Whether by coincidence or design the NSW casino regulator has given Barangaroo’s Crown Sydney a gold star and reinstated its full licence just as the second public inquiry into Star Entertainment’s culture enters the pointy end of proceedings.
As far as The Star is concerned, the NSW Independent Casino Commission (NICC) has moved to potentially push its rival a step closer to having a casino monopoly in NSW.
While The Star’s shareholders factor in the possibility of the casino operator having its licence revoked, the NICC has rubbed a large bucket of salt into the wounds of the already ailing company.
For the private equity owners of Crown, Blackstone, such an outcome would be the lucky break they could never have contemplated when they purchased the group controlled by James Packer for just under $9 billion in 2022. While Crown’s flagship property in Melbourne has struggled but is viable, the economics of Crown Sydney hadn’t stacked up since the Chinese VIP gamblers disappeared from the Australian casino landscape, well before COVID-19.
The Star’s executive chair David Foster
Whether Blackstone has the appetite to attempt to fashion some kind of merger between Crown and Star Sydney remains to be seen. There would be plenty of investment bankers running those numbers, regardless of whether they had a mandate.
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And even if The Star ultimately gets the green light to run the casino in Sydney, its financial future is far less certain. After seeking more than $1.5 billion from shareholders last year to prop up the business, the inquiry has laid bare the limits to which the group’s resources have been stretched since it began the task of cultural rehabilitation.
Since former CEO Robbie Cooke’s departure, the company’s executive ranks are wafer thin. It is now looking for a chief executive as well as other key executives, including a chief financial officer and someone to head its Gold Coast casino. Meanwhile, the revenue hit The Star has endured as a result of cleaning up its act, combined with the profit hit sustained from the cost of remediation and regulatory fines has financially crippled the company.
These structural issues have arguably hindered The Star’s progress towards the regulatory suitability it needs to hold a casino licence in NSW and Queensland.
Source Agencies
