HAS PACKER RUNG THE CHINA BELL?

HAS James Packer just executed his second brilliantly timed – if not quite so profitable – exit?

That is the question posed by the sale of half of his controlling stake in the Crown Resources casino group – the answer to which might be fascinating in relation to Packer but is actually far more fundamental for Australia.

In 2006 he sold out of the family’s long-held Nine Network, pocketing a cool $4.5 billion in cash, free and clear.

Long-held? Like half-acentury continuously long held, by grandfather Sir Frank, father Kerry and then James – apart from the brief moment in the 1980s when his late father Kerry “got his one Alan Bond”.

That $4.5 billion was poured mostly into building Crown into Australia’s premier casino group as the intended foundation of the world’s biggest and best global casino empire.

We saw a month ago the end of that dream – maybe it was always more a fantasy – with the sale of half his stake to former Macau partner, Lawrence Ho and his Melco casino group.

The primary driver of the sale was Packer’s mental and physical health problems, which had essentially disconnected him from Crown.

At its most basic, what was the point of having all his billionaire eggs in the one basket that he could no longer – or at least, no longer wished – to control day to day and even less drive into the future?

That might have been the motivation: Packer is essentially pocketing $1.8 billion for selling half his near-50 per cent stake; and just as surely at some point will sell the rest.

But the news from Australia’s other major casino group, The Star, which sent its – that’s Star’s – share price skidding down an eye-watering 15 per cent yesterday – poses the question whether Packer’s timing might prove to be as perfect as the 2006 Nine sale.

Back then, he sold at the absolute top of the market for free-to-air TV valuations. The deal valued the Nine network at

$5.5 billion and it enabled Packer to pocket $4.5 billion and still keep a half-stake in the network. That halfstake would eventually become worthless.

He would certainly hope that’s not going to be repeated with his remaining 23 per cent stake in Crown. But it could end being worth less, maybe even considerably less, than his sale price for the first 23 per cent.

He’s already ahead. He sold around market at $13; despite the surge in the market since the sale, Crown has dropped to $12.14.

His timing in 2006 was perfect. The first iphone was launched by Apple in 2007 (just in time, ironically, for the GFC) – and the rest would very rapidly become history for 20th century mainstream media.

Fast-forward to 2019 and The Star now poses the question whether the ‘China story’ could be on the verge of also starting to be history for Australian casino groups specifically and indeed, much more importantly, for Australia overall.

At the casino level, The Star and Crown have put all their growth eggs in the Chinese ‘whales’ or highroller basket. And none more spectacularly than Packer’s Crown – with its $2 billion-plus Barangaroo punt.

The original Crown of close Packer friend Lloyd Williams was a spectacular and spectacularly profitable mix of ‘grind’ revenue from pokies and world class – and, most importantly, Australian-unique – highroller venue.

It also was perfectly timed to kick off into the 21st century in lock-step with the explosive growth in China that created so many punter-billionaires and multi-millionaires.

The combination was critical: grind and whales. Not just for Crown in Melbourne but to underwrite Packer’s (as it proved, very profitable) move into Macau.

Especially as The Star, under its various names, was content to run its Sydney casino as an oversized leagues club and its even more down-market Gold Coast casino as ‘thong (both types) central’.

But then Packer launched Barangaroo, purely on the basis of highroller clientele. Bluntly, Mainland China billionaire clientele.

Lenin and Marx would both be spinning faster than a cyclotron at the proliferation of billionaires under the hammer and sickle; but that’s another story.

Barangaroo might have made sense when Packer still had his global ambitions. It might also have made sense when China seemed to have an unchecked high-growth future.

But is The Star indirectly telling us that the latter is no longer the case?

That the great China gift horse, seemingly for Australia alone – first resources, then students and tourists, and the real cream, punting billionaires – might be no longer? We really don’t want to find out that the answer is yes.