europe, Singapore, and Macau, not to mention the number of potential new locations around Asia.

Foolish bottom line
I don't see this as a good move, but Adelson has proved that he knows what he's doing when he develops a resort. The Venetian in Las Vegas was a huge success, Macau has been phenomenal, and the highly sought-over expansion in Singapore was a coup for Las Vegas Sands. Maybe Spain will be next?

When Adelson begins speaking about the development and more details are in place, it will be easier to make a judgment. For now, I'll remain hopeful but skeptical about this massive project in Spain. If anyone can prove me wrong, it's Sheldon Adelson.

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At the time thisarticle was published Fool contributorTravis Hoiumhas no position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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