Crown Resorts director and largest shareholder James Packer has ruled out any immediate plans to pursue a Japan casino license, stating it is unrealistic to consider the company a contender and that he doesn’t want management “distracted” by the possibility.
In a wide-ranging interview with The Australian newspaper, Mr Packer also revealed his regret over the arrests of 19 Crown employees in China last year, the mistakes that cost him his Las Vegas dream and the huge debt that ultimately saw the company split with Melco Resorts and retreat back to Australia.
Asked about Crown’s immediate ambitions on the global stage, with the company having previously expressed interest in building an IR in Yokohama, Mr Packer told The Australian, “There isn’t a great opportunity to get back into Vegas and there isn’t an opportunity to get back into Macau. I don’t want our management to be distracted.
“People talk to me about Japan. I don’t believe it is realistic for us to win a license in Japan.
“It is off my table … but I am only one director and I haven’t had the conversation with the board.
“I am not saying ‘no’ forever, but what I am saying ‘no’ to is writing an $AU500 million or AU$1 billion check to go into Japan next week.”
Discussing the arrests of 19 Crown Resorts staff in China last year, which saw 16 sent to jail for promoting gambling including head of VIP operations Jason O’Connor, Mr Packer said it was a situation that should never have been allowed to occur.
“I definitely feel let down,” he said. “I wasn’t on the board at the time but it is pretty clear Crown should not have been put in the position it found itself.
“It did rock my world. Reading in every newspaper around the world that Crown was a bad corporate citizen shook me to the core because I had put in so much effort over so many years to ensure Crown was a good corporate citizen. And it wasn’t just James Packer being attacked, all of a sudden Crown was being attacked and that was putting the people who were in jail at risk.
“Two of the most successful Australian businesses on the ground in China I had a role in – Melco Crown and Zhaopin. I had advocated China, believed in China, I had gone and been involved in businesses in China.”
The arrests ultimately saw Chairman Robert Rankin and CEO Rowen Craigie step down, making room for Packer’s return to the board in August and the elevation of John Alexander to Chairman.
However, he said it was the company’s growing debt, rather than the China arrests, that prompted Crown’s Macau exit as well as the sale of a parcel of land on the Las Vegas Strip slated for the ill-fated Alon project.
Revealing combined debts of AU$5.5 billion in 2015 including AU$3.2 billion at Crown and another AU$2.3 billion at his private holdings firm Consolidated Press, Mr Packer said he was simply left with no other option but to sell up overseas.
“I have never handled debt well. After the GFC I swore ‘never again, never again’. Yet at the end of 2015 I found myself with 50% more debt than we had during the GFC,” he said. “Crown’s debt was over AU$3 billion and forecast to get to AU$5 to 6 billion. We had not said no to a new project in Vegas, but we had to build a new Melbourne tower and Crown Sydney. There was no obvious way out of it so it was very stressful.”
Ironically, Mr Packer told The Australian he regrets not selling out of the Melco Crown partnership – whose split was finally completed earlier this year – back in 2014 with many of Crown’s problems emanating from poor business decisions in Las Vegas.
“In Vegas I should have owned [the Cosmopolitan],” he explained. “It was a great deal, but unfortunately we didn’t do that deal and bought the land next to Wynn instead.
“People can talk about the ham-fisted ways we went into North America before the GFC but in 2014 we had an opportunity to buy Cosmo for US$1.5 billion. My advisers and management talked me out of it. And if we had done that and paid for it by selling Macau shares that were then valued at US$40, we would have had a more than AU$2 billion value increase for Crown shareholders. We would be in front in America rather than being down AU$1.7 billion.
“In simple terms we would have got US$780 million more for selling 40 million Melco Crown shares roughly US$20 higher, and the asset has gone up conservatively US$750 million as well.
“From two years ago, the mantra became ‘asset sales, asset sales’ and today CPH’s debt is around AU$100 million. And Crown’s balance sheet is in the best shape it has ever been (down to debt of AU$400 million).
“I have managed to keep the controlling shareholding in Crown, which was what was most important to me. At this stage in my life, I don’t want anything other than my Crown shareholding. I am not looking to make investments outside of Crown.”
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