Sat, Mar 4, 8:51am by Staff Writer
Within a week of reporting a 45.3 percent decline in so-called ‘VIP’ revenue across its casino network, Crown Resorts is reportedly considering a fire sale of high-priced luxury assets
Per a report published by the Sydney Morning Herald on March 1, which was quickly expanded upon by outlets like The Australian and the Herald Sun, James Packer himself is directing the drastic cost-cutting maneuver.
The billionaire Crown Resorts mogul has directed new executive chairman John Alexander to conduct a comprehensive review of the company’s spending habits. Expected to be completed by June 30, this review will focus on identifying extreme expenses linked to Crown’s organisational pursuit of well-heeled Chinese high-rollers.
Among the assets considered to be on the proverbial chopping block are a trio of Bombardier Global Express XRS private jets purchased for AUD$100 million in 2014, and the AUD$50 million yacht ‘Infinity’ owned by the company’s Perth casino. The 40-metre vessel alone costs AUD$1 million per year to operate and maintain.
Additionally, the elite Capital Golf Club in Melbourne – purchased from former Crown Casino chairman Lloyd Williams in 2014 for AUD$67.6 million – is likely to be put on the market.
In an interview with The Australian published in January – days after he announced his return to Crown’s board of directors – Packer outlined the financial impetus for streamlining operational costs:
“Crown started 2016 with over $3bn of debt. Crown has secured its balance sheet with the selldown in Macau. With trading softening, especially in the VIP business, Crown has had to make some tough decisions.”
When he was asked about Alexander’s authority to pursue the most effective method of savings, Packer appeared to foreshadow the most recent asset divestment proposal:
“I certainly will be urging him to make the hard calls required.”
Those hard calls extend to Crown’s various sporting sponsorships as well.
Deals with the South Sydney Rabbitohs and Melbourne Storm of the National Rugby League (NRL) are said to be dead as part of the ongoing review.
Crown will also cease sponsorship of the VRC Oaks, a premier racing event held by the Victoria Racing Club during Melbourne Cup week.
Michael Clarke, former captain of the Australian national cricket team, will see his Crown sponsorship – signed in 2013 when the company was attempting to build a casino resort in Sri Lanka – come to an end.
Former Australian Open tennis champion Li Na, the first Chinese player to win one the sport’s majors, will suffer the same fate.
The precipitous plummet in Crown’s VIP revenue is believed to be directly related to last October’s arrest and detention of 18 Crown staff in China. Viewed by industry insiders as retaliation for Crown’s aggressive courting of Chinese VIP patronage, the arrests have caused Crown to wind back its marketing activities to Chinese gamblers.
According to The Australian, the fiasco has had disastrous effects on all Australian casino properties, with the damage not limited to Crown. Chief rival Star Entertainment Group issued a statement to shareholders last week which revealed that VIP revenue had dropped by 27 percent since the arrests.
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