Leanda Lee
Although flagged in gaming analyst reports back in February 2018, the public announcement of a reshuffling of the control of the Stanley Ho family gaming empire on Wednesday 23rd brought with it the predictable rush from journalists seeking gaming analyst commentary. Two basic positions have been taken on the future of the SJM/STDM/Shun Tak conglomerate: a) those who stood firm with their long predicted inevitable heated family bun fight, leading to a weakening or stagnation of SJM, and b) those who allow for sophisticated abilities of key family members to negotiate a settlement that will place the group of companies in a position of strength leading into the new gaming concession bidding process.
The former was exemplified by rather disparaging statements from Sanford C. Bernstein during that week: “The hope that the Pansy Ho – Fok alliance can change the direction of SJM is just that at this stage – “hope” and “a hydra-like three headed co-chairman group and the elevation of entrenched management was not an indication that any shake up at the company for the benefit of independent shareholders [is] forthcoming. The byzantine corporate ownership and governance structure of SJM is not alleviated by this agreement.”
From an extra-jurisdictional perspective, like Galaxy, SJM does not package information for investors in a form readily absorbed by the normal EBITDA-seeking, short-term, American Corporate Governance expectations focused on stock values. Apples and oranges do not compare well, however.
Corporate governance practices need to be in line with ethical and societal expectations within a particular context. Whilst directors are required to act in the best interests of the company, in this type of family conglomerate, the interests may be seen more broadly and based over a longer time-frame. It is not just SJM and its position in gaming vis-a-vis its competitors – as is the focus of the sell-side analyst – but the syndicated and synergistic cross-benefits that can be derived from the group as a whole that is currently being moulded.
Western business theories and practices are but one view of the ways of business. Granted, these are underpinned by empirical evidence in the form of data gathered from myriad business cases over decades, and, what is found in the data informs the development of theories. These theories continue to be tested in situ over time and serve to train business students and advise business leaders on how the business world works: the business world as we know it. To date, that foundational situation has been overwhelming concentrated in North America.
Business and management theories are mostly presented in university business schools as universal in complete ignorance of the implied imperialism. It is as if the most important, the only worthy and relevant set of ways of doing things in business is the western way. Only academic hippies on the fringe talk of comparative management studies and nod to the validity of alternative business structures and modes of conduct in other contexts. Even in comparative studies, the base for comparison is western – oh so ignorantly ethnocentric of us.
When educated in a particular context, targeting certain types of customers by offering them particular measures and definitions of corporate success packaged in a pre-digested form so that buy-sell decisions can be made on the run, one is likely to view as a pariah and a dinosaur any organization that dares step outside of those expectations and which measures its own success differently.
The Western reductionist short-term EBITDA measure of individual companies will continue to drive typical gaming commentary because that is what is understood by a particular market and readership. There are other ways to measure success; for example – if we must remain in the economic paradigm – return on investor capital, and that would paint an entirely different picture.
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