PACKER TO QUIT SECOND EMPIRE
In 2006 James Packer pocketed $5 billion when he did what to so many was the unimaginable – selling out of the company that had been ‘in the family’ for half a century.
The Nine Network had been under Packer control continuously since its birth along with television in Australia in the mid-1950s – starting with his grandfather Sir Frank and most famously under his father Kerry.
Except that is for the brief interlude in the crazy days of the 1980s when Kerry “got his one Alan Bond” and sold it to the bouncy Perth boyo for a cool $1 billion (back in the day when a billion really was a billion) only to buy it back a couple of years later for around half that.
Now he’s about to sell out of Crown for a similar $5 billion or so sum, but the deals and the Packer reality could not be more different.
In 2006, Packer was in his mid-30s, cock-a-hoop and on top of the world.
He had no interest in media and, for that matter, didn’t much appreciate appearing in it. He was embarked on building a global gaming empire – more particularly it would be his, not ‘the family’s’, empire.
Ever since he took his father Kerry into casinos – that’s of course, into owning casinos; Kerry used to have a, well, ‘whale of a time’ gambling in casinos – that has been his central focus, his absolute driving ambition.
Packer knew the casino odds like his father and grandfather had known the fine details of eyeballs, advertising dollars, content and contract rights.
But now Packer is in his early-50s and from both observation and behavior – a shattered person both personally and in business terms.
That global gaming dream is long dead. He sold out of Macau; he abandoned the idea of building a mega-casino on ‘The Strip’ – global gaming central: Las Vegas.
He’s all-but a recluse – apart from his close family links – in Los Angeles and his polo ranch in Argentina.
He left the board of Crown to deal with his mental issues and he makes only rare and fleeting visits to Australia, despite the fact this is where Crown has shrunk almost entirely to.
Crown is now essentially a domestic utility business, centred on the casino in Melbourne. It lost out on Brisbane to its arch-rival Star, which has also become a very, very serious competitor in the highroller space.
The crowning achievement of the ‘old’ Packer global dream was to be Barangaroo – not just ‘a’ casino finally in the Packer family’s home town of Sydney but the absolute top-of-the-pack, high rolleronly, not-a-dollar spared in the spend casino.
It thus captures both the expanse of his ambition and the sheer pointlessness of it now. It will be a spectacular jewel in a tarnished diminished crown.
In 2006 he was selling out of media to go deeper into gaming. Now there’s no succeeding ambition.
He’s in no position to take the 10 per cent of Wynn that he would get if the deal is sealed and turn that into a position of influence in the merged group, far less anything like control.
The exact opposite would have been the case up to around three or so years ago. Indeed there could easily have been a merger built on Packer succeeding Steve Wynn.
He of course has gone and Packer is about to follow.
There is no ‘done deal’, but the fact that this has broken into the public space and the way it did tells us two big things.
One, that Packer if not exactly a willing seller is clearly prepared to entertain offers. And two, that we can’t be too far short of an offer that he would really be prepared to entertain.
If Packer says yes, it’s all but done – subject to the various regulatory approvals. If he says no, there’s no deal.
Wynn is the perfect partner for Crown just as Crown is the perfect growth acquisition for Wynn.
Wynn is centred on Las Vegas and Macau – indeed Wynn both ‘cracked’ and ‘created’ Macau: opening it to western investors and helping turn it into the biggest gaming centre in the world, at multiples of Vegas.
Crown has nothing now in those two places; but would deliver both a superb (arguably the best) ‘grunt’ business in Melbourne and the best high-roller combine across Melbourne and Sydney when Barangaroo is finished, and which particularly complements the Macau business.
That of course opens the door to anyone else. Even without an auction, a final deal with Wynn should take the price a little higher.
An auction would obviously be better. It always is, as anyone who’s sold a house knows. But we won’t see crazy prices paid – and certainly nothing like what Packer got for Nine in 2006.
The Chinese money is no longer pouring into Australian property like it used to. Something similar is also happening with Chinese high-rollers. And there’s a lot more casino competition for them – in Macau, in Australia, everywhere.
Selling out of mainstream media in 2006 was perfect timing – exactly one year before the first iphone set the world on the whole smartphone wave.
Selling out of gaming and especially high-roller gaming in 2019 could also prove to be similarly perfectly timed.
There’s a fascinating, if very minor link in all this.
The person with functional carriage of Crown’s dealing with Wynn is its executive chairman John Alexander, who spent the first half of his adult life in the media.
With Fairfax – the hated enemy continuously of Packer, grandfather, father and son; and now of course just a part of the (much diminished) Nine group.
BUT NOW PACKER IS IN HIS EARLY-50S AND FROM BOTH OBSERVATION AND BEHAVIOR – A SHATTERED PERSON BOTH PERSONALLY AND IN BUSINESS TERMS.