Crown Casino Owner, James Packer, Accuses Punter for Significant Revenue Decrease
James Packer's Crown Resorts in Australia has experienced some unfavorable results at their VIP tables lately. During a recent shareholder meeting in Perth, Packer shared that their VIP operations were $100 million short of the expected goal because of lucky high rollers at the tables, or as Packer described it, "the punters are killing us."
He further elaborated, stating that the VIP businesses were $100 million below the projected outcome in just the first four months of the financial year due to an unfavorable win rate. Packer, who owns half of the Australian gaming empire, also attributed the drop in revenue to weak consumer interest at his Melbourne and Perth properties.
Surprisingly, despite the disappointing performance of Crown's Australian casinos, the company's profits increased by 66% to $656 million in the 2013/14 fiscal year, largely due to their investments in Macau. Crown partners with Stanley Ho in Macau, operating as Melco Crown Entertainment, and owning Altira Macau and the City of Dreams.
Defending Expansion Plans
Packer also had to defend his decision to expand to the Las Vegas Strip at the shareholder meeting. Crown recently purchased the land where the New Frontier Hotel and Casino once stood for $280 million, with plans to begin construction on a new casino resort next year, set to be completed in 2018.
Packer was displeased with a shareholder's criticism that he had rushed the decision, stating, "I have made a lot of mistakes in my life but one thing I try not to do is make the same mistake twice." He emphasized that the team was different this time, claiming they have a world-class management team in Las Vegas.
The "mistake" Packer was referring to was his first attempt to enter the Las Vegas market. In 2009, Crown was set to purchase Cannery Casino Resorts for $1.8 billion, but abandoned the deal due to economic downturn, causing them to pay a $320 million breakup fee.
Las Vegas Plans
Packer mentioned that the Las Vegas project would cost between $1.6 billion and $1.9 billion, with Crown's total equity investment ranging from $400 million to $500 million. Packer will serve as co-chair of a new company with former Wynn Las Vegas President Andrew Pascal and investment firm Oaktree Capital Management, of which Packer will have the controlling interest.
"You can't be in the gaming industry and not have a special reverence for Las Vegas; that's where it all began," Packer expressed in a recent interview. "Although we fell short in previous attempts to enter that market, we now have the perfect opportunity."
The company has been ambitiously expanding in recent years, both domestically and internationally.they are currently enlarging their Perth casino, developing a resort in Sydney, and are interested in entering the Brisbane market. They also own casinos in London and are considering building a resort in Sri Lanka. Packer shared that the company is exploring opportunities in Japan should that market open up in preparation for the 2020 Tokyo Summer Olympics, something that has recently been put on hold.
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